Using the past to explain the future. After the battle between Wall Street and Reddit came to a head over the soaring stock of the mall retailer GameStop, people are turning to the 2015 cult classic The Big Short for answers.
The hit film, starring Christian Bale, Brad Pitt, Ryan Gosling and a slew of other A-list celebs, showed how the financial crisis of 2007-08 was triggered by the housing bubble. In the movie, Margot Robbie is seen — naked in a bathtub — explaining rather difficult economic terms and how the banking collapse happened — all with a glass of champagne in hand.
Many users flocked to social media to explain that rewatching the film, particularly Robbie’s scene in the bathtub, has really helped explain the current complicated situation.
“I for one can’t wait for The Big Short 2: GameStop,” one user wrote. “So Margot Robbie explains this whole thing to me in a bathtub,” while another said: “Shout out to the movie The Big Short cause that might be the only reason this whole Game Stop thing makes sense to me.”
“Basically, there’s a group of people on Reddit who don’t use the stock market to invest, they use it to gamble,” Noah began. “And, yeah, that’s what a lot of serious investors do too, but these guys on Reddit are more honest about it and they love to troll the people who aren’t.”
So, what happened with the GameStop stock drama? OK! breaks it down: A group of ordinary investors teamed up on the Wall Street Bets Reddit page to start massively buying stock in struggling companies, such as movie theater giant AMC, video game retailer GameStop and others. These stocks were being shorted (bet heavily against) by a lot of hedge funds. The hedge funds were betting that they would fail and the stock would go to zero.
The individual investors from Reddit drove up the price of the struggling retailers stock to unbelievable levels, which caused substantial losses for the hedge funds, including almost sinking a few.
On January 28, some trading platforms like Robinhood and others have restricted individual investors' ability to buy those companies, so now the stock prices are tumbling. The Wall Street Bets Reddit community is crying foul, alleging that the rules of the game have been changed by the hedge fund crowd and that's unfair.