[Answer]

im gonna start from the top for the people at home

short selling a stock is basically making a bet that the value of the company is going to go down. Let's say I see that game stop is worth $10 today but I think in 3 days it's gonna be worth $5. I basically sell it to you today for $10 with the agreement that I'm gonna buy it back from you in 3 days no matter what the price is.

3 days later, if game stop is worth $5 then I buy it for $5. but I sold it to you previously for $10. Meaning I made $5 off that sale. But if game stop is worth $15 then I have to buy it for $15.. meaning I lost $5.

So a group of people on reddit looked at some stocks, including gamestop and some others and saw that a lot of investors were making these bets that the value of gamestop was gonna go down. This is public information. So they all got together and bought up a bunch of gamestop stock to drive up the price.

so the people who are shortselling can really only do one thing to try to recover some of their losses... they buy more stocks in gamestop and hope to get the gains from it going up. that's why it's a squeeze, because you're either gonna take your losses or try to recover them by betting against yourself

all of this is perfectly legal though. Gamestop is a valid business and people have every right to buy it up. Unless there was some kind of insider information about how gamestop runs their company that caused people to buy the stock, which most likely wasnt the case, then all they did was take a very strategic gamble that paid off. At the end of the day, all short term stock buying/selling is just gambling.

But then today robinhood and a bunch of other brokers stepped in and cut off the ability for people to buy certain stocks that were being shorted. Meanwhile, the people who are career investors/hedgefund managers still have access to the market to buy and sell as they please.

This was definitely a move they made because some rich people (possibly even people who own these companies) were losing a shitload of money and they're rigging the game in favor of the wealthy. They're definitely gonna get hit with some lawsuits and it's going to turn into a large legal battle and *could possibly* end up with more regulation on the market to inhibit daytrading, which might possibly deter some people from investing which ultimately might hurt the stock market as a whole. I don't think it will be catastrophic, but the market itself is already a massive bubble with plenty of potential for future pushback to liberal policies which generally are counterproductive to the current wealth distribution. Shit is already volatile, and this is throwing gas on the fire.

I also think it's worth speculating on whether these lawsuits and bad press could *possibly* damage any of these brokers enough to put them out of business permanently. Another possible implication is that you could argue that Robinhood/Ameritrade etc. are overstepping their abilities despite being the owners of their own products. It's in a similar vein to how twitter and facebook were able to use their platforms to silence Trump. The 100% "free market" mentality is that twitter/facebook/robinhood etc. should all have the freedom to create the product they want without government intervention and if people don't like the things that twitter/facebook/robinhood are doing then people have a right to create their own social media platforms or brokerage apps. There's a conversation to be had about whether or not these tech companies are getting too powerful and need to have their products regulated more, and this could influence that discussion.

Robinhood is gonna say they're trying to protect the average investor who "don't know what they're doing" but that's a dead ass lie