In the past week or so, news of the GameStop (and AMC, Nokia, etc.) stock market frenzy has been unavoidable. If you’re on social media, both memes and ardent cries to hold would have taken over your feed. If you were in class with me, you might’ve heard my economics professor actually say “stonks” over Zoom. Countless people have either profited majorly or lost a great deal of money. While Dave Portnoy, for instance, lost $700,000, others amassed fortunes, including both retail investors who can now pay off their parents’ mortgages and hedge funds, like this one which started buying GameStop shares in September and made $700 million.
Even if the only involvement you’ve had with the stock market is enjoying the drama, speckled with fun hypotheses about Animal Crossing’s ‘stalk market’ players turning to real life, the lasting impact is huge. Everyday people have never taken on Wall Street like this, apps like Robinhood have never been able to sustain trades of this volume, and government regulators have never had a challenge quite like this one.
It’s clear from events like the Women’s March or Black Lives Matter protests that social media can mobilize people like nothing else. This time, it was mobilizing financial decisions. Users on the subreddit wallstreetbets were sharing information at rapid speeds about their own investment moves. Not only were they able to coordinate massive purchases of GameStop in response to Citadel’s short-selling, but they rallied the troops even when price was dropping. Countless Redditors posted screenshots of their projected losses with encouraging words along the lines of “If I can hold, so can you.”
The matters were complicated when Robinhood, the popular trading app, stopped allowing investors to buy, but allowed them to sell. The outrage was immediate— for a company with the aim of “democratizing finance,” not allowing buyers to buy was a significant violation of both the mission and possibly the law. Investors quickly filed SEC complaints, politicians from Alexandria Ocasio-Cortez to Ted Cruz Tweeted (and held Twitch streams to talk about it), and people flooded the Robinhood app page with negative reviews (Google got into hot water for deleting reviews initially).
The takeaways aren’t clear. What was dubbed as a class war is far from over, though some argue that these didn’t pit the average Joe against Wall Street as much as it did Wall Street against Wall Street. Banks and financial institutions are still reeling from the massive coordinated action that social media allowed individual investors to take. There’s a lot of talk about a bubble, praise for the markets for remaining resilient, and praise for the transparency surrounding the whole incident. In terms of regulation, there are pending Congressional Oversight hearings, SEC claims, and Treasury meetings afoot.