r/WallStreetBets vs. a Hedge Fund: A Hollywood Movie in the Making
Synopsis: Reddit took on WallStreet. Reddit is winning… big.
Another great story of the magnificent year that is 2021 is retail investors from Reddit taking on the hedge fund Melvin Capital Management. So far Melvin has taken a huge loss and had to get a ~$3B(!!) cash infusion to shore up their finances. Anytime you need that much money at once, it’s not good.
I can’t explain this story better than @ShaanVP does in a series of tweets so I’ll just post them here.
My quick take - when everyone’s gambling, there’s going to be winners and losers. At this time, the retail investors are winning versus Wall Street. On the flip side, this happens all of the time where Wall Street essentially makes the same play at the expense of retail investors. This feels like when Chris Moneymaker won the World Series of Poker. The sad part is there is going to be a large chunk of retail investors that got in late for “fun” and will be left holding the bag once this settles.
So here is the full story of r/WallStreetBets, Melvin, and GameStop ($GME) in tweets:
Vox has a really good deep dive into this story as well [link].