GameStop is a dying American video game company known for their gaming and electronic products. Over the course of the past few years, they have been struggling within the economy. And yet, in one single day, it practically rose to the top. But how did this even occur in the first place?
It all began when the users of a subreddit group called WallStreet Bets decided to take on the Wall Street rich kids by reviving a decaying video game company, raising the price of the company GameStop to a whopping $483 when it was significantly less before with the value of $17. That’s approximately a 1,500 percent increase.
However, a couple weeks after this unforgettable event in the stock market, the value of GameStop has diminished to a price of $51.20. It won’t be shocking if GameStop returns to its initial value of $17.
How did the value of GameStop drop to a mediocre $55 compared to the mighty value of $483? While RobinHood, an American financial services company, did aid in the stock’s gains, they also contributed to decreasing the value of GameStop by restricting GameStop trades and restricting users from buying specific stocks. Not only did they prevent users from buying stocks of GameStop they also prohibited users buying stocks from companies like Nokia and AMC. It’s notable to mention Nokia and AMC as there was a positive trend in the purchases of stocks from both companies.
In the end, why did Robinhood even establish these restrictions? The company stated that they had to keep a certain amount of money on hand for the ability to operate all of these trades that were going on. To put it simply, Robinhood did not have enough money for these regulatory requirements.
Due to the restrictions that the company Robinhood enforced on its users, the users were upset, especially those from the subreddit group. The subreddit twitter account @wsbmod states, “Individual investors are being stripped of their ability to trade on @RobinhoodApp. Meanwhile hedge funds and institutional investors can continue to trade as normal.” The subreddit group tweeted about the well-known unfairness between the rich and the poor.
Somehow, throughout all the controversy surrounding GameStop and the Stock Market, this is a significant event in the Stock Market community as it got more people involved in stocks in desperation to get more money. This helped portray how societal norms are seemingly changing as time goes on, showing how the ever-growing influence of social media can play in your benefit.