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STUNNING: Reddit Shuts Down WallStreetBets Subgroup Temporarily — Blames Racism and Hate Speech — After Rookie Investors in General Public Make Money Causing Hedge Funds to Go Bust

  Update:  The Reddit subgroup WallStreetBets is  back up  this evening. What an amazing story!  Reddit shut down its WallStreetBets subredd...


Update: The Reddit subgroup WallStreetBets is back up this evening.

What an amazing story! 

Reddit shut down its WallStreetBets subreddit page on Wednesday afternoon after rookie stock market investors in the general public joined together to purchase stock in targeted companies causing a major disruption in the stock market and resulting in several hedge funds to go bust.

Of course, Reddit blamed “racism” and “hate speech” for removing the community.

According to The Verge, Discord has banned the r/WallStreetBets server. Reddit’s WallStreetBets subreddit is the driver of an unprecedented rally of GameStop stock, and has received a great deal of attention in the press as the stock continues to soar.

NBC News attempted to explain the frenzy in the stock market surrounding WallStreetBets today.

Here’s a guide to understanding why, and what the frenzy means for the stock market.

Like many companies that are in rough shape, GameStop was the subject of what’s called short selling, in which professional investors borrow shares of stock to sell and then buy back at a later date, which lets them pocket profits if the stock price goes down. These are basically bets that the company will fail.

GameStop was one of the most shorted of all publicly traded companies. Other companies on that list include AMC Theatres, Bed Bath & Beyond and even the mostly defunct Blockbuster. Remember those names.

And then it became the source of a short squeeze.

What is a short squeeze?
For the most part, investors follow the “buy low, sell high” format when it comes to stocks. Short sellers do the opposite — they buy a stock when it is high and bet that it will continue to fall. If that doesn’t happen, and the stock price rises, short sellers are forced to cover their position, or buy more stocks — in order to minimize their losses.

Since short sellers — frequently hedge funds — are essentially betting against a company’s success, it can be a risky position to take. Any positive news or enthusiasm for the stock will push up that stock’s valuation, minimizing profit taking for the short seller. In the case of GameStop, chatter on massive online trading forums invigorated interest in purchasing the stock, pushing up the price, which in turn fueled more interest.

The speculative trading left short sellers with no more shares to buy in order to cover their position, creating a short squeeze, and leaving them with millions of dollars in stocks that they bought at a high price but which they then needed to offload at an even higher price.

This move this week by the general public and rookie investors INFURIATED market insiders. So later today Reddit caved and shut down the WallStreetBets subgroup.

The reaction to this latest move to snuff out the small guy is epic!

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