Sen. Elizabeth Warren (D-Mass.) put Wall Street on notice Wednesday amid the ongoing David and Goliath battle over GameStop stock organized by a group of Reddit users.
“With stocks soaring while millions are out of work and struggling to pay bills, it’s not news that the stock market doesn’t reflect our actual economy,” Warren said in a statement.
It’s true: Despite the coronavirus pandemic that caused skyrocketing unemployment, the stock market has soared to record heights over the last year, underscoring that it does not offer a complete picture of economic health.
Warren continued: “For years, the same hedge funds, private equity firms, and wealthy investors dismayed by the GameStop trades have treated the stock market like their own personal casino while everyone else pays the price.”
She concluded that it is “long past time” for the Security and Exchange Commission and other regulators “to wake up and do their jobs.”
″[A]nd with a new administration and Democrats running Congress, I intend to make sure they do,” she said.
In the past month, people who frequent a Reddit message board called WallStreetBets discovered that hedge funds were “shorting” GameStop, or betting that the company would lose money, which in turn would make money for the funds. The speculation was grounded in some logic, given that the pandemic has discouraged people from going to brick-and-mortar stores to purchase games and gaming equipment. But the company in mid-January acquired a new board member with much-needed digital experience in an attempt to buoy itself.
That’s when a group of amateur traders on the Reddit board decided to make a stand against the Wall Street elites, driving up the price of GameStop stock. It’s now up more than 1,000% since the start of January.
What’s ensued is chaos: At least one hedge fund shorting GameStop stock has required a massive bailout as a result of the surge in its price.
The whole mess is essentially a clash between righteous amateurs and the establishment.
On Tuesday, billionaire Elon Musk chose to amp up the madness when he tweeted one word ― “Gamestonk!!” ― alongside a link to WallStreetBets. That further drove up the price of the stock.
Rep. Alexandria Ocasio-Cortez (D-N.Y.) echoed Warren in her own tweet Wednesday afternoon.
“Gotta admit it’s really something to see Wall Streeters with a long history of treating our economy as a casino complain about a message board of posters also treating the market as a casino,” she wrote.
“Anyways, tax the rich,” she added.