INDIANAPOLIS — Everyone throughout the country is trying to make sense of what happened between Wall Street, investors, and GameStop on Wednesday.
Experts, like Dr. Matt Will who is an economist at the University of Indianapolis, say it stems from expert analysts on Wall Street forecasting that the stock price for shares in the video game store GameStop will likely fall from $15 a share to $13 dollars a share.
“The institutional buyers, mostly the hedge funds, shorted (the price),” he said. “Well, all the people on Reddit got upset. They said ‘f*** you, we’re going to buy it’.”
Will refers to a conversation chain on Reddit in which hundreds of people were talking about the GameStop share price forecast and essentially banded together to buy up a lot of GameStop shares. This, in turn, inflated the price of GameStop stock from $15 a share to over $500 a share one point.
“But, it’s not even worth 13-dollars a share,” Will said.
He likens the Internet conversation to “cyberbullies on Reddit going after the Wall Street experts. But, the whole debacle begs the question: Did they do anything illegal?
“I think they might have,” Will said. “You and I cannot collude. We cannot get together with thousands of our friends and say ‘we’re going to push up the price of a stock.’ That’s actually against the law.”
However, Will said there is some level of interpretation between whether this was full-on collusion between thousands of people on a chat chain on social media or simply thousands of people having a conversation about trading stocks on Wall Street.
The National Security Exchange Commission has opened an investigation into the debacle. In the meantime, trading apps, such as Robinhood, are limiting the trading of GameStop stock for now.