In the United States, Wall Street is rocked by a big deal: amateur traders have managed to trap hedge funds and make them lose billions of dollars, simply by buying in bulk shares of Gamestop, a chain of game stores video.
Regulators are worried and Elon Musk is getting involved.
DECRYPTION
In more than 200 years, Wall Street, the world's most famous stock exchange, has seen a number of extraordinary stories.
But perhaps none more insane than that of the "Gamestop affair".
Since mid-January, the action of this American chain of video game stores, owner of Micromania in France, has been the subject of a fierce battle between hedge funds and amateur traders.
In a few days, the price has multiplied by 20 and individuals have made investment funds lose billions.
The regulatory authorities get involved and the matter even becomes political.
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Hedge funds caught on their own
It all started in mid-January when
hedge funds
, speculative funds, decided to bet on the drop in Gamestop's share.
To do this, they practiced a form of short selling: they borrowed stocks, sold them when the price was high, and they waited for it to drop to buy them back at a low price before returning them to the organizations to which they were sold. had borrowed, reaping in the process a juicy capital gain.
The case should have been one operation among millions of others in a day on Wall Street.
But WallStreetBets amateur traders decided otherwise.
The six million members of this online community, which gathers mainly on Reddit, a very popular site where each topic takes the form of a forum, share their good stock market plans, their biggest wins and their biggest losses daily. .
Having heard of the
hedge fund
plan
, they wanted to see if they could, with their small means, thwart the plans of the investment funds.
And they succeeded!
Thousands of "Robin Hoods"
Amateur traders have coordinated to mass buy Gamestop shares in an attempt to drive up the price.
They went for that by Robinhood, an application allowing to play on the stock market simply and especially without paying commissions.
In a few days, the share price had increased 20 times, from 17 to 340 dollars.
Not content to succeed, some have in the process garnered thousands, even millions of dollars in capital gains.
© Olivier DOULIERY / AFP
And while amateurs got richer, hedge funds lost colossal sums.
According to the
New York Times
, Melvin Capital, one of the main funds to have bet against Gamestop, would have released $ 3.75 billion in the operation.
Others were forced to stop the fees by selling their shares and accepting the losses.
What attract the attention of the authorities.
The White House and the SEC, the US stock market policeman, have said they are now monitoring Gamestop-related transactions in financial markets.
An amateur heist turned into a state affair
The affair could have ended there but it suddenly took a political turn.
On Thursday, when the share price was at its highest, Robinhood, the app popular with stock marketers, suspended share purchases, depriving thousands of small holders of their access to the market for this title.
Direct consequence of this decision: the action plunged and made the yo-yo Friday.
Elected officials of Congress, in particular the Democrat Alexandra Ocasio-Cortez, supported by the Republican Ted Cruz, then got involved, denouncing the inequality of treatment between individuals and investment funds which, them, can always buy Gamestop shares.
This is unacceptable.
We now need to know more about @ RobinhoodApp's decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit.
As a member of the Financial Services Cmte, I'd support a hearing if necessary.
https://t.co/4Qyrolgzyt
- Alexandria Ocasio-Cortez (@AOC) January 28, 2021
u can't sell houses u don't own
u can't sell cars u don't own
but
u * can * sell stock u don't own !?
this is bs - shorting is a scam
legal only for vestigial reasons
- Elon Musk (@elonmusk) January 28, 2021
Even Elon Musk got hold of the subject.
In a series of tweets, he first recommended buying Gamestop shares, before protesting against the suspension imposed by Robinhood and then attacking the very functioning of Wall Street.
"You can't sell houses or cars that you don't own but you can sell stocks that you don't own ?! That's nonsense. Short selling is a scam, legal only for reasons archaic, ”said Elon Musk.
The amateur heist has turned into a state affair that shakes the foundations of venerable Wall Street.