reddit v Wallstreet

the modern age of class battles

Earlier in January, the digital Colosseum saw social networking platform Reddit battle against hedge funds; a battle that has been a long time coming. For decades, the aftershock of the GFC has coloured lower and middle-class citizens’ views of Wall Street investors and their sharkish ways. Investors have long been making profit at the expense of others. Whilst they rake in millions, the lower classes struggle against job loss, debt, homelessness and countless more devastating hardships.

From 2007-2009, the United States was choked by a grim fog, destroying the lives of countless people. The stock market collapsed in on itself causing a massive recession, bringing ruin to the country. Unemployment surged, causing people to lose their homes and incomes. With it, their livelihoods vanished into thin air. Those played for fools were the lower and middle class, and the bitterness still lingers. But how did they not see the rug being pulled from under their feet? During a housing boom, mortgages were approved for people with poor credit history. Loans were being given out to people despite their inability to pay them off. This made for some shoddy returns. House prices were driven up, steering investors away from the market and causing stock prices to depress, leading to devastating financial loss. When house prices did eventually fall, many were burdened with mortgages higher than their home’s worth. The Federal Reserve’s lack of regulations on the financial sector further pressured the country. When debts grew and mortgages faulted, banks considered “too big to fail” struggled to recover, requiring bail outs. All of this was the doing of Wall Street scamming everyday people, completely despoiling them of their trust and robbing them blind. Fourteen years on and the resentment is still deep, growing evermore with the high cost of living and the never-ending debt many in the United States must contend with. It should be of no surprise that when the opportunity arose, those wronged served Wall Street their just desserts on a shiny, silver GameStopsized platter.

The hedge funds, much like those they cheated in the past, weren’t prepared for what happened with GameStop, an electronics retail company. They were betting against the gaming company, hoping to turn a profit at the business’ expense. They borrowed GameStop shares and sold them to others in the hopes they could buy them back later for less and keep the difference, a process known as shorting. But Reddit users smelt the blood in the water before the sharks could, and they decided to take action, setting forward an unprecedented chain of events.

Reddit banded together an army that wreaked havoc on the share market by driving prices up, which is exactly the opposite of what Wall Street wanted. It hoped to make GameStop’s loss its gain, but the blind side happened with such speed and ferocity that those who had hoped for GameStop’s share price to plummet called for government intervention. Yet they were left dry as political representatives turned against them. It was a battle that was fought in a completely online space. Hedge funders were oblivious to the potential social media held for spurring people against them.

Throughout history, social uprisings against injustice and wrongdoing have been frequent. From revolutions, to wars, to protests, this GameStop incident is but another rise to action. What sets it apart from earlier events is the realm in which it has been fought. The ABC reported that GameStop only had 65 million shares (as of January 21st) which were bought and sold 650 million times in a period of four days during the debacle. At its peak, on

January 28th, share prices for the gaming company were at $US483 per share, leaving many rich beyond their imaginations. Prices have since plummeted.

In the years since its conception, social media has been a formidable tool for inciting mass action. The GameStop fiasco is just the most recent event. Social media played a crucial role in the Egyptian Revolution, the Black Lives Matter movement, and the Capitol Riots among other decade-defining events. In the case of GameStop, it was used to outmanoeuvre the hedge funds in their own game. Word broke out across all social media platforms of the plan to surge GameStop’s share price. This cross-platform pollination encouraged more people to join, furthering the downfall of the hedge funds.

Social media allows instant communication on a global scale, overcoming geographical boundaries and time delays that earlier communication networks faced. On Reddit, one person alone was able to share a pattern they had noticed on the stock market and counteract it. In little time the plan had reached Twitter, Facebook and many more platforms, helping to bring in more people and raise awareness of what was going on.

However, the power of social media is causing growing concern. It presents dangers, much like the violence seen in the Capitol Riots and organised through apps like Parler. But it also proves itself a valuable tool to those who demand justice. With the high costs of living and the ever-increasing earnings of billionaires who exploit lower classes, the fight back was inevitable. Especially when it was as easy as investing a few dollars into stocks through a phone app. The internet offers ease of access to information and communication, giving power to the masses, no doubt the likes of which we will see again very soon.

With the restrictions the Robinhood app forced on Reddit investors, many called for a class action. All eyes were watching, including the US Government, who called for hearings on the incident. Robinhood was unprepared for what happened on their app. They imposed trading restrictions on GameStop stock. Yet they were forced to undo this after backlash from investors and politicians. This incident with GameStop has driven home a point: even if those who invested lost, the memory of the event still holds firm. Pushback from the exploited is inevitable and is occurring in ways

“reddit Users sMelt the Blood in the wAter Before the shArks coUld, And they decided to tAke Action, setting forwArd An Unprecedented chAin of events.”

words by lakeisha watkins