They thought they really stuck it to the man.
When a bunch of users of the "WallStreetBets" forum on Reddit started bidding up the stock price of GameStop - and later other low-value stocks - they had one goal in mind: make a hedge fund, Melvin Capital, go bankrupt. The idea was to drive up the price of a stock the fund bet would be priced low, and thus make them lose their bets, and their money.
So, how did it go?
Melvin Capital closed out its bet on GameStop and took a loss, but it got bailed out by other hedge funds. They told CNBC that they're definitely not going bankrupt.
But the meteoric rise in GameStop's stock prices, driven by a desire to get back at Wall Street rather than rational investment decisions, had to have made someone money, no? Perhaps many somebodies?
Indeed. One of those somebodies happens to be BlackRock, the world's richest asset manager. BlackRock, which manages $9 trillion in assets, made over $2 billion in the GameStop rally. Other investment firms also doused themselves in windfalls from the 'anti-elite' rally. BlackRock and others are set to keep making bank if Redditors keep the rally going, although they might find it increasingly difficult with individual trading apps like Robinhood putting halt to purchase of stocks being promoted in the particular Reddit forum.
If the expanding wealth of those at the top was something this haphazard power-to-the-people wanted to make a statement against, they instead became the elites' rainmakers. Far from challenging the structural accumulation of wealth at the top, their move ended up moving money around between rich money managers on Wall Street. Good job.
This is not to say hedge funds are good. In fact, I believe that the practice of gambling on stock prices should be outlawed. You can either buy a share or not, but you should not be allowed to place bets on the value of share prices.
But getting together a ragtag group of angry people on the Internet to storm the digital house and buy up stocks with no connection to the fundamentals that make a publicly traded company more or less lucrative as a statement of protest does not work. Doing something just to hurt someone, with no larger purpose or end-goal in mind, is not just wrong, but more often than not, counterproductive. It certainly was in this case. The Hedge Fund that was the target of this 'operation' got bailed out, the people who benefited from the gorilla op were other rich people who play the stock market for a living, and nothing on Wall Street will fundamentally change because of the last few days.
Nothing will change on Wall Street as a result of the GameStop Rebellion, let's call it, because the GameStop Rebellion was a disorganized mess, had no unified message other than retribution, and sought no proactive change. It acted like - and probably was - a bunch of angry, hurt, desperate people lashing out.
Grievance politics rarely leads to lasting, positive change, and this case is no different.