Users of the resource Reddit organized a serious attack on hedge funds, which were playing to lower the stock price of the video game retail chain GameStop, starting to actively buy its shares. As a result, the value of GameStop securities soared more than 480% in a week, costing hedge funds millions of dollars in losses and dramatically increasing the income of young investors.
The bull market was initiated by the popular r / WallStreetBets (WSB) subreddit, which has over 2 million members. ” They’re doing it digitally in a coordinated attack, ” Howard Lindzon of Social Leverage, an initial investment fund, told BuzzFeed News.
According to Lindzon, investors who chat in Reddit chats, who are usually Millennials or Gen Z, are simply having fun, creating problems for hedge funds that have bet on the fall in the gaming retailer’s stock. “ They just play a game and have fun ,” he said.
Calls to buy GameStop (GME) shares have been posted in WSB chats for several months. Chewy founder Ryan Cohen has been promoting GameStop to investors for a long time. He owns at least 13% of GameStop and is now on the board of the company. Thanks to the growth of GameStop shares, Cohen’s block of shares has risen in price by almost 800% in two months and now he has become a dollar billionaire – his fortune is about $ 1.7 billion.
In turn, Wall Street hedge funds, including Citron Research and Melvin Capital, decided to play short. After Citron Research’s Andrew Left posted a video last week claiming GameStop’s stock price would soon drop to $ 20, his Twitter account was hacked. (He subsequently referred to the Reddit investors as “the angry mob ”).
But instead, GameStop’s share price went even higher as Reddit editors urged investors to invest as much money as possible in the company. GameStop rallied again last Monday, climbing to an all-time high of $ 159 an hour after the stock market opened. By the end of the day, the retailer’s stock was back to $ 70 per unit.