Moon of Alabama
Early this week a few amateur stock trading nerds decided to promote a stock that was heavily shorted by certain hedge funds. The idea was to raise the stock price of Game Stop Corp., a vendor for computer games, by having lots of small stock traders to buy into it. The hedge fund that shorted the stock, and thereby bet on a dropping stock price, would then make huge losses while the many small buyers would potentially profit.
These people, who had joined up in the sub-reddit /r/WallStreetBets, were not driven by greed but by rage against the financial machine:
Instead of greed, this latest bout of speculation, and especially the extraordinary excitement at GameStop, has a different emotional driver: anger. The people investing today are driven by righteous anger, about generational injustice, about what they see as the corruption and unfairness of the way banks were bailed out in 2008 without having to pay legal penalties later, and about lacerating poverty and inequality. This makes it unlike any of the speculative rallies and crashes that have preceded it.
The movement was successful. The stock price of Game Stop Corp. rose from some $10 to over $400 within just a few days. The short seller had to take cover under a larger firm:
Hedge fund Melvin Capital closed out its short position in GameStop on Tuesday after taking huge losses as a target of the army of retail investors. Citadel and Point72 have infused close to $3 billion into Gabe Plotkin’s hedge fund to shore up its finances.
Then the system hit back.
Discord, the company which hosted the server for the sub-reddit /r/WallStreetBets suddenly found that there was ‘hate-speech’ in the threads. It unplugged the server.
Continued as link below: