Recently, the stock market dominated the news cycle as the story of how an online community reviving the stock of a thought-to-be-dead company sent Wall Street into a frenzy. Many questions arose at the end of the saga, with many people feeling cheated on both sides of the spectrum. Small scale investors felt as if popular trading platforms such as Robinhood, which shut down users’ abilities to trade, were looking out for the pockets of hedge funds and those who were profiting from Gamestop’s demise. While many in Wall Street argued that this was a necessary move to prevent deeper damage to the stock market and to protect the stability of the market, the move to stop users from purchasing Gamestop and other trending stocks is undemocratic and promotes a culture of elitism.

This whole episode started when a Reddit community known as “r/WallStreetBets” urged its users to buy into Gamestop stock. There were a variety of reasons to do so. Primarily, many of the users wanted to punish “short-sellers” on Wall Street, who profit off a company’s demise, especially for companies like Gamestop, AMC, and Blackberry that have sentimental value for many. Short selling is a practice in which someone borrows stocks from an investor and sells them at market price. Then, after a while, the person who sold the stocks buys them back for the person who lent them. If the price of the stocks has fallen, the short seller will profit and get to keep the difference between the price they had sold the stocks and the price they had bought them back for. However, if the price has increased, the short seller will actually lose money as they have to buy back the stocks for the original holder at an increased price. 

This campaign by WallStreetBets met unprecedented success, raising the value of the stock by over 1800%. Many on Wall Street panicked as they saw the stock price of Gamestop, which they had expected to decline, soar. Hedge funds, which are managed funds of pooled money that use aggressive strategies to create returns, and other investors lost millions as individuals who bought into Gamestop’s stock gained thousands. However, the move by Robinhood and other investment platforms to block or limit users’ ability to buy, trade, or sell the stock is one that is undemocratic and goes against America’s capitalist principles of open competition for a profit motive.  

Robinhood cited the integrity and safety of their own app as the reasons for shutting down users’ ability to trade Gamestop stock. However, many believe that this was another example of looking out for the pockets of the rich, and essentially another form of market manipulation. The decision drew unprecedented outrage not just from investors but people all over the place, and even from both sides of the political aisle as Senators Alexandria Ocasio-Cortez and Ted Cruz slammed the company. In a tweet addressing the situation, Ocasio-Cortez said, “Gotta admit it’s really something to see Wall Streeters with a long history of treating our economy as a casino complain about a message board of posters also treating the market as a casino”. 

Now investors who felt they were cheated are fighting back against this injustice. A class-action lawsuit filed in New York accuses Robinhood of rigging the market against their customers, and for the benefit of others. The fact that small-scale individuals were banned from trading stock while massive hedge funds were allowed to continue should be an outrage to everyone. Many have pointed to the irony of an app called Robinhood depriving money of everyday Americans. One thing is for sure, apps like Robinhood cannot be allowed to escape unscathed for protecting the pockets of the wealthy who were burned by others playing their same game.