OLIVIA: When there's trouble in the world of finance,
one team of experts is there to get to the bottom of things.
(SIREN WAILS)
What have we got here, boss? Hedge fund, by the looks of things.
And, um... (SOBS)
..they're not in a good way.
I lost all my money! (SOBS)
Bad day at the stock market.
The stock market?
Yep, the stock market - that thing that goes up and down
that you hear about on the news all the time.
Basically, it's a place where people buy and sell shares,
which are like little pieces of companies.
If a company does well,
more people are likely to want shares and the value will go up.
If things aren't going so well,
people start selling their shares
and the price goes down.
So, you're saying these guys have been buying shares?
Exactly, which is a hedge fund,
which is basically an investment company.
(SOBS) Boss, I found something.
What is it? It's an investment, boss.
Something about GameStop.
Meanwhile, the stock on everyone's lips
in New York at the moment is GameStop.
GameStop is a chain of video game shops in the US
that - you guessed it - mostly sells video games.
They haven't been doing so well lately,
partly because of the pandemic
and also because more and more people are buying games online.
So, you're saying these guys have been buying shares in GameStop
and that's why they lost their money?
Not exactly.
(SOBS)
People don't just make money on the stock market
by investing in businesses that are doing well.
Big investors, like this one, can actually make money
out of businesses doing badly by short selling.
Short selling? What's that?
OK, think of something
that goes up and down in value,
like trading cards.
Imagine your brother's got
a really rare one.
If he sold it now, he'd get 100 bucks,
but he doesn't want to sell it.
Now, you reckon that, in a few months,
it's going to be worth way less than that,
so you say, "Hey, bro. Can I borrow your trading card?
"I promise I'll give it back in two months."
He says yes, and you sell it for 100 bucks.
If everything goes to plan,
two months later, the card craze is over
and you can buy your brother a new one for way less.
And boom! You've made 90 bucks profit.
That's what investors were doing with GameStop shares.
But short selling is risky.
Imagine, after two months,
your brother's card gets more valuable.
You still have to return it,
so now you have to buy another one at a higher price,
and that's what happened to these guys.
They bet GameStop shares would go down in value,
but they went up...big-time.
I think I have a suspect, boss.
It's ordinary people on the internet.
A bunch of people online saw that big investors
were making money off GameStop's problems
and they didn't like it,
so they decided to buy GameStop shares.
It's the regular Joes versus Wall Street.
As more and more people got on board,
the share price skyrocketed.
Cheers, everybody!
For a little while, this struggling business became
one of the most valuable companies in America,
and the investors who had tried to short sell it lost heaps -
like, billions of dollars -
and the finance world flipped out.
Video game retailer GameStop jumped 67%.
Many were shocked that small-time investors
who met on the internet could have such a huge impact.
And they didn't stop at GameStop.
They started encouraging people
to buy shares in other struggling businesses
or unpopular products, like silver.
So, what you're saying is a group of people on the internet
caused ALL this mess?
Yup.
So, what do we do about it?
Well, that's a good question.
Some people think the big investors deserved to lose money.
After all, what they were doing was basically gambling and they lost.
But others have pointed out
that ordinary people have lost money too.
And some say it's shown some big problems
in the way the stock market works, and they're calling for changes
to stop this sort of thing happening again.
Do you think we'll see another case like this again, boss?
I wouldn't like to speculate. After all, it's a volatile market.