With a reported 1,700% increase in the GameStop stock(GME) since the start of the year as a result of the Reddit community r/wallstreetbets’s GameStop rally, hedge funds who have been shorting the stock have lost approximately $19 billion according to financial data service Ortex. GameStop is an American video game retailer founded in 1984 which had a market valuation of $1.2 billion at the beginning of 2021. r/wallstreetbets is a subreddit from Reddit where people are able to discuss the topic of stocks. The community of the r/wallstreetbets which as of now (January 31, 2021) has 6.7 million followers rallied long on GME in order to short squeeze hedge funds such as Citron Research and Melvin Capital. Retail investor is also known as an individual investor, which is a non-professional investor who buys and sells securities or funds that contain a basket of securities such as mutual funds and exchange traded funds (ETFs) according to the definition from Investopedia. These retail investors bought the GameStop stocks and it caused such a rally that the price soared 1,700% in less than a month into 2021. These retail investors originally invested in GME in order to fight back against the hedge funds and institutions which shorted the GME. In turn of an event, retail investors from across the nation and the world jumped in to the opportunity and bought up the majority of the available stocks in GME and short squeezed the hedge funds and resulted in a massive loss of $19 billion for the hedge funds. Short squeeze is when the stock rises in price causing the traders who were betting on that the stock would fall in price to purchase the stock to mitigate their losses. This purchasing of stocks results in the rise in the stock prices which causes further losses on the part of the short sellers. Now at the time of writing this (January 31, 2021), GME sits at $325 a share after 67.87% increase from the closing price the day before the market closed on January 29th before the weekend when the market closed. Major online brokerage firm Robinhood has been under scrutiny by the general public for their actions in limiting the available purchase of GME on their app. This action caused a massive uproar against the Robinhood and pundits are attacking the brokerage firm of market manipulation and illegal actions. Hedge Funds are working to mitigate their losses by shorting the GME while retail investors on r/wallstreetbets are messaging one another to “HODL” the stock which is another term used to describe holding the stock rather than selling them. Just like the GameStop stock, other stocks such as the AMC Entertainment Holdings Inc(AMC), Nokia Oyj(NOK), and BlackBerry Ltd(BB) also had a surge as a result of this r/wallstreetbets stock rally. A cryptocurrency called Dogecoin which started out as a joke back in 2013 also had a surge of more than 1000% as a result of the r/wallstreetbets community since the beginning of 2021. However, these actions of increasing the stock prices are being called pump and dump schemes by many investors and pundits, and the posts on r/wallstreetbets are currently being investigated by the Securities and Exchange Commission(SEC).
The Liberal Conservative 