via Todd Richmond
The stock market is an interesting beast, and there are rules that try to control manipulation and things like insider trading. But in a hyper-connected world where details are often available for those that look, is it time to rethink the model?
Witness the interesting story of Game Stop. This brick and mortar operation, like many others, has struggled due to a variety of factors. Some high profile hedge funds shorted the stock, expecting Game Stop to continue circling the drain. But then the sub-reddit “wallstreetbets” decided they didn’t like the shorts and started buying, driving the stock up. Way up. Like from $6/share to $140/share up. That resulted in huge losses for the hedge funds when they had to close out their short position.
So…just desserts for the hedge funds, illegal manipulation by an internet forum, reddit users having a good laugh, or all of the above? As congress begins to ponder section 230 protections for tech companies, they can add this dynamic to the fire and see what burns.