I wrote about how the GameStop stock boom a few days ago and you can read that here. Disclaimer: this is not financial advice, I bought AMC stock and sold it for a small profit.
As of this week it appears that the reddit stock boom is over. As I am writing this GameStop is currently at about $71. It’s down about 82% this week and it continues to drop even further. In case you haven’t heard the Reddit stock boom is referring to the Reddit forum r/wallstreetbets, which was responsible for the boom of several stocks including GamesStop and AMC. If you go onto r/wallstreetbets you will see some very frightening things. First off you will see people who clearly have no investment experience talking about how they bought hundreds of shares of GameStop at $300 a share. This is the problem with the Reddit boom, you have people who have never invested before now investing. Which on paper is a great thing, but the issue arises when they do not make smart investment decisions and then they lose all their money. GameStop is not a valuable company and in no world is it worth $100 a share, let alone $400 a share like some people seem to believe. The amount of people saying that they took out loans or invested their life savings in GameStop is incredibly sad because now most of their money is gone.
Wallstreetbets has seen an incredible rise in membership this past week with them getting a little over 5 million new members. With millions of new people joining many of them have turned into sheep and blindly invested their money into GameStop. People saw others making money through GameStop and they got FOMO. They invested their money at a crazy value that wasn’t sustainable and now they are shit out of luck as the price continues to drop. While I do believe Robinhood and the other brokerages are partly to blame for this, it is still irresponsible investing.
The weird thing is that the Reddit boom has somehow turned into a “fuck Wall Street” movement. People have been buying and holding this stock as a way to get back at the “man.” The thing is that this really isn’t a movement. There are people who made a lot of money off of this and they took their money and got out. A lot of people that post onto that forum are trying to stick it to Wall Street, but they fail to realize that the people who work at Wall Street generally are not fucking idiots. While r/wallstreetbets definitely did initially fuck over several hedge funds, that is over. The Hedge Funds have covered their positions to try and minimize their losses. What these people fail to realize is by buying more GameStop you aren’t actually hurting the hedge funds, you are only hurting yourself. Losing all your money isn’t cool nor does it make you morally superior.
If you are reading this and you invested in GameStop and the other Reddit stocks I wish you nothing but the best. I don’t want anyone to lose money ever. However, This point in history should serve as an example of how not to act. Don’t be a sheep, don’t be a follower. Investing your money is serious business, you can get rich or you can become poor. Wall Street is not a casino, despite what some people want to believe. Take care of your money, stay safe.