The Reddit-GameStop saga didn’t hurt Wall Street as much as you think

  • Thread starter Thread starter Yoni Heisler
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Yoni Heisler

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  • The Reddit-fueled rise of GameStop shares in January made many individual investors incredibly rich.
  • Wall Street investors also took advantage of GameStop's meteoric rise and its subsequent sharp decline.
  • Many Wall Street firms actively monitor social media chatter on Reddit to stay abreast of what retail investors are up to.

Over the course of a few days in January, a somewhat obscure subreddit called r/WallStreetBets managed to increase the price of GameStop shares by more than 5000%. In the process, hedge funds with short positions on the company lost billions while one hedge fund in particular -- Melvin Capital -- almost went bankrupt. As GameStop shares began to march towards $500, Melvin Capital had to secure a $2.5 billion cash infusion from two other hedge funds to remain afloat.

The entire saga was fascinating to watch and didn't elicit much sympathy for folks on Wall Street. Many people, after all, argued that what Redditors did was no different than what hedge funds have been doing for decades, namely manipulating the market for their own benefit, everyone else be damned.

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The Reddit-GameStop saga didn’t hurt Wall Street as much as you think originally appeared on BGR.com on Tue, 9 Feb 2021 at 18:35:35 EDT. Please see our terms for use of feeds.

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