Congress probes market frenzy over GameStop stock value

Last month, the world learned how social media can have a major impact on the stock market after Reddit users drove up the price of GameStop stock and on Thursday members of Congress heard testimony from some of the key players.

A big part of the conversation from lawmakers was about how the stock market appears to be structured to mainly benefit financial companies, but what happened last month showed how young investors are getting empowered by online platforms to build their own wealth through the market.

All eyes were drawn to a single investor in Massachusetts during the market frenzy.

“I’m just an individual whose investment in GameStop and posts on social media were based upon my own research and analysis,” Keith Gill testified.

Gill said he took to social media sites like Reddit and YouTube to say he felt GameStop was being undervalued by the market.

Other social media users got on board with his analysis and the stock prices for the video game store shot up tremendously.

Gill ended up making millions.

Gill told the House panel his posts should not be considered the cause of the major shift.

“The idea that I used social media to promote GameStop stock to unwitting investors and influenced the market is preposterous,” Gill said. “My post did not cause the movement of billions of dollars into GameStop shares.”

Gill urged lawmakers to investigate market practices and financial regulations to better serve everyday Americans, and not just Wall Street.

“It’s alarming how little we know about the inner workings of the market,” Gill said.

Part of the January controversy also stems from the trading App, Robinhood, which decided to freeze trades for GameStop after the stock price shot up.

Customers were outraged saying they had a chance to make money but were denied.

Robinhood said it couldn’t meet the regulatory requirements to cover the cost of the unexpected spike in stock trades leading to the temporary freeze.

“What happened is unacceptable to us. To our customers, I’m sorry and apologize,” said Robinhood Markets, Inc. CEO Vladimir Tenev. “Please know that we are doing everything we can to make sure this doesn’t happen again.”

Cox Media Group