The interest in GameStop’s irregular stock activity has thrust the Reddit group seemingly driving the surge into the spotlight. Popularly described as “4chan with a Bloomberg Terminal,” r/WallStreetBets is a wild west of stock investing “advice” and memes. And the pearl-clutching establishment has certainly painted this group as a rogue troll army messing with the established practices of Wall Street.
What Is Going on with GameStop Stock?
GameStop stock (traded as $GME) is on the up-and-up. Prices for a single piece of stock peaked today at around $145. Compare that to a year ago, when prices for the biggest video game brick-and-mortar retailer hovered around $15 but went as low as $3 a share.
But instead of going down, prices are going up, and this is bad for short sellers who have to buy back the stock they borrowed. Redditors on r/WallStreetBets saw the short early and moved in to buy GameStop stock early and cheap, creating a short squeeze.
Who Is Squeezing Wall Street?
In speaking with traders on r/WallStreetBets, it’s evident that these traders are not wolves of Wall Street, but hobbyists who trade on the side and have either a clear-eyed or irreverent view of the stock market.
GameStop, a Meme?
One reason why the GameStop stock situation is so absurd is that for the past three years, GameStop has been struggling as a business. A brick-and-mortar video game retailer, GameStop has not been able to compete with digital retailers like Amazon as well as the growing trend of customers buying primarily digital versions of games through portals like Steam, PSN, or Xbox Live.
What Happens Next?
One side-effect of the GameStop Stock squeeze is the increased scrutiny on r/WallStreetBets. Mainstream and finance-focused publications are covering the subreddit in recent days — and not in a way the community finds helpful.
This content was originally published here.