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If you’ve been paying attention to market news over the past month, it’s hard to ignore the huge change that has come following the movement by the Reddit community Wallstreet Bets. The community is made up of retail traders that had largely focussed on sharing their success or losses on the retail trading platforms, and whilst some big names had shown incredible victories, it had largely been made up of smaller trades. The start of 2021 signalled huge change here, however, as it seems the community had an opportunity to take on Wall Street and seized it.
The act of short selling has been a well-known tactic by the big hedge funds for years. Choose a stock they feel is falling, publicly announce that the stock will go down, and watch as the price falls and the big funds benefit from their own short position and the dropping price. This had been the exact tactic used with GameStop, a struggling company for years, with the ongoing pandemic used to fuel the doubt that there could be recovery. However, some Reddit users noticed what was happening and took steps to ensure the same fate wouldn’t happen as had with others. Users started buying the stock, some in small amounts, and others in much larger amounts. From a share price starting at $20 during the start of the year, the price had risen to almost $400 at some points throughout January and leading to some Wall Street funds facing losses of over $70 billion in just January alone, with higher expected losses to come.
It’s no surprise so many were willing to take such an unsure gamble, the past few years have seen other gaming platforms become extremely popular, as many regions across the world adopt gambling, some have enacted changes to restrict player options where others have enhanced player participation as online casino in Canada for example have become much more accessible. JackpotCity has been a clear example of this, and the accessibility has helped drive the popularity in the platform, with it provided a great means of online entertainment, which helps to factor in its growth.
With the stock market providing just another form of betting and gambling, it hasn’t been a surprising change for many to make. Although there’s a lot of volatility in the market, there are still plenty of calls for holders of the stock to ride out the storm, as it has moved away from simply trading and more into a position of damaging an institution which has a history of taking advantage of the ordinary person. Combined with the recent betrayals of a number of retail trading platforms such as Robinhood, which saw all trades halted for a certain period of time on certain stocks, and other stocks such as AMC and BB finding a similar level of interest too. It will now be a long road before the retail market settles down and makes sense. Either way, there seems to be a huge opportunity for the traders to either make huge winnings on these riskier bets or face the potential to lose big as the plan comes crashing down. An answer will be given soon either way, and as with anything of this nature, there has to be one winner and one loser.
