The final days of January 2021 will go down as one of most historic weeks on Wall Street.
Unless you live in a secluded base with no connection to the outside world, you’ve probably heard something about the stock market this past week. The basics are that, in a matter of days, GameStop’s stock skyrocketed from $50 dollars to almost $500 at its peak for a single share. The stocks explosion was caused by a mixture of short selling, a rambunctious subreddit and the beauty of internet virality.
Wall Street Bets (WSB) is a subreddit with over 6 million members. In this community, Reddit members and amateur traders are able to share their speculation on stocks and high-risk ideas. There is a little bit of a twist here: Wall Street Bets’ members lean heavily into the joke that the majority of them have no idea what they’re doing when it comes to the stock market. While there are members who are knowledgeable about the market on r/WSB, everyone is unified by wanting to beat Wall Street at their own game.
One of the major influencers on r/WSB, user DeepF*****gValue, posts his GameStop Stock (GME) progress every day. On Feb. 1, this user wrote a post called GME YOLO (you only live once) update. In this post you can see that he purchased 50,000 shares of GME, which has netted him around 21 million dollars as of Feb. 1.
The post has 200k upvotes and tens of thousands of comments. Members of WSB rallied behind posts as if he was a General and the comments and upvotes are his army. They are willing to do whatever he tells them, and in this case, it’s “Hold the line.”
This is where the conversation of WSB’s legality comes into play. One side says that gamifying the stock market is illegal. People argue that it is unlawful to buy a number of low shares, lie about its “true” value and sell when the stock rises before the deceit is revealed.
In an interview with The Washington Post, Leon Cooperman, a billionaire investor chimed in with, “It’s just a way of attacking wealthy people, and you know I think it’s inappropriate.”
Lauren Bracesco is a commercial music arranging & composition, and pre-law student in her junior year at Azusa Pacific. She has been investing in the stock market since Dec. 2019. Bracesco was one of the lucky few who secured a free share of GME through Robinhood. On top of that, she was able to see the upwards trends before GME exploded and invested in more shares.
”I don’t think it was illegal at all, it’s kind of just capitalism. We as investors take risks. Sometimes people take good risks and are rewarded. Sometimes they take bad risks and fail,” Brasceso said, talking about WSB involvement in the sudden rise of GME.
Bracesco is content with how she handled her involvement with GME. She set boundaries for herself and felt like through this she was successful.
“Regardless of how I feel about the stock and whether it should be bought and sold, like of course it should be because it’s a public company,” said Bracesco.
I believe that GameStop’s stock should remain open. I would argue that nothing illegal has happened. While this “pump and dump” strategy of lying about a stock’s value is illegal, it seems as though WSB truly believes in the value of GME and its potential. There are posts on the subreddit pushing GME that date all the way back to 2019.
“I think it was definitely a little problematic for Robinhood to restrict people’s ability to trade it, especially since the majority of people who were trading were younger people who were trying to squeeze money out of the stock,” Brascesco commented.
Investing apps such as Robinhood should not have the power to shut down the purchasing of shares just because big investment companies are losing money. Robinhood flaunts its platform as the best place for free market trading. This last week it has not lived up to its motto and failed at its economic model.