February 1st, 2021
In recent weeks GameStop, a once-irrelevant company, became the most relevant company on Wall Street overnight. But how did such an odd phenomenon occur?
Throughout the past week GameStop, an electronics retail company, experienced an increase of 1700% in their stock price! In comparison to one year ago, where the GME stock price was a mere $4, the highest opening stock price this month was over $347!
But how did something so abnormal and insane happen in a week?
The answer is short — the power of unified online traders. Most people assume that such a tremendous surge was caused by intelligent Ivy League investors. However, it’s the complete opposite. The reason for the record-breaking stock price was by none other than American teens that communicate with each other through an online platform known as Discord.
This event represents what kind of power and influence social media holds. Millions of teens who are barely old enough to invest gathered together in an online forum known as WallStreetBets where they “hype up” stocks and tell each other to buy more. At first, many thought this was just an irregularity that would soon pass. However, the sheer volume that these teens were buying these stocks in was stupendous. Not only did these teens (who most likely live with their parents) create a bubble in the stock market but they also attracted the attention of professional day traders who ended up losing millions due to the group’s antics.
Legendary investors such as Micheal Blurry, from the movie Big Short, even said that this was a once-in-a-lifetime occurrence. Blurry was a hedge fund manager who realized during the early 21st century that the U.S. housing market was an inflated bubble. Around the world investors of all ages are making thousands of dollars off of this irregularity. A fifth-grader in San Antonio received $60 worth of Gamestop stock for his birthday which later turned into over $3,200 after the rise according to TodayNews.
When I first saw the initial price of GameStop (GME) on January 25th I was astonished. A bricks and mortars company which I, like many others, considered a prehistoric retail store was making a comeback — and quick. This company, which had been in the dark for over 5 years had surfaced and was slowly climbing to the top of the stock market. Soon, this sudden rise was being covered on all major news platforms making it an even more attractive stock for investors.
Gamestop is an American video game & consumer electronics company. Founded in Dallas, Texas in 1984, it was thriving until the early 2000s. Since then the American company has experienced a tremendous decline in its stock price, especially during 2019 when the price plunged as much as 22%.
If you thought 2020 was a crazy year, this occurrence was just another example that proved to us that we can never know what to expect.
