How Apps are Influencing Reddit’s War with Wall Street


While 2020 was undoubtedly a strange year for the stock market, with industries swinging unprecedentedly up and down due to the COVID-19 pandemic, January 2021 might go down in history as one of the most notable stock moments of the decade.

In mid to late January, private investors on the Reddit forum r/wallstreetbets began encouraging other members to invest in GameStop, one of the most shorted (a term that refers to when investors essentially bet that a stock will go down) stocks on the market. Redditors, with support from various celebrities, including Elon Musk, have driven the cost of GME shares up from $17.25 at the beginning of January to an all-time high of $483 on January 28th. Short sellers have lost, thus far, around $5 billion on GameStop alone, and r/wallstreetbets and their followers aren’t stopping there. They have been buying shares of AMC Entertainment, Bed Bath & Beyond, and others in the same way, consistently targeting massively shorted stocks with the express intention of taking money from hedge funds like Melvin Capital.

Amidst the chaos, more and more private investors are joining the game, utilizing apps like Robinhood to purchase stocks promoted by r/wallstreetbets as commonly shorted stock, hoping to get in on the profits and get revenge against hedge funds they feel have been gaming the system for decades. However, for the most part, these trading platforms weren’t prepared for the massive influx of accounts, and their servers have been intermittently down over the duration of the GME fluctuations.

By January 28th, Robinhood and other similar platforms attempted to completely shut down the trade of GameStop, AMC, Blackberry, Bed Bath & Beyond, and many of the other stocks targeted by r/wallstreetbets. While those who own those stocks can still sell, users of the apps are no longer able to purchase them on the platform. While Robinhood implied that they areattempting to protect their members from the ensuing market volatility, many members of the public believe something more sinister is going on.

One Twitter account associated with r/wallstreetbets posted that “robinhood decided this morning to suspend buying of AMC and GME stock because regular people were making too much money, proving once again that any time the poors find a way to get any sort of financial foothold in this world the billionaire class will move swiftly to crush them” – echoing an increasingly radical sentiment expressed online about the fundamental unfairness of the stock market and who is meant to be using it. Congresspeople Alexandria Ocasio-Cortez and Ted Cruz, generally considered extremists of their respective parties, both tweeted their anger at Robinhood, with Ocasio-Cortez stating that “We now need to know more about [Robinhood]’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit. As a member of the Financial Services [Committee], I’d support a hearing if necessary.”

Robinhood’s about page states that “At Robinhood, we believe the financial system should be built to work for everyone. That’s why wecreate products that let you start investing at your own pace, on your own terms.” Instead of allowing their users to do so, the platform has taken control of the situation, effectively cutting r/wallstreetbets’ revolution off at the knees.

As a platform, does Robinhood have a responsibility to maintain an open marketplace where their users can participate in the trade of stocks freely, or is it ethically acceptable for themto limit opportunities when they deem those opportunities too volatile?

This story is ongoing and facts may have changed since the time of writing.