Money is complex. Stocks even more so.
A few stocks have shot up in value after traders gathered on Reddit.com after noticing hudge funds like Melvin Capital Management were betting against companies like GameStop, AMC, and Blackberry.
Traders took to the free-trading app Robinhood bought those same stocks to drive up the prices.
Melvin was trying to short those same stocks.
Shorting a stock is the process of one firm borrowing shares of a company's stock from someone else and selling them at the current price. They then attempt to buy the same stock back once the price drops. After that, they return the shares to the original owner. The firm that borrows the stock keeps all the profits.
This one way big Wall Street firms can manipulate stock prices. Tesla Founder Elon Musk put it this way.
In this case, Melvin had to buy back GameStop stock at a higher price losing tons of money. They lost so much money two other hedge funds, Citadel and Point72 Asset Management, bailed them out.
Wall Street is a twisted spider web.
Citadel turned in a record $6.7 billion profit in 2020 during the pandemic. Point72's profits were up 16%. All while millions of people have been laid off during COVID lockdowns.
We the People took on power and power is now fighting back. Robinhood, the trading app, has already restricted trades on these stocks. Robinhood works like Facebook. It's an app that allows anyone to buy and sell stocks for free. In exchange, Robinhood sells data like users trades to big hedge funds like Citadel. Citadel buys this data to make even more money because they can see what 'regular, every day' investors are doing.
Congress is going to step in to investigate. As usual, Congress will protect the current power structure just like they bailed out the same people that ruined the U.S. economy in 2008.