GameStop shares surged again Friday morning after trading app Robinhood eased up restrictions intended to slow the rush of investors driving up the price.
Members of the online community WallStreetBets on Reddit created a frenzy for stocks that hedge funds and traditional Wall Street investors had decided to short, or bet against, and were wildly successful. One analytics firm estimates those hedge funds lost $70 billion as a result of this run on GameStop and other heavily shorted stocks.
Finance commentators and the media struggle to understand online communities like WallStreetBets, says Ben Brock Johnson, who covers technology for Here & Now and hosts the "Endless Thread" podcast. The subreddit includes memes and jokes about Wall Street, but also real stories from people playing the stock market and younger folks learning about investing.
“Any community organized around a general topic that has millions of subscribed user accounts is incredibly hard to describe simply and broadly,” he says. “Reddit is an anonymous platform, but this community that jumped from 3 [million] to nearly 6 million subscribers in the last few days appears to have jokers and teenagers on it, people who work in the finance and stock trading industry, and also real people who are participating in this kind of stock inflation effort to make money or make jokes or make a statement about the inequalities of our capitalist system or all three at once.”
Some people are buying short stocks as a form of activism against Wall Street hedge funds — a David and Goliath story. Some users are investing thousands of dollars, while others are buying one or two stocks, he says.
“Endless Thread” spoke to one Redditor whose post about buying GameStop stock went viral. Jake, known as Hungry_Freaks_Daddy on Reddit, is a mid-30s man who works two jobs and grew up poor, Brock Johnson says.
Jake wrote a manifesto-like post explaining why he used his limited funds to buy one share of GameStop at the beginning of the week. His post, which was removed from the subreddit, read:
“I'm not here to get rich overnight. I don't have enough to invest to make that happen. I'm here to say f--- you and to be a part of this moment, this movement. I will never sell. Never. I don't care about the money at this point. If I never see it again it makes no difference to me. I have to go right back to work tomorrow and the next day and next week. And next month and next year.
“There isn't a single thing you can say or do to change my position. I risk my money happily. I am not the least bit scared or worried. You might be a financial expert, I am a survival master. Power to the people. I will not sell.”
Online communities become impactful when people join together to rally against a cause, which also happens in online QAnon and white supremacist groups, he says. Now, one group of people is challenging how Wall Street does business.
“Motivations are variable. Profiles of users are variable. And results are variable,” he says. “But the unique force-multiplying ability of the internet in how communities rally around things to be against, I think that is not variable and it's going to happen again.”
This segment aired on January 29, 2021.