Robinhood App Under Fire as Wall Street Reels from GameStop Reddit Revolution

In the past 24 hours, headlines across the internet and forums have exploded with news about GameStop and Wall Street.

Gamestop Robinhood

In the past 24 hours, headlines across the internet and forums have exploded with news about GameStop and Wall Street. In what has become the defining, “working man sticking it to the rich,” moment of 2021, a group of Reddit amateur investors have sparked what turned into a conflagration on the stock market, upending norms and forcing the value of failing company GameStop to more than triple in a week’s time. The effort has been a response to a practice on Wall Street known as short stock trading, one long considered unethical if legal.

What Happened to GameStop’s Stocks?

Throughout 2020, game store company GameStop was having a pretty bad year by any metric. With people staying home due to COVID-19, people were less likely to walk into their stores to purchase the gaming products and software they were seeking. Due to the rise of convenience technology that allows people to download games from the safety of their own home, brick and mortar stores like GameStop were hurting pretty badly as the pandemic wore on.

Slate writes, “In August, the well-known investor Ryan Cohen—founder of online pet food giant Chewy—took a 13 percent stake in GameStop. In November, he wrote a harshly worded letter to the company’s board, lambasting it for not keeping up with ‘the transition from physical hardware to digital streaming,’ among other errors. He took specific aim at GameStop’s CEO and blamed the company for squandering billions of dollars and ‘a massive amount of market share.’

The letter generated a lot of press. By January, GameStop appointed Cohen and two associates from his investment company to serve on a newly expanded board. Cohen’s arrival turned GameStop into a ‘cult stock,’ one financial analyst explained to Bloomberg News, where retail investors believed he’d be a corporate savior. Two days after the announcement that Cohen had joined the board, GameStop’s stock surged more than 50 percent, going from $20.42 to $31.40 after reaching as high as $38.65. That’s when the company’s story went from typical to bizarre.”



As GameStop’s collapse seemed imminent, so-called hedge fund investors began the process of short stock purchasing. Per Investopedia,Short selling is a fairly simple concept—an investor borrows a stock, sells the stock, and then buys the stock back to return it to the lender.

Short sellers are betting that the stock they sell will drop in price. If the stock does drop after selling, the short seller buys it back at a lower price and returns it to the lender. The difference between the sell price and the buy price is the profit.”

But a shrewd group of amateur investors on Reddit’s r/WallStreetBets picked up on the short stock purchasing happening in GameStop’s (GME) portfolio and began buying stocks when the prices were low. This short-circuited the typical process and hedge fund investors who had put millions on the line suddenly found themselves bereft of their expected profit.

In what quickly became a millenial revolution of the power of the average investor against billionaire Wall Street, soon the value of the ailing business soared and stock prices surged.

Slate shares some of the comments from the r/WallStreetBets thread that rocketed the GME revolution into existence; “‘When these boomers made their bet, GME wasn’t a big thing on WSB yet,’ one poster wrote. ‘I don’t feel bad at all taking money from these rich greedy hedge fund managers.’

‘They’re not even playing with their own money,’ another wrote.

‘I’m an old millennial. I’m tired of getting screwed by the globalist elites,” said another. “This isn’t left or right republican or Democrat. It’s the 1% versus everyone else.’”

Reaction On Wall Street

As soon as it became obvious what was happening and that market norms were being turned on their head, Wall Street began to panic. Periphery stocks wobbled in uncertainty under the meteoric rise of GME. Other stocks for companies in similar situations like Bed Bath & Beyond (BBBY), Nokia (NOK), and AMC – among others- were also bought up in a similar manner by the army of so-called democratic “retail investors.”

Major Wall Street investors reacted in disgust – after all, how can these amateur investors devalue their portfolio on a whim? The power of people in large numbers seems to be a concept beyond many of them. The idea was to expose market value as the fictional veneer it is, and the Redditors have succeeded in doing exactly that.

