GameStop Explained: Role of WallStreetBets and Importance of Big Community

  • GameStop Stock surged 928% from $18 to $483 in absolutely no time
  • WallStreetBets is the major name involved in the pump of GME Stock
  • AMC, BlackBerry, Nokia stocks also faced extreme price swings this week

Three weeks ago the GME Stock price was settled at $18. However, it doubled in four days. The share kept surging higher, hit $347.51 on Wednesday but was down by 44% on Thursday. The Stock stunned the world when it soared by 928% to $483 within the first few weeks of 2021!

Source: TradingView

The Role of WallStreetBets And The Power of Community

One amongst the WallStreetBets users formulated a case for GME being a value investment. According to the person, the stock is undervalued. Immature people bought into the logic while hedge fund professional investors with billions of dollars sold the stock short. They were gambling on the stock to showcase a dump. Between the incident WallStreetBets community-initiated buying of GME shares, supporting the immature investors.  

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Such a game of Tug of War made the stock price go higher quickly. And Reddit community proved itself stalwart than any short-seller establishment!

GameStop Exchange Saga 

Trading App Robinhood halted buying of  Gamestop, AMC, and Nokia Stock. Why does this matter so much and isn’t this a pushback against the establishment? It is not a pushback against the establishment. There is an online popularism that is promoted by the wall street insiders. 

The WallStreetBet members are piling on into some of these stocks to hurt the professional sellers and empower the immature investors. However, the more these stocks go up, the more the big people are getting creamed and losing billions of dollars. Till previous years the brokers didn’t charge brokerage fees of $799 or $1099, so it’s free for someone to be on one of these Wallstreetbets forums and start buying the stocks. 

The Power of Community can be observed in surging share prices! One of the 25-Year-Old students made $20,000 in 3 days and paid off half of his student loans. These are the kind of stories they’re spreading. It can be a green signal for buyers as one can spot a big game being played on some of the social media sites. 

Reddit Revolution from the perspective of SEC

SEC observed the incident in prospects of Fraud, Manipulation and New York Stock Exchange-listed stocks, also whether there were enough investors perceived to be forming a group. Fundamentally, the Security Exchange Commission is looking to protect all investors irrespective of the fact whether. The SEC may impose a 1-2 day trading suspension to create some order and stability in the market. But the SEC has been eyeing the complete incident closely!

Jordan Bradford on Stock Manipulation

Elizabeth Warren, United States Senator, demands the US Regulators to reign in the hedge funds as private equity firms treat the market like the ‘casino.’ Perhaps no surprise there! But, Jordan Bradford who is the wolf of Wall Street Traders convicted of stock manipulation during the dot-com boom, told that the government would be forced to take action. The SEC regulators are now hearing from Hedge Funds pleading for some form of action.

Every victorious individual understands that his accomplishment depends on a Community of People working unitedly! 

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Ritika Sharma
Ritika Kumari Sharma is an Economics Honors graduate from the University of Calcutta. She is completely into finance and believes that cryptocurrencies are the future. She is an enthusiast learner about the cryptocurrency and blockchain technology.

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