This article originally appeared on The Popular Times, our new sister publication on the intersection of popular culture and luxury.
Thought Starters For Your Read
If a community of users on discussion forum Reddit can take down a Wall Street firm, what else is the Internet capable of?
Where is the luxury industry’s real place in a culture that favors the randomness and democratization of influence online?
Who holds more power: (a) luxury conglomerate leaders or (b) the people who subverted Wall Street?
Twitter, Instagram, and all of the Internet are on fire as a group of users from the discussion forum platform Reddit beat Wall Street at its own game. The Reddit stock trading community, WallStreetBets, came together to stop at least two notable Wall Street hedge funds in their tracks as they were in the process of short selling GameStop stock.
Together, the community of Redditors managed to successfully set up a short squeeze, uniting to purchase and hike up the gaming store’s stock value. GameStop (GME) stock, which kicked off the year at $19, rose to $223 at the time of writing. As a result, the hedge funds’ short positions began to lose billions. At least one of the firms is now facing bankruptcy.
Wall Street is up in arms while trading platforms including Robinhood and Interactive Brokers have taken action to curb trading activity, resulting in a class action lawsuit. The great people of the Internet, meanwhile, continue to do what they do best — create memes.
In a nutshell, this incident displays the power of the Internet and its inherent democracy. The current frenzy is reminiscent of that time an egg became the most liked picture on Instagram, knocking off Kylie Jenner for the top spot. Internet users decided they wanted to stick it to the influencers, brands, and celebrities who hold power, instead crowning an egg.
It’s this same collective voice that gave influencers their power in the first place. However, the Reddit case at hand is one where users were able to break through algorithms and paid advertising, past the world of influencers, and into the “real” world. And, of course, we’re talking about finance and Wall Street. To some, it doesn’t get more real than that.
The problem is, GameStop-gate happened almost instantaneously, and it highlights the instability of the systems which have operated with so much strength for decades. This matters for the luxury industry, and more so than most industry leaders care to see.
With the launch of The Popular Times, we established the term popular luxury, and The Popular Luxury Model. This model holds that under traditional luxury, brands held the power in taste-making. Today, under popular luxury, consumers and audiences — even those who cannot afford luxury — hold the power. This power is driven and granted by the democracy of the Internet.
The same dynamic is at play in the GameStop drama. Under a traditional Wall Street system, suited hedge fund brokers hold almost unbelievable power. They couldn’t imagine a world where a few commentators on a blog could tank a billion dollar business. The reality today is that when the interests of a few people on the Internet converge, power takes on new meaning. The influence of an institution like Wall Street, meanwhile, becomes almost laughable.