The White House is currently looking over the situation of the Gamestop stock. According to reports, solons are looking into the potential for widespread financial fraud.
The Gamestop stock’s explosive rise has become the talk of the town both on gamer circles and business circles.
The r/wallstreetbets trolljob is so big that it’s getting the attention of the White House and Congress.
Many finance bigwigs are looking if a new kind of pump and dump scheme is happening. Even then, most of Wall Street is not getting any sympathies from the internet.
$GME stock now at almost $350 per share
The current issue with Gamestop comes from a recent report. Recently, Gamestop received a gentle rise, mostly from the holiday season and a new Microsoft partnership.
Tomorrow am at 11:30 EST Citron will livestream the 5 reasons GameStop $GME buyers at these levels are the suckers at this poker game. Stock back to $20 fast. We understand short interest better than you and will explain. Thank you to viewers for pos feedback on last live tweet
— Citron Research (@CitronResearch) January 19, 2021
The problem came once Reddit noticed the amount of short selling done with the stock. The collective saw the cautionary tweet from Citron Research on January 19.
They note how those buying $GME beyond $20 are “the suckers at this poker game.”
Many hedge funds and wholesale investors used low-value stocks like $GME to short sell.
They try to borrow stocks low, wait for the stocks to rise, sell high and return the stocks low. This method, called short selling, is standard practice.
The Wallstreetbets subreddit, however, intervened. The subreddit, formed by mostly retail investors, worked as a collective and both stocks from Gamestop.
The rapid mass-purchase shot up the price of the stock and wholesale traders are shaking.
— CNBC (@CNBC) January 27, 2021
The massive move increased the stock price of Gamestop – now as high as $347.51 from its original $12 tag. The trolljob is making hedge funds nervous.
Wallstreetbets making Wall Street nervous
The sudden move of Wallstreetbets to buy Gamestop stock puts traditional hedge funds in peril. As many borrow a low-value stock, the time has come for some to return what they borrowed.
— Elon Musk (@elonmusk) January 26, 2021
The problem comes from the fact that it’s now 3000% more expensive when buying the stock.
Companies like Melvin Capital, for example, asked for a $3 billion investment from other funds to stop “heavy losses.”
Wall Street is now bleeding money, and people are concerned what’s happening is a modern-day “pump and dump scheme.”
Investors are asking the Congress and White House for potential regulations.
“I do think that as we look at these new technologies that are available to everyone, including investors, I think it’s also important for regulators to understand that manipulation is manipulation, whether it’s happening through a new technology medium, or it’s happening through traditional mail,” said Adena Friedman, the CEO of NASDAQ.
“I think it’s just a matter of making sure that we understand what the behavior is, what’s underpinning the behavior, and working appropriately with the regulators to manage the situation, regardless of the technology that they’re using.”
So far, the problem is that pump and dump regulations don’t cover collective information trading on the internet.
However, the internet doesn’t care, as Wall Street was the cause of the 2008 Recession in the first place.
The White House also confirmed they’re monitoring the situation on the Gamestop stock.
Featured image courtesy of JJBers/Flickr