In recent years, social media has increasingly been used by young people as a stage for activism. From users taking to Twitter to get real time coverage of white supremacists storming of the Capitol to TikTok users bypassing Chinese regulations by masquerading an exposé on the Uyghur Muslim genocide as a make up video, the politicisation of these spaces by young people has never been clearer. The ‘discussion website’ Reddit, however, has traditionally rarely moved beyond meandering conversations to enact real life change.
Reddit has over 2.2 million different forums, known as subreddits, where people from all over the globe discuss a wide variety of topics. You can find a subreddit for just about anything. There are forums such as /r/Wellthatsucks/, where people share images of their daily disappointments, or really niche ones such as /r/MonksLookingAtBeer. While topics range from the mundane to the fantastical, the content of Reddit usually stays within the confines of the website. And while social justice conversations have found their way onto some subreddits, r/WallStreetBets wasn’t one of them – in fact, it was originally designed as a space to discuss tips about the stock market and call options among the four million amateur traders in its community. Anthony, a frequent member of WallStreetBets, says: “It’s essentially a forum for gambling, but it does sometimes have helpful advice. It’s not a place for activism.” But, last week, this unlikely space was co-opted by young Redditors who used the forum to beat capitalists at their own game.
To understand what happened with WallStreetBets, we first need to know how trading works. Share prices go up and down depending on demand, and to make a profit you want to buy shares at a low price and then sell them when the prices have increased to make a profit.
Short-selling is a little different: an investor will borrow a share from a third-party broker, take on the risk of selling the share when it’s high and betting that the share prices will soon go down so they can buy the share back at a lower price, return it to the broker, and make a profit. In this case, hedge fund managers wanted to short-sell the shares of GameStop, a failing American video game and merchandise retailer, to make a profit.
But WallStreetBets’ involvement put a spanner in this long-established process. Reddit, like most other social media platforms, is populated by a majority of millennial and Gen-Z users who are increasingly anti-capitalist. People are sick of billionaires and the structures within which they’re created. A natural divide is therefore deepening between younger generations and boomers who have historically profited off capitalism.
WallStreetBets kicked this generational conflict into a higher gear. Young users bought up as many shares as possible, and therefore drove up demand. This community used Reddit to come together and disrupt the status quo of Wall Street. Many actually saw it as retribution against the people and institutions they held responsible for the 2008 crash – a financial disaster whose aftershock has negatively shaped the landscape of future generations. It is also interesting to note that this happened at a time where, due to COVID-19, the chasm between rich and poor has become even more pronounced. Some Reddit users transformed into modern-day Robin Hoods, ‘stealing from the rich to give to the poor’ by donating their share earnings to charity. Their work led to GameStop’s share prices skyrocketing from $20 to nearly $350, which resulted in big losses for hedge funds like Melvin Capital Management and Citron Research. It was a redistribution of power: a win for ‘the little guy’ succeeding in challenging Wall Street head on.
There are currently no regulations against short-selling, despite the ethical grey area it resides in. It also creates a situation in which it is possible for people to lose a lot of money. However, following the drama that WallStreetBets has caused, there is now talk about more regulatory oversight of the market with the House Financial Services Panel setting a hearing on GameStop for the 18th of February.
Many hedge funds can predict market trends effectively, or at least withstand the losses if their predictions prove wrong, but it’s very risky for non-professionals to get involved. It therefore poses the question: are regulations only now being considered because the ‘little guy’ was, however fleetingly, the one with the power? For the first time, Wall Street was the one who is losing out, not just everyone else.
The media coverage surrounding this has been dubious, with some mainstream outlets advocating on behalf of Wall Street rather than the Redditors fighting against market manipulation. The Financial Times had to retract a statement stating that the Reddit users were alt-right despite no evidence of such affiliations, prompting a disgruntled response from the WallStreetBets moderators on Twitter. CNBC anchor Joe Kernan, who has previously expressed great admiration for the free market, asked the Securities and Equalities Commission (SEC) to get involved and ‘take back control’ while The New York Times said that the Reddit investors were motivated by “greed” – which is a bit rich considering the net worth of each hedge fund involved.
As of Thursday 4th February, GameStop’s stock price has fallen to $53.50, a sharp decline of 89% down from its peak of $483 last week. Many will have lost out on big gains as a result. Many brokers, including day trading app Robinhood, shut down trading at the height of this saga, drawing criticism from users who deemed their actions to be at odds with their name and purpose. Alexandria Ocasio-Cortez saw it as a way for Wall Street to protect themselves and squeeze the Redditors out, making it impossible for users to sell on their shares.
Despite these losses, WallStreetBets remains enthusiastic. The subreddit documents users’ pride in their challenge, albeit brief, to the power of Wall Street. For a short while, WallStreetBets beat Wall Street at its own game – and while the structures of traditional capitalism have since regained their control over the markets, we can’t ignore the role that young people on social media played in disrupting the game.
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