WallStreetBets vs. Melvin Capital
Users on the r/WallStreetBets subreddit coordinated a short squeeze on GameStop in late January 2021. The stock climbed from roughly $20 at the start of the month to an intraday high of $483 on January 28. Melvin Capital, which had built a high-profile short position, reported a 53 percent loss for the month and took a $2.75B rescue infusion from Citadel and Point72. It wound down the following year. Robinhood halted GME buying at the peak, citing clearinghouse collateral calls, and triggered congressional hearings.
Robinhood halted GME buying at the peak of the squeeze, citing clearinghouse capital requirements. The decision triggered congressional hearings and a permanent shift in how retail investors think about who the platform is really serving.
06 · Social Media & Algorithms
Anyone with a phone is a potential market-moving source. Reddit can force a hedge fund into bankruptcy. A single tweet can swing two trillion in market cap. Now the accounts and the readers are both partly AI.
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