AOC and guests explored the conditions that led to the GameStop short squeeze and the ramifications of the institutional response to it.
Hundreds of thousands tuned in to a Twitch stream today as U.S. congresswoman Alexandra Ocasio-Cortez discussed Robinhood’s controversial decision to suspend trading in GameStop after the short squeeze engineered by r/WallStreetBets.
Hours earlier, Ocasio-Cortez, who sits on the House Financial Services Committee, slammed Robinhood for favoring the interests of the ultra wealthy at the expense of ordinary investors.
“This is unacceptable. We now need to know more about @RobinhoodApp ’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit.”
The live stream, hosted on Ocasio-Cortez’s personal Twitch channel, was only announced a few hours earlier and drew more than 300,000 viewers.
During the hour long event, Ocasio-Cortez took in the opinions of guests while contributing her own thoughts on Robinhood, their recent actions and the backlash that ensued. She also offered commentary on how to best approach regulatory issues surrounding finance and stock trading:
“There are fundamental questions we have to answer: how do you actually shift power back into the hands of everyday people? Ultimately that's what this is about.”
Ocasio-Cortez’s first guest was Markets Weekly author Alexis Goldstein, who was one of the first to report on Robinhood’s shutdown of GME trade.
He said institutions will always have a “systemic advantage” over retail investors, but that regulators are in a position to help even the playing field. He added that regulators should first examine whether fintech companies like Robinhood are “doing right by their customers,” and then focus on changing the harmful incentives society has set up:
“How do we want to design our economy? Do we want to incentivize people who study science to write trading algorithms because it’s a more lucrative trade? Unfortunately, the way we incentivize people right now is by rewarding them for making wealthy people more money.”
Ocasio-Cortez was also joined by Reddit co-founder Alexis Ohanian who explained the origins of r/WallStreetBets, describing how much of the research on GameStop that snowballed into a social movement was performed by “one clever person who shared their work with the world.”
Ohanian also said that the combination of technological breakthroughs with a new era of economic strife will encourage “more of a push to decentralization,” and that there will soon be “more and more energy to find decentralized solutions.”
When things like this happen - pay attention https://t.co/fJp8aeWycW— Alexis Ohanian Sr. 7️⃣7️⃣6️⃣ (@alexisohanian) January 28, 2021
The price of GME closed the trading day at $193.60 per share, down 44% from its opening price. It has since moved back up to $311.99 during after-hours trading, representing a gain of 61%.