Hedge fund billionare Leon Cooperman lashed out at the everyman revolutionaries, and Vanity Fair shares his CNBC rant; “‘The reason the market is doing what it’s doing is people are sitting at home getting their checks from the government, okay, and this fair share is a bullshit concept,’ Cooperman shouted on the business network earlier today. ‘It’s just a way of attacking wealthy people. It’s inappropriate and we all gotta work together and pull together.’”

While Cooperman isn’t directly affected by the GME surge, it’s clear that hedge fund investors everywhere are nervous and that became obvious as stock trading platforms like Robinhood, which claims to be a democratic option for those looking for a working man’s approach to Wall Street, closed off purchasing for stocks like GameStop and AMC. This is being seen as an attempt to appease their hedge fund pals, as billionaire investor and Robinhood CEO Vladimir Tenev likely has a stake in maintaining the status quo.

In an email sent after the markets closed Thursday, Robinhood did promise to re-open trading on those so deemed, “volatile stocks,” in a limited capacity on Friday. What exactly that means remains to be seen.

Class action lawsuits have been filed against Robinhood and others, and even in Washington it’s clear that the game as Wall Street knows it is grinding to a halt.

Per the Chicago Tribune, “Rep. Alexandria Ocasio-Cortez, D-N,Y., called Robinhood’s actions ‘unacceptable,’ noting that as a member of the House Financial Services Committee, she’d support a hearing, if necessary, to explore why the online brokerage is blocking small investors from buying stocks while hedge funds ‘are freely able to trade the stock as they see fit.’

Democratic Rep. Ro Khanna, whose California district sits in Big Tech’s Silicon Valley, said the GameStop episode ‘has demonstrated the power of technology to democratize access to American financial institutions, ultimately giving far more people a say in our economic structures.’

In a statement Thursday, Khana called for ‘more regulation and equality in the markets,’ and accused Wall Street of spending billions to ‘crush’ GameStop and ‘put workers out of business’ instead of investing in future technology.”

Even Republican Senator Ted Cruz signaled agreement with Ocasio-Cortez and others, although AOC quickly turned on Cruz with a blistering retort, “I am happy to work with Republicans on this issue where there’s common ground, but you almost had me murdered 3 weeks ago so you can sit this one out.

Happy to work w/ almost any other GOP that aren’t trying to get me killed.

In the meantime if you want to help, you can resign.”

What Does the Future Look Like for GME and Wall Street?


Hedge fund investors are ranting everywhere across the internet, promising that the artificial inflation bubble will burst, stock value will fall back to expected rates, and things will return to normal. But the Reddit revolutionaries and internet warriors who drove the stock surge have a different goal in mind besides making money – they’re hoping to teach Wall Street who’s really in charge of the economy.

“Look at the VW short squeeze of 2008. It peaked around 430, crashed to its baseline, then rocketed to $1,000/share. This is what a short squeeze looks like. Everyone needs to take a deep breath, hold and keep buying up the float. The squeeze has not been squoze. If we hold, we win. Apes together strong,” said long-time WSB member and millionaire entrepreneurEthan Chumley.

Chumley went on to explain the situation in a nutshell and why trading platforms have cut their users off from purchasing power on those rising stocks; “Imagine if you went to a casino, saw an idiot making a huge stupid bet, and so you bet against him. Then the casino was like, ‘you can place your bet, but if the billionaire who owns part of this casino starts losing, we’re going to cancel all of your bets and let him take his money off the table before he loses too much to your bets.’

That’s literally what’s happening. They are changing the rules of the game during the middle of it because the wrong people started winning.”


So is the bubble going to burst or can the amateur investors stick it to Wall Street? It looks as though the little guys are already winning. With hedge fund investors openly panicking and GME purchasers holding strong, it’s becoming a waiting game. Wall Street is now aware that people in large numbers have the power to change the game at any time, and they can’t be sure where it’ll hit them next. Short stock buying has suddenly become even riskier and they must be wary lest the horde of anti-billionaire investors turn their eyes in a new direction.

In the wake of movements like Occupy Wall Street and other millenial and gen X efforts to reclaim economic power for the people, it’s become clear that the norms have always been a facade. Now both sides of the table are holding and hoping the other side blinks first. However, one side has a lot more people to tag team.