The ongoing GameStop saga is full of surprises. The retail investors are not budging, with the stock recovering form the $100 low on Thursday, once again going over $300 in value. Robinhood app has announced it will reverse its previous decision and limited purchases of GameStop stock. Things are not going well for Wall Street short sellers.
The run on hedge funds has revealed another interesting point. The issue of GameStop is not divisive along traditional political lines. Politicians from both the left and the right of the spectrum have welcomed the surge of retail investment and called out dishonest practices by the Wall Street short sellers.
Senator Elisabeth Warren slammed hedge funds while saying that there’s a need for clear rules. “All of a sudden, the billionaires and some hedge funds are yelling because they’re not the ones, the only ones, who make money when the manipulation works”, the senator stated.
Warren expressed sympathy for retail investors who “are just looking for another way to try to make money”, and slammed Robinhood for stopping the trade which brought the stock down to $100 low on Thursday.
“This is happening at a time when millions of people are out of work, when millions of people are struggling, and they’re looking for another way to try to make money and going into a market that is not honest, that is not transparent, signing away their rights with arbitration agreements, and then getting cut off from being able to trade,” Warren added. “That is not a way for them to be able to build any security at all.”
On the other end of the political spectrum, Fox News talk show host Tucker Carlson dedicated an entire show to GameStop. Tucker proceeded to call out hedge funds, the mainstream media, “institutional investors” and Robinhood.
Tucker pointed out the tactics reportedly used by investor Bill Ackman to manipulate the markets by making people believe that the COVID-19 pandemic will cause a global market crash.
“Hell is coming …” Ackman said during an appearance on CNBC. “There’s a tsunami coming, right? A tsunami’s coming and you feel it in the air, right? The tide starts to roll out, OK? And on the beach, people are playing and having fun like there’s nothing going on. And that is the feeling I’ve had for the last two months … We need to shut it down now … America will end as we know it, I’m sorry to say so, unless we take this option.”
Ackman was later accused of having made more than $2 billion in profits while trading in that period. Many believed he deliberately spread panic so he can push the stocks down, and profit from their low price.
Short selling functions in a similar way. Often it is enough to announce a short position in a stock, go mainstream media interviews saying why the stock is terrible, and profit from the drop. Now that tactic might no longer work, and short sellers are furious. For some, this was their entire business model, and they are fighting tooth and nail to protect it.
While they can rely on their friends in the mainstream media and the establishment, more and more politicians and personalities see which way the wind is blowing and where the people stand.
Perhaps one of the most telling moments was this tweet in which Republican senator Ted Cruz expressed his agreement with Alexandria Ocasio-Cortez, a progressive Democrat, on GameStop. Both agreed that rules should apply equally to “small players” as well as Wall Street insiders and hedge funds.
On the other hand, Joe Biden and the White House refused to address the GameStop situation, only stating that they are “monitoring the situation”.
It seems that GameStop once again revealed that the political divide in the country is moving more and more away from left vs right and more and more towards the divide between those who are beholden to special interests and those who are beholden to the people.