Redditors : The New Wolf of Wall Street

  A very interesting and indeed surprising series of episodes are being observed in the "streets" of Wall Street. Redditors have wedged the million dollar "stock war" against the big cats of stock market. The way in which this chapter has unfolded, it has sent shock waves across the Wall Street. 

Game stop, a company that sell physical copies of video games, is now the most highly traded asset in United States and a "meme stock" for netzians and gen z. 

Essentialy, many non professionals have invested against giant financial investors and institutions and currently winning. In current times it seems to be the biggest money transaction from ruling financial giants to middle and upper middle class. 

But how do they made this possible? This has happened due to wrong anticipation and evaluation about the value of stocks of Game stop by prominent hedge funds in long run. On the other hand a group of redditors in wallsteet Bets subreddit analyzed Game stop stock and concluded that it is undervalued. Then they, over the course of months, identified the discrepancies in the strategy of giant hedge funds who have predicted that Game stop would fail. 

Now these Redditors purchased huge number of Game stop stock at low prices, held it, and currently forcing something that is known as "short squeeze" that is driving the stock price up and emptying the bank account of huge hedge funds in the process. This short squeeze of stock owes mostly to the "shorting " strategy adopted by giant financer of Wall Street. 

What does "shorting" exactly means? Shorting is the bet that a company's stock will become less valuable. This is done when investers sells sharesof a stock that they borrowed, but do not own.

They will then able to buy the stock back at the lower price to cover their shorts and closing the deal and pocketing the difference between the price at which they sold at and brought at as profit. Because of betting by short sellers against a company the stock price of struggling company goes down as giant hedge funds have invested millions of dollars shorting it. This is what mostly happens but in this particular case a company called Melvin capital management shorted millions of dollars in Game stop stock.This company and many other companies at Wall Street  made risky bet that stock would go down ,allowing them to gain fortune,as they usually do. BUT NOT THIS TIME. 

As their is no limit on to how much a short seller can loose in this unprecedented sinerio, it is evident that short sellers have been playing fabulously expansive game of chicken.

Reddiators on wallsteet Bets are holding the stock which are subsequently rising, short sellers are waiting for price crash to cover their positions which has never arrived. 

What is wallsteet Bets and who are they?              Wallsteet Bets is a subreddit, full of day traders who invest their money into a single stock, to hopefully make a fortune in short period of time by taking advantage of temporary price movement. "Buy Game stop, hold it, and f**k over the big hedge funds" became the slogan of wallsteet Bets subreddit. Melvin capital and citron research was on the target and they beare huge lose in the process. This rivalry became instant hit among netzians and soon turned into meme. Elon musk also jabbed at it ,who famously hate Telsla's short sellers, tweeted about Game stop stock and said that he is hanging out in wallsteet Bets Discord. 

This whole happening is signaling towards somewhat democratization of financial information. Now it is something which is not solely possessed by huge hedge funds managers,  financial institutions,and the very rich, but by masses also. It is also pointing at increasing financial inequality, and someone who is fed up with this chasm is explaining how it all works down there to huge groups of people.

This is certainly not the death of financial class and big hedge funds but a needed setback for better operation of financial system in long run. People who have invested in Gamestop, making thousand of dollars at the expense of Wall Street fat cats is a good prize. 


                                       ~Rajnish Ranjan 


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