What the GameStop wave says about online crowds

It’s a fable for our time: Small investors band together to take out greedy hedge funds from Wall Street using the shares of a struggling video game store.

But the online scholarship revolt suggests much more. The internet is changing the balance of power in society in unforeseen ways. And the same tools that hold the little guy accountable – allowing people to organize quickly and seemingly out of nowhere, troll powerful institutions and unleash chaos – can also result in extremist mobs leading harassment campaigns or the January 6 riot at the Capitol.

In the world of pseudonymous message boards, crazy pranks and upset logic in the midst of a global pandemic, revolts come in all shapes, sizes and purposes. Last week they gave us the Great GameStop Stock Uprising. Who knows what this week will bring.

One thing is certain: we will see more. More and more of us are learning to play with the system, whether for a noble cause or, as they say, “for the lulz”. If a Bernie Sanders meme in mittens can distract us in the middle of a presidential inauguration, and a Reddit bulletin board can send big bangs from Wall Street in panic, maybe that can come out with something good, too. Right?

“The Internet can democratize access, disrupting the power dynamic between the people and traditional institutions,” tweeted Tiffany C. Li, professor of law and lawyer specializing in the protection of privacy and governance of technological platforms.

With GameStop, she added in an interview on Friday, the aim was to upend the interests of a few large hedge funds.

“But in other places, the goal can be more damaging. Online spaces are used to radicalize people to extremism, to plan hate crimes and attacks, ”she said. “The internet isn’t really the bad guy or the hero.

Jason Wilkinson had immersed himself in stocks but dove deeper into the Reddit WallStreetBets forum after losing his job at a tech company during the pandemic. The 30-year-old New York City resident began trading between other part-time jobs like delivering motorcycles and sharpening knives, and began buying stock in GameStop in November.

“I went from a position of $ 9,000 to around $ 30,000 last night. Today I lost $ 10,000, “he said Thursday.” I didn’t sell. I’ll hold on. It’s been an emotional week, let’s say that.

As with many crowd moves, it was hard to know where it all started, even though there were at least a few prominent instigators. Among them was Roaring Kitty, a YouTube personality from a Boston suburb who has become a legendary feature on the Reddit forum, expressing an early interest in buying GameStop shares and inspiring a growing legion of followers to follow suit. look into his finances.

Reddit-based investors used the Discord discussion platform to get started on each other and the Robinhood trading app to buy stocks with just a few clicks on their smartphones. They quickly found a common enemy among the hedge fund managers who tried to sell the stock short, encouraging each other to keep buying GameStop and pushing it ever higher – “over the moon”.

Wilkinson said this week’s forums probably struck newcomers as “really, really childish and crazy,” full of rocket emojis, calls to pump up stocks written to the tune of sailor chants and songs. ‘a flood of newcomers trying to jump on the train, but he said it’s not his usual experience there.

“Some of the people who are on this thread are probably on par with the stock pickers of these hedge funds,” he said. “It’s knowing who to listen to and who to ignore. It’s really just a bunch of people sharing ideas. It’s the same as when Jim Cramer goes up on CNBC and smashes the buttons.

In 2017, the “MeToo” hashtag began to go viral when women – and some men – shared their experiences of sexual assault on social media. Although the term was coined in 2006 by activist Tarana Burke, a confluence of the political climate, the case against Harvey Weinstein and the rise of social media allowed the movement to take off 11 years later. Social media has also helped Black Lives Matter activists organize rallies, record police violence, and communicate during the marches that swept across the United States and other countries after George Floyd’s death last time around. ‘summer.

But the mass movement that has emerged from online communities designed to allow amateur stock traders to share advice has come as a shock to Wall Street.

“What these communities are doing is a gray area,” said Allen Tran, 23, administrator of a popular Robinhood Facebook business group that was temporarily closed amid the frenzy. “The group mindset is where things can get uncertain and coordinate.”

Sinal Aral, director of the Digital Economy Initiative at the Massachusetts Institute of Technology, said the social media frenzy disrupting the stock market this week has parallels with disinformation campaigns affecting the national election and the movement that has leads to the Capitol Riot – any situation where it can be difficult to lay blame.

“There is an important distinction between an actor who coordinates the manipulation and a retail investor who lets himself be drawn into the movement,” he said. “We also saw these two types of people in the Capitol Riot.”

One thing that sets the GameStop rally apart from more nefarious crowdsourcing actions is that it is less about misinformation and more about coordination. It is not clear whether or how the actions of those behind these acts crossed the line of market manipulation.

Tran said some forums have an issue with “front loaders” buying large inventory, building excitement and taking advantage of the “hype that follows.”

The involvement of platforms like Robinhood has also brought back wider concerns about the number of phone apps designed in a way that makes people compulsively more compulsive. Buy shares on the app and you get a celebration notification with digital confetti.

“They basically activate the dopamine reward systems in our brains,” Aral said.

So if the internet isn’t the villain or the hero, how do you mitigate the damage while keeping it open to positive forces?

“There are ways to do it, but it’s a difficult balance,” Li said. “You don’t want to delete everything or censor everything to the point that people can’t use it for good.”

Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

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