(WBNG) -- Wall Street has had quite the week as it experienced an incredibly volatile market due to the unprecedented and rapid rise of Gamestop's stock.
12 News spoke with Daniel McKeever, an Assistant Professor of Finance at Binghamton University, who breaks down what happened.
He explained that certain hedge funds on Wall Street had been betting against Gamestop's stock, believing that their price would continue to decline. He points out that just a month ago, a stock was only valued at around $18 a share.
But, then, the group called "Wall Street Bets" on Reddit, coordinated with its millions of followers to buy Gamestop's stock all at once, which ended up increasing the stock's price significantly and therefore hurting the hedge fund's position.
This caused many hedge funds to suffer heavy losses.
"If you get enough people sort of 'ganging up' on one of these short positions, you can push that stock price very high, very fast and that's what happened Monday of this week through yesterday," explained McKeever, adding, "This was not a group of people who suddenly were irrationally convinced that Gamestop was going to become a great company."
McKeever also explains that a lot of the sentiment online and on the Reddit thread expressed anti-Wall Street views, and McKeever said that, in part, the move was also psychological, as many people continue to be stuck home, out of work, or in financial distress, yet the stock market had continued to rise.
However, McKeever cautions about this type of investing, comparing it more to gambling.
Certain trading platforms, like Robinhood, even halted people from buying more shares on Thursday and only let their users sell. This move by the company caused a lot of backlash from both Republicans and Democrats in office, claiming it was market manipulation, and some members called for congressional hearings on the move. Robinhood denies the claim. The SEC says they will investigate the matter.
Robinhood allowed people to continue to purchase shares Friday, but then, as the day progressed, limited the amount that people could buy.
As of Friday afternoon, Gamestop's stock was over $300 a share, compared to a month ago when it was only $18.
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