You say you want a revolution?
Then look at what’s happening on Wall Street.
Small investors banding together on social media are taking on big investment firms by running up the stock price of GameStop, a struggling video game retailer whose shares were trading at around $4 at the start of the coronavirus pandemic. By Thursday, the stock price had surged to more than $480 a share before leveling off and closing at $193.
“We are witnessing the French Revolution of Finance,” declared Anthony Scaramucci, a financier who famously served as Donald Trump’s White House communications director for 11 days in 2017.
Other analysts think Scaramucci, aka “The Mooch,” is right about the revolution, even if he cites the wrong country.
They see parallels between what’s taking place on Wall Street and the streak of populism that powered Donald Trump’s rise to political power and fueled a pro-Trump mob of insurrectionists who stormed the U.S. Capitol three weeks ago in a failed bid to overturn his election loss to Joe Biden.
“We are starting to realize that traditional rules don’t necessarily have to matter,” said Frank Murtha, the co-founder of MarketPsych LLC, a behavioral finance consulting firm. “The rules only work if a lot of people are willing to play by them.”
To be sure, there’s no comparison between Reddit users making legal trades and the deadly insurrection at the Capitol, where rioters intent on overturning the election rampaged through the halls of Congress bearing racist symbols and built a makeshift gallows and noose just outside the building.
But experts said both events illustrate – in dramatical different ways – the power of social media and crowd psychology.
What happened on Wall Street and in Washington “speaks to a larger disenchantment and sense of unfairness that is going on in society,” Murtha said. “This is merely a natural move by these guys that, I think, is largely an attempt to strike back at what they consider to be unfair forces in society. And they’ve found a way to do it.”
The way they’ve done it is the same way that Trump supporters organized their attack on the Capitol: by turning to social media.