A Million Hobby Traders Just Glimpsed What Racism Feels Like
Outsmarted by savvy internet users, investment institutions rewrote the rules to maintain the status quo
“This is some bullshit!” I said aloud to no one, as I watched a red dial draw circles on my iPhone screen before being replaced by a “Connection Error” message. It was Thursday morning, just after the stock market had opened for trading, and I’d lost count of how many times I’d attempted to purchase shares of stock in AMC Entertainment — yes, the struggling movie theater franchise — via Cash App, only for the requests to conk out. I knew these weren’t mere technical difficulties. There was some foul shit going on.
As of the start of this week, AMC had become one of a handful of publicly traded entities known as “meme stocks” — holdings that have attracted the attention of hobby investors who congregate on platforms like Reddit and Discord. These companies typically have a cheap share price and low market value, making them attractive buys and prime for big profits. (And in many cases, major institutional investors had “shorted” the companies, betting major figures that their prices would fall over time.) GameStop is the most prominent of the batch, its stock price at one point shooting up by more than 1,900% since the start of this year, but other companies enjoyed big gains, too. Nokia; Blackberry; clothing retailer Express; even BB Liquidating, the last vestige of bankrupt video-rental company Blockbuster: It was a great time to be a relic from another decade.
As casual traders coordinated their efforts and encouraged each other to hold the line, their pet stocks skyrocketed — not only making money for them, but bringing crushing losses to the hedge funds and power players who had shorted those stocks. It was all perfectly legal, but the establishment pushed back. Around the same time that my Cash App stock purchases were being denied, word began to spread on social media that other brokerages had been halting buys of the aforementioned high-volatility stocks. Legacy firms like Charles Schwab and TD Ameritrade did it; mobile-first traders like WeBull did it. But…