GameStop Stock Market Saga Explained

GameStop stock has been making headlines.

GameStop stock has been making headlines.

Ameena Farooqui, Editor-in-Chief

If you asked me a couple of days ago what was this whole GameStop Market Stock saga was, I would’ve looked at you with the most confused face ever. But don’t you all worry, because recently I have delved into this frenzy that has taken the stock market by storm. And am here to help you understand:

In the last couple of days, GameStop’s stock price increased as much as 17,000%. Simply put this is insane. This is all powered by small investors who noticed that large investors had bet billions that GameStop’s stock would fall. Through viral posts, stock prices grew, forcing large investors to spend billions of dollars to cover their losses. As for the small investors because of this, some have now earned an insane amount of money quickly. Some would call this a big victory against hedge fund billionaires.

Reddit Users have taken the Stock Market by storm.

So how did this even come to be?

A couple of months ago large investors started betting heavily against GameStop due to trends they noticed as a result of the pandemic. They basically predicted that GameStop was doomed. Enter Reddit Users aka the small investors. Through Reddit, users began encouraging each other to invest in the company. This became viral, capturing the attention of the average citizen. People began to buy GameStop stock, fueling its rapid rise in market value. The rapid rise in stock price hurt large investors catastrophically because they had bet billions against it.

Now what?

The commotion surrounding GameStop and other companies such as AMC etc., who similarly were betted against by large investors too, has captured the attention of Congress themselves. Democratic Senator Sherrod Brown of Ohio, incoming chair of the Senate Banking Committee, spoke openly on the issue stating, “People on Wall Street only care about the rules when they’re the ones getting hurt. American workers have known for years the Wall Street system is broken — they’ve been paying the price,” ..”It’s time for the SEC [Securities and Exchange Commission, which regulates U.S. stock markets] and Congress to make the economy work for everyone, not just Wall Street.” In the next few days, a hearing to evaluate the state of the stock market right now, as well as examine short selling and other stock market practices is expected.

Recently Robinhood has severely limited trading.

Also in new developments, it has become apparent that investment app Robinhood, an app many small investors (the average citizen), use has suddenly severely limited trading after the recent storm caused by this whole GameStop saga. This has prompted several members of Congress to investigate as well.

Who knows what the coming weeks will unfold as we all closely monitor the state of the stock market. I think it’s fair to say that we can call this a small victory for the little guy.