Following Reddit fueled stock gains, caused by 'retail' traders turning the tables on hedge fund investors, Fox News' Tucker Carlson explained what happened Wednesday, before slamming Wall Street’s response.
"Hedge funds do a lot of things to make money, but one of those things is trading in the options market, shorting companies. In other words, making money. When the stock price of other companies, firms, American companies go down, they lose money, hedge funds make money. It's part of the business model, shorting stocks. So borrowing shares and selling them on the expectation that those shares will decline in value."
Carlson then described what inspired retail traders to act. "Well, for the past several months, hedge funds have shorted the stock of a retailer called GameStop. People online, watch this, this kind of stuff happens all the time. We've talked about this before on the show. (The hedge funds) attack specific companies or whole sectors of the economy, hoping the value will go down and they can profit from it."
Carlson called the practice, which is legal, "very ugly" and "very wrong," before describing how hedge funds ended up on the losing side of the bet.
"A group of people on Reddit decided to buy up GameStop options. And that triggered a chain reaction that drove GameStop share price higher and higher and higher. As of today, shares of GameStop are up 1700% since the beginning of the month. That means people on Reddit, profited people in hedge funds who were betting that share price."
Carlson then slammed the Wall Street establishment for crying foul on a game insiders are usually the ones playing. "That's a crime only people who work for hedge funds are allowed to manipulate the market often with the help of CNBC. Normal people are not allowed to do that already. The people in charge of our system are outraged that anyone without an official position at a hedge fund would dare manipulate the market to their benefit."
Following the rocketing prices on shares named by the users on Reddit, The r/WallStreetBets server that initiated the mass buy of GameStop stock, was been banned by the social media platform Discord. Carlson called out Wall Street's reaction.
"They've shut down the day. Traders claiming that they're committing hate speech. In other words, if you do what hedge funds do, but you don't work at a hedge fund. You're a racist, obviously it's just the beginning today. The CEO of NASDAQ jumped to the hedge funds rescue and suggested the day trading would need to be halted."
Carlson concluded the segment by calling out Wall Street insider's hypocrisy "If we see a significant rise is the chatter on social media channels. And then we also match that up against unusual trading activity. We will potentially help that stock to allow ourselves to investigate the situation, to be able to engage with the company and to give investors a chance to recalibrate their positions."