Reddit co-founder calls GameStop frenzy a ‘bottom-up revolution,’ shifting power to small investors
Reddit co-founder Alexis Ohanian said Thursday that the GameStop stock-trading frenzy, originating in large part on the online platform he helped create, is a turning point in the U.S. investing landscape.
“I do think this is a seminal moment. I don’t think we go back to a world before this because these communities, they’re a byproduct of the connected internet,” Ohanian said in a “Squawk Box” interview. “Whether it’s one platform or another, this is the new normal.”
Ohanian, who resigned from Reddit’s board in June and urged for a Black director to replace him, said the GameStop short-squeeze that was instigated in recent weeks — pushing the video-game retailer’s stock up nearly 2,000% this month alone — shows the disruptive nature of the internet.
“We’ve watch the internet now, over the last 10 [years], 15 years thanks to the rise of social media and all this infrastructure, bring a bottom-up revolution to so many industries,” said Ohanian, who co-founded Reddit in 2005 alongside current CEO Steve Huffman. “We’ve seen this across media, we’ve seen this across so many sectors, and now it’s happening to finance.”
The massive rally in GameStop shares has put financial pressure on the hedge funds who had shorted the stock. It’s an investment strategy in which people or institutions sell borrowed shares in hopes of buying them back lower in the future. They return the borrowed number of shares and pocket the price difference.
Some high-profile short sellers have indicated they had retreated from their positions in recent days.
Ohanian said he believes there’s another layer to the short squeeze beyond just making money for users of online forums such as Reddit’s WallStreetBets. “Just looking at the comments around the internet, it’s something that’s very personal for a lot of people and a chance for Joe and Jane America, the sort of retail buyers of stock, to flex back and push back on these hedge funds,” he said.
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