Wall Street Bets Storms The Financial Bastille

By Michele Schneider and Forrest Crist-Ruiz of MarketGauge

Sunday, January 31, 2021 7:00 AM EST

Out of the corner of my eye a message pops up on my screen saying “Hold the line! Selling here means Wall Street wins!”

This is one of thousands of posts found on big social media platforms, which spurred from a reddit page known as Wall Street Bets (WSB), which is an online forum that has grown in popularity for their involvement in GameStop’s (GME) huge price movement.

In just the past 3 weeks GME has risen from $19 to all-time highs of over $500 in afterhours trading.

Although the price now sits in the middle ground at about $300, the huge price increase left a path of destruction for anyone who had shorted GME.

Shorting shares takes the complete opposite position of buying a stock. When one shorts a stock, the profit is made off of the decline in price.

The recent debacle involves Melvin Capital a large hedge fund.

They had a big, short position in GME so when the Reddit crew began to buy, they were forced to cover much higher thereby losing 30% of their capital.

The hedge fund was recently bailed out from the losses by Citadel Securities.

That created an uproar with retail investors and WSB who feel that while large institutional investors get bailout money, they continually get overlooked by regulators.

Even worse, these regulators threaten to take away the ability to trade in a free market.

Furthermore, WSB members have stated the media has labeled them as the enemy since they were the direct cause of Melvin Capital’s loss.

“Old Wall Street & paid commentators whined all day about GameStop and dissed retail investors. The same folks that dissed and missed Tesla (TSLA),” said Charles Payne, host of a popular Fox Business show.

Then on Thursday RobinHood, the popular brokerage platform, began restricting buying of GME and other popular stocks.

The major source of angst by retail traders right now, is that they are tired of the corruption on Wall Street propagated by large institutions and corporations.