Be the first to access new posts and exclusive content
Trend Alert introduces you to the latest trends that are impacting the daily lives of 16-24s.
In 2016, Reddit users took credit for getting Donald Trump elected as US president. How much responsibility they can really claim is debatable, but their anti-Hillary memes certainly contributed to swinging the vote. Now that Trump is out of office, they’ve turned their attention to disrupting another part of the American establishment: the financial market. This week, members of the subreddit r/wallstreetbets caused chaos as they colluded to drive up the value of GameStop, a struggling video game retailer. On Thursday, shares reached a peak value of $492.02, an unbelievable 2,400% increase on its price a month earlier.
So, why did the Reddit community want to disrupt the stock market? There are many theories as to their motives, but the general consensus is that it’s a combination of a prank, a get-rich-quick scheme, and a form of activism. They are targeting the Wall Street bankers who are widely viewed to have received insufficient punishment for causing the financial crash of 2008, which meant millions of people lost their jobs and homes. Because of this, the Redditors have the sympathies of much of the public, and even received support from leaders at both ends of the political spectrum, from Alexandra Ocasio-Cortez to Ted Cruz.
As for why the Redditors chose to invest in GameStop, again there were multiple motives. The business has been struggling due to the decline in physical retail, especially during the pandemic. Members of r/wallstreetbets have been buying stocks of well-known yet declining businesses for the past few months, including AMC and Bed Bath and Beyond – these have become known as “meme stocks” as the advice to invest in them spread virally across social media. It’s likely that GameStop was the stock that took off most dramatically because it’s a brand close to the heart of many Redditors, since there is a big gaming community on Reddit.
A key reason for buying stocks of struggling businesses is not just to try and save them, but also because many on Wall Street are “short selling” these stocks – a practice that basically means betting on their value continuing to decrease. For the Redditors, holding resentment toward these members of “the 1%,” hurting the bankers and playing them at their own game is as much an incentive as making money themselves. It’s the ultimate troll move.
Another question many are asking is: why is this happening now? It appears that a combination of factors coincided to create enough momentum for the scheme to have an impact. People are spending more time at home, looking for a distraction from the boredom of lockdown. Additionally, millions of Americans received stimulus checks over the past year, and many chose to invest the money in stocks and shares – often doing so for the first time. This coincides with the rise of investment apps that make trading accessible to a wider population than ever before, including most notably Robinhood – the app which imposed limits on GameStop trading yesterday. This caused the share price to immediately drop by half, making Robinhood the villain of the affair as users claim this action contradicts their pledge to democratise the finance industry.
The GameStop incident is confirmation of a trend we’ve been tracking for a while: an increased interest in financial investments from young people. Not only have we seen the growth of apps like Robinhood, and the introduction of investment tools within Revolut and Cash App, but sharing stock tips and encouraging investment in cryptocurrency is a growing trend on Instagram and TikTok. While it’s great to see Gen Z take an interest in their financial future, it’s also concerning that these inexperienced investors could easily be misled into making bad choices with their money. Providing trustworthy advice and information is a valuable contribution that publishers, brands and content creators with a Gen Z audience can make.
Want more stories like this? Subscribe to our newsletter for weekly updates on the latest youth trends direct to your email inbox.