Students invest in stock following GameStop fiasco

This story was originally published in the sixth edition of The Lion’s Tale (May 5, 2021).

Back in late January, the video game retailer, GameStop had stock going for around just $18 a share and was close to going out of business. Since the rise of online gaming and the COVID-19 pandemic, the need for purchasing video games in stores has decreased, leaving retail companies such as GameStop out to dry. 

However, ‘r/WallStreetBets,’ a group of investors on Reddit, had a solution to save Gamestop. Through continuing to purchase GameStop stock, they caused the value of each share to increase rapidly. Eventually, so many users purchased GameStop stock, that the value increased from a mere $18 to $347 a share at its highest. 

 Redditors’ mass purchasing GameStop stock caused a domino effect on Wall Street. As GameStop was looking close to bankruptcy, many investors had bet large sums of money, or “shorted,” the decrease of GameStop stock prior to these events, essentially borrowing a stock, betting it will decrease, then selling and buying it back to turn a profit. This sudden increase of stock value caused many professional investors and hedge funds to lose a combined $12.79 billion. Meanwhile, some Reddit investors made millions off of their GameStop stock. 

The events with GameStop lead many to realize that they too, could invest money in the stock market. Companies who have been financially suffering, such as AMC and Blackberry, have seen a stock value increase as well. The logic is, if GameStop can be revived through purchasing stock, so can other companies. And a profit might be turned from it. 

However, as more and more GME stocks were bought, Robinhood, a stock trading app, blocked users from being able to purchase GameStop stock. This caused controversy among small investors, who felt that by limiting stock purchases to everyone except big time investors, the idea of an “open market” was lost. Multiple class-action lawsuits have been filed against Robinhood, and will be taken to court. 

Here at Oviedo High School, students have been quick to jump on the investing wagon. Like many others, the GameStop fiasco has inspired students to start investing their own money into the stock market. 

Junior Colin Duncan invested in GameStop with his dad just a day after everything happened. Since then, he’s made over $100 through selling the GME stock. He felt that the GameStop incident was just the beginning of a change at Wall Street. 

“I think it was the first shakeup that happened. I think it was the first time the public realized they could invest and potentially make millions,” Duncan said. “It proves how different the rich are compared to the poor, especially hedge funds.” 

Similarly, junior Varsha Suresh has been investing for the past few months, making around $200-300. Despite her profits, she feels that the process can be risky. 

“I’d say choose where to invest very carefully. Just because you make a little money doesn’t mean the wisest thing is to sell immediately,” said Suresh. “By holding you’re looking at a chance for greater profit.”

Investing money in the stock market can be risky, but has proved to be a good learning experience for Suresh. 

“Research is definitely important when it comes to learning which companies are the best to invest in as well as when to sell and hold,” Suresh said. “I’m still learning myself but so far, so good.”