What you need to know about the stock market

For most people, the plethora of GameStop (GME) and stock market memes that have surfaced the past couple of weeks have been unavoidable. But what does any of this even mean? Here is the rundown of the bizarre situation with the stock market.

According to an NBC article published by David Ingram and Lucy Bayly, “The simplest answer is that [GameStop] stock price has skyrocketed — by somewhere around 8,000 percent over six months. The more complex answer is that its stock has become the central game piece in a financial power struggle between a major hedge fund, Melvin Capital, and a group of amateur stock traders who yell on the Internet.” Ingram and Bayly then go on to note that this is because of everyday frustration toward the fact that investors are often locked out of lucrative opportunities and that the game of investing is stacked against the little guy.

Throughout the pandemic, many smaller companies that rely on in-person customers, like GameStop, have been struggling. In fact, GameStop, although it’s still in business, is not expected to grow again. Because of this, GameStop has been the subject of short selling, which involves “investment or trading strategy that speculates on the decline in a stock or other security's price” according to Investopedia. But then, GameStop became the source of a short squeeze, which essentially means that their stock price rapidly increased due to an excess of short-selling.

So how does the Internet come in, and why were there so many memes about this? It may not surprise many of you that Reddit is involved. A group of Reddit users known as the r/wallstreetbets have been talking about GameStop for several years now, but on Monday, Jan. 10, one of these users posted “100% of my portfolio on GME because of you idiots.”

Then, on Friday, Jan. 29, the activity around the stock spiked. The trading value went from $43 to $380 per share and GME became one of the most traded stocks in the market.

This whole situation has been met with mixed feelings from many different people. For example, Sen. Elizabeth Warren, (D-MA) said in a press release: "For years, the same hedge funds, private equity firms and wealthy investors dismayed by the GameStop trades have treated the stock market like their own personal casino while everyone else pays the price.” Newt Gingrich, the former Republican House Speaker said, “It’s not about Republicans and Democrats, it’s lots and lots of normal, everyday people who began to figure out they really got ripped off for the last year just like they got ripped off in 2008 and 2009. What you’re seeing is an almost spontaneous cultural reaction in which the little guys and gals are getting together and going after the bigs, so the bigs are having to rig the game in order to survive.”

Perhaps the most entertaining part of this whole ordeal has been the hilarious memes and tweets that have been posted, including a tweet that read, “I know this GameStop stuff is funny, but you have to remember this is hurting real people who own multiple boats,” (@KevinFarzad) and another that said, “the next time everyone’s about to make a lot of money super easily could someone shoot me a text” (@sarahclazarus).

So if you were completely lost about all the memes, here’s your go-to summary of the stock market to ensure you can have a good laugh next time you’re scrolling on Twitter.