Social media are democratic tools and the GameStop case shows they are, turning Wall Street into their new meeting point. The GameStop case is filling the pages of newspapers and spaces in TV, blogs, newsletters. Wall Street race.
The up and down of the stocks of the physical retail chain (in a deep economic-financial crisis both for the natural decline of traditional retail in the era of e-commerce and for the forced lockdown that has kept us away from traditional shopping) led to easy gains and billionaire losses. These economic phenomena can be explained with a few simple concepts:
The logic of crowdfunding (the coordination of individuals who are motivated to financially support a specific initiative) has historically been used in economic and social sustainability initiatives. In this circumstance, the coordination of thousands of unsuspected buyers made the company’s stock skyrocket. Powerful hedge funds that had bet on stocks to the downside (through sales of stocks they hadn’t hoped to buy back at lower prices) were forced to buy back to avoid losses by pushing stocks even higher.
The combination of the use of social content aggregation platforms, including in particular the Californian Reddit, with applications that simplify online trading as much as possible, including Robinhood, has triggered a dynamics known to the stock markets (speculation on shares), but apparently ignored due to the way in which it took place. They have all together, savers, students, families, funds and large investors, contributed to a four-figure growth in the stock, due purely to the volume of transactions produced and therefore subject to collapse in the short term. As it happened yesterday. Yes, they have put some large operators in difficulty (one in particular), but individual traders, students have often unconsciously jeopardized their small savings.
Behind the stunt of this and other operations, there are champions of new technologies such as Elon Musk (who actively contributed to the rise of the GameStop title), but also many indecipherable profiles who have technical investment skills and orchestration skills with social messages. A distinctive feature of this story is also the demobilization of thousands of young video game enthusiasts who are accustomed to the logic of the crowd, but less inclined to invest in the stock market and who in some cases have staked part of the mortgage money to support their studies.
This story is yet another demonstration that the web in its multifaceted aspects, starting with social networks, covers all spheres of our life and that unlike the analog world thanks to his ability to connect and persuasion allows him to do things that were literally unimaginable until yesterday. In the particular case of the financial world it is expanding towards well-governed frontiers, such as digital payments, but also as in this case towards unexplored paths.