The predominant way people make money on the stock market is by buying stocks or shares of a company at a low rate; expect the value of that stock to go up so that they can then sell their stock at a higher rate on the stock market and keep the profit made, this method is the most common way of making money on the stock market and is used by amateurs, stock brokers and hedge fund owners.
However, there is another way to make money on the stock market, this is by 'short selling' a stock. When a stock is shorted; instead of people wanting or expecting the stock’s value to rise, they place a bet that the value will fall. A short sell works when a person or company asks a broker to locate a specific stock (either from their excess stock, clients, or by asking other brokers to lend to them) & then sell a that stock on the market, you are given this money. Then ideally you can buy the stock when its value decreases so your broker can put the stock back from where they had borrowed it from & you can keep the profit after giving the broker their cut. (Example: Broker borrows stock from a client when value = £10; sells it & gives the money to you, then when the value drops to £6 you buy the stock and the broker returns it to who they borrowed it from. You keep the £4 profit and give the broker a cut of it.)
This is exactly what recently happened to Hegde fund managers because they continually used a network of brokers to short the stock of fledgling companies such as GameStop & AMC Entertainment. They did this in bulk making them millions of dollars. However, when the Reddit user Keith Gill, & other members of Wall Street Bets, Subreddit decided to stop this, it cost some hedge funds, millions of dollars.
They accomplished their plan by using their vast Reddit user base of 2 million users as well as using social media & the internet to promote the idea, once they had done this, they used commission free apps like 'Robin-Hood' to buy the stock, this led the value of the companies to growing ludicrously (GameStop rose from approximately $15 to peaking at $469 and staying consistently between $250 - $325.) This meant that hedge fund managers were forced to buy their shorted stock at a highly inflated price and as a result they endured multi-million-dollar losses.
Due to this, hedge fund managers & part of Wall street were not pleased and wanted the 'Sub-Reddit' and 'Discord' of the Wall Street Bets shut down and apps like Robin-Hood to stop or limit or the amount of stock of these companies that could be bought and sold by individuals. In addition to this Robin-Hood even went as far as selling the stock without the consent of their users & this caused a mass uproar & even law suits from users, because they felt they had done no wrong and Robin-Hood and other large companies were siding with Wall street and Hedge fund managers and not standing by their community and users.
Since this happened Discord and Reddit have reinstated the Wall Street bets channel but commission free stock trading websites still restrict people when they are buying and selling stock of those specific companies. At present no one is aware what will happen to the situation but many feel that it is one rule for Wall Street & one rule for the common person however above all Reddit has undoubtedly cost Wall Street millions.
