A group of individual investors on Reddit’s r/WallStreetBets forum orchestrated a short squeeze on GameStop’s stock, causing its price to skyrocket and leaving several hedge funds in a precarious position.
The saga began when GameStop, a struggling video game retailer, became a “cult stock” among a subset of Reddit users. These users collectively bought and held shares of the stock, aiming to force institutional investors who were shorting GameStop to buy it back at a higher price or incur losses. This strategy, known as a short squeeze, resulted in GameStop’s share price soaring from $17.25 to a high of $347.51 in January 2021.
The individual investors’ primary goal was to profit financially from this effort, but there was also a vocal desire to undermine the financial establishment and exploit the vulnerabilities of the industry. This sentiment echoed the decentralized Occupy Wall St. protest movement that followed the Financial Crisis of 2007-08 in the United States.
The campaign gained momentum on Reddit and spread to other platforms such as Discord and Instagram for more closed discussions between individual investors. Influential posts on the subreddit, reinforced by the site’s upvote feature, played a crucial role in driving the campaign.
The GameStop short squeeze is a prime example of coordinated financial market manipulation by individual investors through an online platform. It challenged institutional investors and regulators, and the response from public figures and institutional investors was mixed.
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