The People vs Wall Street: The GameStop fiasco

The+People+vs+Wall+Street%3A+The+GameStop+fiasco

Nikhil Patel, Guest Writer

Everyone has heard the latest story in the already eventful 2021: a bunch of low-level retail investors versus the biggest Wall Street billionaires. 

The GameStop fiasco started when hedge funds began short-selling Gamestop stock. In come numerous investors from popular Reddit group WallStreetBets. After observing high short interest by hedge funds, the self-proclaimed “degenerates” decided to conduct a short squeeze, causing hedge funds like Melvin Capital to lose billions

As a retail investor myself (I own an account and invest in several companies), I approve of my fellow Redditors’ actions. WallStreetBets has unjustifiably come under heavy fire for colluding to profit by multiple high-profile groups including the SEC. However, the short squeeze was not a move primarily made for money, though any profits weren’t uninvited. Rather, the band of misfits desired to send a message to Wall Street: that the little guys still have power. As user r/Xsorus said best, “I don’t know if I’ll […] lose money, at this point. It doesn’t matter though. I’ll happily lose money if I can cause some rich [expletives] to take up skydiving.” I support r/Xsorus’s sentiment, if not his readiness to lose money, because in a world where the rich profit off the less-fortunate, retail investors like us need to show Wall Street billionaires that they can still lose. 

The ultra-rich’s abuse of power only became more apparent as GameStop hit its peak. A few days after trading volumes reached their high, Robinhood, a brokerage widely used by WallStreetBets members, placed restrictions on buying additional shares. Interestingly, they continued to allow sales of shares, substantiating claims that the restrictions were placed only to reduce GameStop’s price, and help short sellers. Yet again, everything is stacked against the non-affluent. Purchasing stock is completely legal, and companies like Robinhood must be held accountable for taking potential profit away from clients by restricting trade. 

It is a breath of fresh air that several people with large platforms are using their voices to defend the common investor. As Congresswoman Alexandra Ocasio-Cortez announced, “This is unacceptable. We now need to know more about @RobinhoodApp’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit.” Other legislators, both Democratic (Ro Khanna) and Republican (Ted Cruz), also came to the support of Reddit’s investors. Frankly, the rare bipartisan political unity against Robinhood only further demonstrates the issues of inequality of Wall Street. 

Although speaking about the problem is only a small step, it is a small step in the right direction. What we really need is for regulation to be enforced no matter who the victim is, whether it’s Wall Street or your average retail investor.

 

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