Reddit, Wall Street, and the Stock Market: What Happened?

Image by Scott Beale
reddit aliens

Many Reddit users, nearing the end of January, invested in and bought stock towards the company Gamestop, greatly affecting the stock market.

According to Scholastic writer Jordan Goodman, “Stocks… are certificates that are sold to raise money for starting a new company or for expanding an existing company. Stocks and bonds are also called securities, and people who buy them are called investors.” Stocks are crucial in increasing a company’s worth.

The stock market, then, is a place where people can buy and sell stocks (or portions of a company). A company with more stocks, is a company that will make larger profits; this is what makes the stock market so important in the “business world.”

Gamestop, a company that sells video games in-store, was quite stagnant in regards to their stocks in the beginning of January.

Graph showing Gamestop’s stocks over a 1 month period (Retrieved from Google Finance)

So, many top-investors were surprised when the company’s stocks increased substantially.

According to Google Finance, the company’s stocks grew from 19.94 USD (on Jan. 11 2021) to 347.51 USD (on Jan. 27 2021).

The cause of this rise? Reddit users.

The popular social media site, Reddit, is a place where people with common interests can come together and interact. These interests are categorized into groups called subreddits. r/WallStreetbets, a subreddit from the social media site, played an important role in the rise of stocks.

The group rallied together to influence the stocks of Gamestop, hoping to affect top-investors who “bet against” Gamestop’s stocks.

One anonymous student at Mt. SAC ECA was subscribed to the subreddit r/WallStreetbets.

They “didn’t think much of [the group’s messages] at first because it was normal to post screenshots of stocks.” This student continued to say, “It surprised me that [the stocks and stock market] could be influenced by a group of people in a short period of time because the people that did it were risking their money.”

Not only was this increase in Gamestop’s stocks out of the blue, but it was a huge “risk” on the part of the Reddit users due to financial reasons.

“Reddit Alien Wordmap” (rich8n)

Daniel Barajas, a freshman at MECA, has seen the meme everywhere on the internet

”The first time I heard of the GameStop stock was in a meme.”

Even though many thought this subreddit to supply people with memes and jokes, the reality of the situations truly reveals a lot about the power of a group.

”To me this shows me that numbers of people still hold power over decisions and can do big things when in packs. Show how people rule over the government, not the other way around,” stated Daniel.

This economic event was publicized greatly, even making an appearance at the most recent SuperBowl. Reddit bought 5 seconds worth of an ad to play during the Superbowl. It did a subtle nod to r/wallstreetbets and the Gametop stock scenario.

“One thing we learned from our communities last week is that underdogs can accomplish just about anything when they come together around a common idea,” the ad read.

Even Elon Musk, the CEO of SpaceX and influential personality, tweeted two words to Twitter about the whole GameStop stock situation and it reads, “Game stonk!!” and then a link to r/wallstreetbets. (Stonk is slang usually used on the internet to refer to stocks.)

This whole GameStop event has shown us that if people rise together on a common interest upon which they agree, they can do really big and amazing things.