Hedge fund managers call it “Foul” and Robinhood comes into the Expose Rigged System
By: Sammy Quarrato
GameStop, like many retail companies, has closed in large numbers since Amazon’s huge hit.
Even before the lockdown was in full swing at the beginning of March 2020, around 9,302 branches closed in 2019. That was a 60% jump from last year and the worst year for store closings to date.
GameStop, in particular, struggled after buying real estate from Sprint, which operated around 1,500 stores under the Sprint brand. They also bought AT&T mobile stores.
They had hoped to make $ 1 million apiece, but couldn’t reach that threshold and mutated into a financial liability instead of a profit maker.
Overall, GameStop is expected to essentially fall into a deep decline that would result in its stocks being trimmed by hedge fund Melvin Capital.
The concept of short selling a share “When an investor borrows stocks and sells them right away, hoping they can pick them up later at a lower price, return them to the lender and pocket the difference ”(MarketWatch).
This was essentially what Melvin Capital and other hedge funds started with GameStop. It did so by cutting the stock 100% in the hopes that the price of GameStop stock would drop even further.
The subreddit called Wall Street Bets saw this and decided to play the Wall Street game and invested their money in GameStop stock.
The news spread quickly on the Internet and the name “Wall Street Bets” was quickly known. Billionaire Elon Musk even tweeted about it to get more people to buy GameStop stock.
Musk was known for criticizing the practice of shorting stocks, but he understood how much profit he would make from the event.
Additionally, Tesla’s stock has risen due to some Redditors investing in GameStop. This in turn benefited Tesla and helped Musk become the richest man in the world for a short period of time while Tesla became the most valuable automaker.
In both cases, it cannot be denied that his involvement has meant that the disadvantages for these hedge funds have been more brutal than before.
The hedge fund Melvin Capital lost roughly 53% of its investments as GameStop shares rose over 400%.
Robinhood decided to stop trading GameStop specifically, along with other stocks like AMC that were overtaken by trading.
After a long public pressure campaign, they finally gave in to popular demands and let these stocks sell for free, but the damage had already been done.
This effectively demonstrated how in many ways these rich and powerful corporations have been an elite cabal of corporatists who will privatize the profits and socialize the losses.
Whenever they do well they want as little regulation as possible, and when they start losing they want either the bought-out government or other big corporations themselves to manipulate the system for their own benefit.
Billionaire Leon Cooperman – the same billionaire who cried as he talked about the possible payment of a property tax if Warren or Bernie won the Democratic primary – stated that these people who invested in GameStop stock were lazy and only responded to stimulus- Checks Waiting The concept that people in his business class should pay their fair share was a “bullshit concept”.
This alone shows that the greater divide in the United States is not left or right, but the common people versus the elite.
2018 marked the first time in American history that billionaires paid an overall lower effective tax rate than the average American.
The three richest people are more wealthy than the entire bottom half of society. The top 1% of Americans own 50% of the stock, and CEOs made about 25 to 30 times as much as their mid- to late 20th century employees, which is now about 275 times as much as their employees.
And that just scratches the surface of how massive income inequality is in this country. This is not capitalism, this is corporatism, and in a way, corporate socialism.
Money in politics clearly contributes to why the United States government is being bought up by corporations and big money interests.
Treasury Secretary Janet Yellen received $ 810,000 speaking fees from Citadel to speak to Wall Street. Citadel owns Robinhood.
The legal side of lobbying creates adverse factors for the average person in America. Congresswoman Alexandra Ocasio-Cortez and Senator Ted Cruz agree that an investigation should take place.
In this country, the little guy obeys the rules and is used by the rich. The same wealthy people will be quick to change these rules to keep control of a flawed system that they are exploiting.