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GameStop’s Wall Street Takeover

GameStop has had a long week. The video game chain that has over 5,000 stores has seen its stock soar this week all due to a thread on Reddit. The store’s stock has gone up 1,700% just in 2021—and the month isn’t over yet. 

This rise all began last week when the price of GameStop’s stock slowly started to rise day by day. This week, however, was really when things started to take off. On Monday GameStop’s stock finished at $77. On Tuesday it closed around $148. Wednesday is was at $347.51. It eventually reached $483 before it started to fall again. Even people like Elon Musk, the CEO of Tesla, were Tweeting about it. 

[bf_image id="q6fhuq-7ph74-fi5c2t"] This new rise seemed great for the redditors who were buying and selling it. Essentially, they were beating the system at its own game. Not to mention all the money these people were now making—some of them being completely unfamiliar with stocks before this fiasco began. But the joy was not shared by members of Wall Street. Hedge funds like Melvin Capital took huge losses because of the rise. Melvin Capital had to close out its short position because of it. Short sellers, what the hedge fund is, are sellers who profit when a stock goes down. The fund did not report exactly how big of a loss it took on, but according to the Wall Street Journal, they did receive more than $2 billion in emergency cash in order to close out the shorted position.

On Thursday, however, things started to quickly go downhill. Robinhood, a popular stock trading app, restricted GameStop trading. Users found themselves unable to purchase GameStop stock, as well as a few other stocks that began to soar due to the same Reddit thread. This caused the app to get slammed for their actions with their Google Play rating even dropping to one star. Lawmakers and prominent figures like Rep. Alexandria Ocasio-Cortez (AOC), Sen. Ted Cruz, Donald Trump Jr. and Rep. Maxine Waters even spoke out against the app, calling it “unacceptable” and “unethical.” Robinhood eventually released a statement saying they will allow people to resume buying on Friday.

Even with Robinhood’s statement, there is still a possibility that they may have to go to court for their actions. AOC and Rep. Rashida Tlaib who are both members of the Financial Services Committee said they support a hearing on Robinhood’s “market manipulation,” if necessary. The chair of that same committee, Rep. Maxine Waters said she would hold a hearing “to examine GameStop and other impacted stocks with a focus on short selling, online trading platforms, gamification and their systemic impact on our capital markets and retail investors.”

Ultimately, nobody knows how this will end. There are predictions that it will end very badly, and predictions that it will just fade away. At the end of the day, it has given everyone a new look at stock trading and how broken Wall Street is. 

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Mikayla is a senior at FSU majoring in Political Science with a minor in Communications. She loves chai lattes, reading books, musicals, and waffles. In her free time you can find her curled up in a cozy blanket, napping, or trying to pet an animal (including the ones she shouldn't.)
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