It is, on social networks, the collective enthusiasm of the beginning of the year: the rush on GameStop shares, an American company which is nevertheless experiencing serious financial difficulties.
Behind this buying frenzy, there is the Reddit forum and more particularly the millions of amateur stock marketers in its r / wallstreetbets section, who are trying to thwart a yet classic financial operation carried out by hedge funds. The hedge funds thus sold “short” GameStop shares that they had not yet, hoping, given the poor health of the company, to buy them later when they would have fallen in price.
By game, by love of the meme or the “troll”, by sympathy for the brand GameStop (specialized in the sale of video games) and probably also in the hope of making a success of a nice financial operation, the users of r / wallstreetbets then began to buy shares in the company on a massive scale, investing tens of thousands of dollars with their eyes closed simply to prevent hedge funds from buying them back at a good price. The GameStop action had already gone from $ 2 to $ 20 in nine months: over the last two weeks, it went to … $ 492 (about 405 euros).
To limit the damage, and fearing that prices would continue to panic, the hedge funds had no choice but to buy back Gamestop shares several hundred times their original price. In the case, the Melvin Capital fund has already lost $ 3.75 billion and has been forced to seek help from other investors, while brushing aside rumors that put them on the verge of bankruptcy.
Initially driven by the lure of profit and a sense of humor that belongs only to them, Reddit users have discovered, in recent weeks, another motivation: that of bringing down Melvin Capital and all. hedge funds looking to buy GameStop stocks, or even bring Wall Street to one knee.
After a first movement of panic, when r / wallstreetbets closed its doors for a few hours, and that the Discord room – an online chat tool – used by its community is restricted for moderation reasons, the switch is made when, on Thursday, RobinHood, a brokerage tool widely used by amateur stock marketers, decides to ” prevent access to GameStop actions. A temporary blockage (the possibility of buying them came back after twenty-four hours) experienced as an attempt by the markets to muzzle small carriers.
Among the 40 most popular messages posted during the past week on Reddit (one of the most popular websites in the United States, ahead of Wikipedia or Netflix), more than half concern the standoff between Wallstreetbets and Melvin Capital.
Since social networks and the media have only spoken of Wallstreetbets, its popularity has exploded: in one month, this community, which is already nine years old, has grown from 1.7 million to 6.1 million subscribers. Newcomers are drawn to the smell of blood, of money, but above all by the prospect of a great night. Revenge against the world of finance. A new generation Occupy Wall Street, except where Occupy Wall Street in 2011 was a social movement seeking to fight through speech and the streets, Wallstreetbets is a liberal protest movement, seeking to bring down finance with its own weapons – even if it means filling their pockets with them.
“Today is the hardest test of our life”
“I was about ten years old during the 2008 crisis”, begins Ssauronn, who tells how her family, after the financial crisis, had to be content with eating rice and beans for a year. How her aunt lost her home and how her friends in college had to bring home some ketchup bags to make an ersatz soup. “Melvin Capital: you represent everything I hate. “ He explains that he spent all his savings to buy GameStop shares, even having to pay his rent on credit. “It’s personal, for me and for millions of others. “
“These speculative funds pushed a lot of people to suicide in 2008: so we don’t sell anything, and we hit them where it hurts”, urges cookiedeclassified. “This day will see the birth of heroes and legends. We have the unique opportunity to hurt hedge funds, ignites Xray_Mind, in a message in the meantime removed by moderation. Many of us have seen our parents lose their homes, many have not had an education because our savings evaporated in 2008 through the fault of the same assholes. Today is the hardest test of our lives. It’s gonna be hard [de ne pas revendre nos actions] when they exceed 500, 600 or 800 [dollars]. But stay strong. ”
On Friday, some limitations remained in place on Friday but trading resumed on RobinHood, while GameStop shares were on the rise again. But the Securities Exchange Commission, the policeman of the Stock Exchange, said in a statement Friday. “Monitor and evaluate” the volatility of certain stocks.