Jack Rivlin

Memes vs Wall Street: how Reddit took on US hedge funds

What did you do this week? I spent it drenched in sweat, launching a vicious assault on Wall Street hedge funds which cost them $5 billion (£3.7 billion). And I didn’t even have to put my trousers on.

Along with thousands of other degenerates, I bought shares in GameStop, a struggling US video game store whose value has soared by 2,000 per cent in the last four weeks. Behind the surge is a wild Reddit community called WallStreetBets, where bored young men gamble on barely researched stock tips and crack tasteless jokes.

The community, whose tagline is ‘like 4chan found a Bloomberg terminal’, has a long and hilarious history of aggressive stock market bets leading to eye-watering gains and losses. In 2019, for example, a clueless 19-year-old member made $700,000 (£510,000) and then lost it all again within two weeks.

I became the only moron to buy GameStop shares and lose money

But this GameStop episode is different. Armed with stimulus cheques (direct pandemic payments from the US government), thousands of Redditors have piled into one stock. They’re even taking out loans to do it, or persuading their parents to hand them their life savings. And so far, these reckless bets have paid off, delivering six, seven and eight-figure returns.

How did this happen? GameStop is a classic pick for WallStreetBets: a nostalgic gaming brand that has fallen on hard times. And crucially, the financial elite hates it. Hedge funds have been betting against it for a few years now, and it is one of the most ‘shorted’ stocks ever.

When this fact emerged on WallStreetBets, it was a red rag to the bulls — they decided to take on the hedge funds and launch a ‘short squeeze’, where buyers drive up the stock’s price, costing the hedge funds billions of dollars and eventually driving them to give up entirely.

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