A battle between internet day traders and professionals on Wall Street has become the hot non-political story of the day. That excludes CNN, which turned a story about online trading activists boosting a stock all about Trump.
Summary
Wall Street is in a game of chicken with a group of anonymous online investors coordinating on Reddit to drive up the price of the game retailer GameStop.
- It started when Redditors noticed professional investors began betting on GameStop’s stock price to decline (using the tactic known as “shorting”), leading them to believe it was undervalued and starting a buying spree.
- It has been pitched as a fight between David (day traders) and Goliath (Wall Street) as the stock price soared from just $18 per share a few weeks ago to nearly $400 at one point on Wednesday, causing massive losses for firms who bet big on shorting the stock.
- The Reddit forum propping up GameStop has begun focusing on AMC Theaters and BlackBerry stocks, hoping to squeeze the short sellers and make a profit on what some consider artificially priced stock.
- Professional investors and brokers have decried the actions of online investors, leading to a reprimand from Senator Elizabeth Warren, saying “the stock market doesn’t reflect our actual economy.”
- The New York Times noted the several hedge funds who have taken a beating as a result of the skyrocketing stock, including Mets owner Steve Cohen.
- In an “explainer” of the entire saga, CNN suggested neither side is the hero or villain. Elsewhere at CNN, Chris Cillizza’s “analysis” of the situation blames….you guessed it: Donald Trump.
- Helaine Olen wrote in the Washington Post the story is one of income inequality, simultaneously sneering at and sympathizing with “(mostly) youngish men attracted to” fee-free trades via apps like RobinHood and Stash.
- Former Secretary of Labor and Late Night with Conan O’Brien bit actor Robert Reich chimed in on twitter, calling out Wall Street for their hypocrisy.
- RedState took CNN’s Cillizza to task for “an insulting view of Americans” when blaming Trumpism for the GameStop stock story.
- The Wall Street Journal’s deep dive in the situation included a plea for sympathy for one hedge fund manager, complaining that he has repeatedly been called a “boomer” on social media.
- One opinion piece at Marketwatch suggested the risky bets being made by beginners reveal a need to “practice” trading before using real money.
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© Dallas Gerber, 2021
