Frenzy on Wall Street! In case you aren’t aware, within the past week, the stock market has seen some pretty interesting and unique surges in some stocks nobody expected. If you have been keeping up and are still confused, you have good reason to be, as wha we are seeing is causing a frenzy. The surge in stocks of Gamestop (GME) and AMC Entertainment (AMC), most notably, has caused everyone to raise concerns about a plethora of different aspects of the stock market.

The whole situation surrounding Gamestop, a struggling company, began with major hedge funds and professional investors betting on the expectation that the Gamestop stock would fall by shorting it. A short is a way investors make money. What they do is borrow a share of a stock, in this case Gamestop, then later sell it. They then wait for the stock to do as they expect, go down, and buy the stock and keep the difference. Then it becomes a short squeeze, where investors purchase stock of the company and the value of the stock doesn’t go down as the investigation had thought, causing them to lose money, and in the case of these hedge funds and professional investors, they lose large amounts of money, in the millions and billions.

To begin the year on January 4th, a share in Gamestop was $17.24. On Friday, January 29th, it is now up to $325.00. This meteoric rise has caused hedge funds like Melvin Capital, Point72, and Citadel to try and cover their losses. 

The surge in these stocks can be attributed to a page on Reddit.com, known as WallStreetBets page. People on the page have coordinated this craziness, making life tough on the billionaires. As we all know, the stock market is supposed to be a “free market”, allowing anyone to have a fair shot at investing their money and possibly cashing out. But controversy kicked in on Thursday morning, when the company Robinhood, a regulated broker-dealer which is registered with the U.S. Securities and Exchange Commission (SEC), sent out a tweet saying, “In the light of current market volatility, we are restricting transactions for certain securities to position closing only, including $AMC and $GME…” This had many people livid. What this action by Robinhood did was restrict people from investing in GME and AMC, effectively closing those markets for a period of time. The question is why did they do this though? People have many questions, wondering if it was possibly any of these major hedge funds committing any sort of fraud or insider trading, in order to cut their losses. But then what about the thousands of other people, more of the middle class people? Is Robinhood restricting users of purchasing shares of the stocks really make the stock market “free and fair”, or is it only so for the top 1% of people?

Going forward, this should be an interesting story to see continue develop. Was there any illegal activity going on behind the scenes? Does Robinhood have the authority to do what they did? Hopefully some of these questions get answered soon and we can see what the final outcome of this craziness will be.