Finances
The GameStop Bubble Is an Attack on the Financial Industry
Reddit could wipe out some hedge funds.
You may have heard of the GameStop stock. Yes, the price is at a dizzying height. All this, although GameStop is actually not doing very well.
The retail chain, which sells video games, consoles, and accessories, looks set to close more than 1,000 stores this year.
The reason is probably simple: no one buys video games on disc anymore. Thanks to the internet, content can be purchased and downloaded easily — consoles and accessories can be conveniently delivered. So things are not looking good for GameStop. Nevertheless, the stock is booming — and there are no natural reasons for this.
r/wallstreetbets is an online community on Reddit. The so-called subreddit is known for its young members who carry out moronic trades on the stock market. That’s why they call themselves “degenerates” or “YOLO traders.”
But what does the subreddit have to do with GameStop’s bullish run? On January 22, 2021, YOLO traders started buying GameStop stock like crazy. It all probably started when well-known short-seller Andrew Left testified that the stock price would continue to fall¹. An understandable judgment, given the chain’s situation. But Reddit users…
