On the Internet, stock marketers who stir up Wall Street



Wall Street had never seen such a commando operation. Since mid-January, a group of stock market Internet users have been buying the shares of the video game seller GameStop en masse to increase the price. Their goal: to make investment funds and other professionals lose money. trading “ who bet on the collapse of the titles of this Texas chain of stores weighed down by the health crisis. In a few days, the value of the GameStop share rose by 1,700% and the market capitalization of the brand, still moribund a few weeks ago, reached 10 billion dollars on Wednesday, January 27.

52 million users

This slingshot that fascinates the United States was born on Reddit, an online platform founded in 2005 by college friends. Great aggregator of content which proclaims itself ” Internet home page », It brings together a multitude of thematic forums, ranging from sports to politics, including images of kittens and television series. In total, the site has more than 100,000 “communities”, where some 52 million users are active every day, according to statistics from the California-based company.

The rebel scholars coordinated on the forum “Wall Street Bets” (“Wall Street Bets”), which now has more than 3 million members. Reddit guarantees the anonymity of its users, their identity is not known. But, according to the American media, it is for many small amateur investors who tell, in the crude language characteristic of Reddit, their adventures on the stock market. Coming from the generation of “ millennials ”(Born between 1981 and 1996), which suffered greatly from the 2008“ subprime ”crisis, they criticize the financial system, accused of privileging large institutions over“ small ”like them. ” When you feel like a rebel who attacks the system, you feel a special motivation. It is central to explain the current dynamic According to Richard Smith, director of the Foundation for the study of cycles, specializing in the study of financial cycles.

Support in the political sphere

The episode, described as a “virtual Occupy Wall Street” in reference to the protest movement against finance and inequalities born in 2011, shows the impact that a group of Internet users can have on the markets. ” Platforms like Reddit, which circulate information that escapes financial institutions, deprive these institutions of part of their control Richard Smith continues.

Supported by business executives as well as progressive political figures such as the Democrat-Socialist Alexandria Ocasio-Cortez, the approach of Reddit stock marketers has already pushed two investment funds to inject nearly $ 3 billion into Melvin Capital, one of the hedge funds that had bet on the drop in GameStop prices. For their part, some “Redditors” (the name given to users of the platform) celebrated their ” stroke “. One user said he paid off his $ 23,500 in student loans from the sale of his securities.

Finance shaken up by the Internet

The legality of their actions, especially the calls posted on Reddit to buy stock and not immediately resell it, remains a matter of debate. Indeed, the law prohibits any dissemination of false or misleading information that could lead to manipulation of investors. Far from being discouraged, these amateur financiers have also set their sights on other struggling companies, such as the AMC cinema chain. ” Over the past 15 years, the Internet has transformed many economic sectors from the bottom up, Alexis Ohanian, one of the founders of Reddit, told CNBC on Thursday, January 28. It’s finance’s turn!

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