In the past few weeks, the use of social media interfering with the stock market has led to one of the greatest underdog stories of 2021. A war rages between a group of hedge fund managers and an unlikely rival: everyday citizens on Reddit. These Reddit users saw certain companies being run into the ground by the hedge funds and they decided to make a difference in the stock market. The war is intense and complicated— in short, these Redditors are backing failing companies like Gamestop while giving the big hedge funds a run for their money. 

This entire situation involves tricky financial topics and it’s easy to get lost in terms like “hedge funds”, “stock shorting”, or “brokers”. So to make it easier, we’ll start from the beginning and go through the series of events that led to the Reddit pushback. It started with the hedge funds and the hedge fund managers. A hedge fund is a group of people that pool the money of rich people together so that they can execute complex trading. Hedge fund managers are the firms or individuals that look over the actions of a hedge fund and monitor activity. One popular strategy that hedge funds use is called “short selling,” when a hedge fund essentially “bets” that a failing company will fall or go bankrupt. First, the hedge fund investor will borrow the company’s stock from a broker and sell the stock for its current price. They will hold onto this money for a while, waiting to buy back the stock. The investor is hoping that the price of the stock will drop so that he can buy it back at a lower price and earn a profit. This process was utilized on a large scale by hedge fund companies that hoped to profit off of Gamestop and AMC’s declining value. However, a few Reddit users on the forum “r/wallstreetbets” caught wind of what was going on and decided to buy copious amounts of stock in Gamestop and AMC to drive the stock price up. Instead of buying back the stock at a lower price, the hedge fund companies have been forced to either buy it at a higher price and lose money, or wait until the stock price drops again. In order to prevent these companies from finding an easy way out, the Reddit users are now all saying to “Hold the line” and keep prices up.  In their eyes, they are fighting against the rich hedge funds who, since last Friday, have lost about 19 billion dollars on Gamestop. Regardless of the side that you choose to take, this situation has captured the attention of almost every news outlet in the country and will go down as one of the greatest underdog stories in history. 

As this frenzy has grown more popular, it has reached the borders of many Asian countries. For example, India had a large number of investors hop on the Gamestop trend. This led to Gamestop being the most traded stock on some brokerages, making up almost a fifth of stock trade on a platform called Vested Finance. In other countries, investors have also chosen to replicate this entire movement in their country’s markets. In Malaysia and China, investors have gotten inspired by the movement in the United States and tried to replicate it in their own home countries. Unfortunately,  short selling in both these countries is far more regulated than it is in the United States, which ultimately leads to a smaller overall impact. In addition,  the small investors in Malaysia are attacking a bigger and more profitable company than Gamestop, which means big hedge funds aren’t short-selling the company’s stocks. In China, investors also risk getting arrested—watchful regulators hunt down people that look like they are trying to manipulate the market.

The people of r/wallstreetbets and other investors worldwide are using this situation to take back their power and show big corporations that they can take control of the market. Some see it as revenge for the 2008 recession since one of the leading factors for the economic downturn was hedge funds exploiting the market by overly short-selling stocks. The Reddit users seem to be succeeding in their quest for vengeance: this incident cost the hedge funds billions of dollars who subsequently called the common people “thieves”. Wealthy investors aren’t the only ones that oppose this action.  Robinhood Markets, Inc and other stockbroker companies took the side of the hedge funds and limited trade by almost completely removing Gamestop and other targeted shares from their apps. Although these companies may claim that they’re trying to protect the market, their actions are morally wrong. We’re supposed to live in a free-market country and this limitation of stocks is a clear restriction on the free market concept. Celebrities and politicians alike have expressed negative sentiments towards these corporations. Some have even called for hearings in Congress. Even political enemies like AOC and Ted Cruz have come together on this issue to stand against these restrictive stockbrokers. In situations like these, all of us need to come together and join the fight against the hedge funds and their supporters.

The uproar of this battle between the people and the hedge funds has flowed across the world in record time. The middle and lower classes of America, India, Malaysia, and China have seen that great corporate powers can be brought down a peg in the right circumstances. People are uniting, small investors are seeing a new way to make a stand, and everyone is seeing a strange power shift. This courageous underdog story brings hope all across the world and brings new hope in a troubled time.