The Latest In The GameStop Wall Street Stock Battle
SCOTT SIMON, HOST:
Now to events on Wall Street this week, where small stock traders made a fortune outwitting big institutional investors. They did it buying stocks in GameStop. Its price hovered around $4 a year ago. Now over $300. They essentially willed this to happen by creating a buzz on social media. Online brokers tried to stop the wild ride, but yesterday, more twists and turns. NPR's Uri Berliner, senior editor on our business desk, has been following all this. I'm sure he can explain it. Thanks for being with us, Uri.
URI BERLINER, BYLINE: Hey, Scott.
SIMON: Can you give us a recap of all the ups and downs this week?
BERLINER: Yeah, well, let's start with GameStop. It's a retailer of video games. And it's a familiar story. It hit hard times. It was in a lot of malls - wasn't a good place to be. And a bunch of hedge funds said, you know, that it's only going to get worse for GameStop. So they bet against the stock. It's called short selling. At the same time, though, the online communities where a lot of people have taken to online trading, there were people who were - they were GameStop fans. Maybe they had bought stuff there as kids. And there were a lot more people trading online during the pandemic. And they started buying up the stock when it was really pushed down. And it just started picking up steam, totally proliferated this week. And it became kind of a mass movement. It sent the stock price in the stratosphere. And the big hedge funds took a lot of losses.
SIMON: I mean, that's the point. Some people make money. A lot of people lose money. Who winds up paying the price?
BERLINER: Well, so far, it's the hedge funds, the short sellers. They've lost a lot of money - billions. But that could all change. If the GameStop stock tumbles back to Earth, like, for example, where it was at the beginning of the year, it could be really painful for a lot of people who've joined these message groups, in a place called WallStreetBets, where they gather. They push up the stock. It's been kind of a jubilant atmosphere. But if the stock starts falling, they could get hurt pretty badly.
SIMON: Should we expect greater controls on these rollercoaster trades to come in now?
BERLINER: Well, we saw some during the week. The popular online broker Robinhood restricted trading in GameStop, stopped people from buying the stock. There was a huge backlash against Robinhood. People were saying there was a blatant double standard against small investors. Robinhood opened up trading again on Friday.
Beyond that, there should be hearings in Congress. And the Securities and Exchange Commission put out a warning, says it's on the lookout for market manipulation. But there's no public evidence of that so far in this situation. There's nothing illegal or wrong about being enthusiastic about a stock. Now, if there's evidence the stock price was artificially inflated, that would be a different story.
SIMON: How much has Wall Street been shaken by this, by seeing how - I don't want to say how easy because I'm sure it's not easy - but how this could happen so unexpectedly?
BERLINER: It's a seismic shift. The power was in the hands of small investors for once. You know, Wall Street firms have had a lot of advantages in markets. That's led some people to think they're rigged. And this time, the amateurs got the upper hand. Where this goes, we don't really know. There could be some paring back of short selling, but really we don't really know where this is headed.
SIMON: NPR's Uri Berliner, thanks so much for being with us.
BERLINER: Thank you. Transcript provided by NPR, Copyright NPR.