What’s going on with the stock market? Allow this L.A. comedian to explain
We see you, 2021, literally giving 2020 a run for its money by having the stock market go berserk because of — wait for it — Reddit?
The unexpected culture clash took the masses by surprise this week when stocks for the embattled brick-and-mortars GameStop and AMC Theaters unexpectedly climbed after a bunch of Redditors essentially screwed over hedge fund short sellers who misplayed bets in the companies.
It’s something known in finance as “a short squeeze,” which apparently has nothing to do with hugging.
Confused? So was social media, as the good people of Twitter and TikTok unabashedly chronicled what went down when Robin Hood came for the stock market — or at least tried to.
The GameStop stock-trading frenzy is all about punishing short sellers, but why?
Los Angeles comedian Avalon Penrose was scrolling through Twitter in her parked car Wednesday when she stumbled upon several tweets and videos attempting to break down Reddit’s stock market revolution.
She cycled through a bunch of them in an attempt to educate herself but quickly realized “no one had any idea how to explain it.” Inspired, Penrose decided to try her hand at explaining what she called “the biggest s— show I’ve ever seen.”
“I didn’t see really any comedy takes on it,” Penrose — who got her start performing in student theater companies at UCLA — told The Times in a phone interview. “I was like, ‘Imagine if someone were to do this through the lens of comedy.’”
The 24-year-old channeled one of her favorite original characters — a hopelessly lost person who likes to offer advice — to illustrate the situation in hilariously simplistic terms, describing it as a rift between rich people and an “online reading club” fighting over garden “hedges.”
After ad-libbing the comedy bit from her car in a single take, Penrose uploaded the video to Twitter with low expectations. In less than 24 hours, the clip has already racked up 13.4 million views and more than 400,000 likes on the platform, while Penrose’s follower count has skyrocketed from about 5,000 to 45,000.
“I cannot tell you how much I did not expect this to happen,” said Penrose, who has been busy fielding a massive influx of personal phone calls from agents, managers, a studio exec and other “really big people” who suddenly want to work with her. “It blows my mind.”
“I was coming from a place of authenticity of not having any idea what the f— was going on. And I think that everyone else was experiencing the same thing,” she added. “They genuinely thought ... that I was actually going to give a legitimate breakdown of what was happening in the stock market ... when they realized it was someone who they could relate to that also had no idea what the hell’s going on.”
Surges in share price for companies like GameStop and Blackberry illustrate how social media swarm behavior has become a driving force in today’s stock market.
The two-minute video even caught the attention of SpaceX Chief Executive Elon Musk, who jokingly replied that “a hedge fund that shorts is a shrubbery.” Online, Penrose kept her comedic cool, informing the billionaire her “tweet was for business only & not jokes” and suggesting he “keep scrolling” unless he needed financial advice.
“I just can’t even,” she said of the interaction. “I don’t know how it got on his radar. ... But I think it’s absolutely so funny to pretend like I’m the smartest person in the room at all times. ... I like feeling like I’m being dominant over Elon Musk.”
Assuming Penrose’s parody video didn’t quite connect the dots for you, allow Times columnist Michael Hiltzik to actually summarize the stock market uprising:
“If you’ve shorted a stock at $20, your potential gain is $20, again if it goes to zero. (You sold at $20, and you’re buying it back, or ‘covering,’ at zero.) But if the shares keep rising, your potential loss is unlimited,” he wrote.
“This is the phenomenon behind the GameStop action. It’s known as a short squeeze. The stock bulls higher, eventually surpassing the capacity of the shorts to remain short. They bail out by covering — that is, buying — at a higher price, swallowing their losses. Their buying action pushes the stock even higher, forcing more shorts to cover, until finally all the short sellers are swept out.”
Hiltzik’s column was among several explainers published this week by media outlets and tech blogs as well as hordes of Twitter users trying their best to make sense of the GameStop showdown.
We’ll let the many experts — and short-squeezing novices — of social media take it from here. Enjoy!
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