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GameStop stock experienced a hurricane that stunned Wall Street. Trading in stocks was halted nine times on Monday as stocks hit a record $ 159.18, more than double their previous high. The session rose 18.1 percent to $ 76.79 – and on Tuesday it rose even further to $ 132. As Alex Kirshner explains in Slate, a lot of this activity has to do with the online craze for the stock, which seems disconnected from the chain’s underlying fundamentals. Indeed, online video game retailers like Amazon and Steam have picked up on GameStop’s brick and mortar business, a trend that rocked the company even before the pandemic. Thanks to an unlikely clash of events, resentments, memes, and buzz – largely led by posters on the WallStreetBets subreddit – the stock has reached new heights. Not independently of this, r / WallStreetBets describes itself as « how 4chan found a Bloomberg terminal ».
To get a better feel for the GameStop rally and the online culture behind it, I spoke to one of the many many people who have bought shares in GME in the past few days. He is an online engineer based in the Southwest who bought shares after monitoring WallStreetBets (I don’t use his real name when asked). The interview has been compressed and edited for the sake of clarity.
I have had a temporary interest in this WallStreetBets subreddit for several years. I just thought it was funny, but every now and then they have some stocks that they get really keen on. They were just crazy about GameStop so I bought some calls that I didn’t hold long enough. I could probably have made a lot more money. [A call option is a contract that gives a buyer the right to buy a certain stock at a certain price within a certain time.] I got a little bit of the stock right now, not much. I’ve seen some people make really massive games with it and it seems crazy to me. I had two calls for Feb 12 at $ 60 that I paid $ 1.99 for and I sold when they were at $ 5. I think they’re now sitting at $ 70 or more.
It was crazy because none of it is tied to reality. It’s related to the online craze. I know that big institutions will find a way to win. They are very smart people. You are very ruthless. A group of people who invest half an hour in memes every day won’t crack anything they can’t crack. I am concerned that I am too excited. This is stupid and can’t go on forever, but I might as well see if I can make some free dinners out of it.
I know this would be the time to do some in-depth due diligence and come up with something To seek observable, repeatable patterns, but frankly it was just idiotic enthusiasm. It was people who said they would take money out of their retirement savings and put it in this one. Basically, some people who acted irresponsibly made me think, « OK, all the basics about GameStop are probably irrelevant if this large number of people are doing something stupid right now. » I have no doubt that the big institutional investment firms are going to find a way to fool all of these people. You’re not a trained investor, but right now there seems to be only one direction anyone can buy the stock.
It’s a little hard to quantify, but mostly it’s just a lot of people having memes about a stock publish, and lots of enthusiastic posts mixed with a little positive due diligence. I’ve seen a person or two post serious analysis of what is going to happen to the short sellers [who have positions in GME] and that if everyone just holds them there has to be a quick squeeze and then the stock has to go up . Then beyond that just the waves and waves of people shouting « Hold! » and posting Braveheart memes where they hold the stocks until the Brits go bankrupt.
Do you think these Redditors invested strategically in GameStop for profit, or did it seem more like a stunt or meme? </ It's probably mostly people doing it as a meme, but not just because it's a joke. I think they think they are investing solidly. If you follow this subreddit there will be a small number of people who really seem to know what they're doing and dig into the basics of doing business. They're going to put out really thorough due diligence and try to teach people things. There's probably a much larger segment of the people who do what I do: just making sure to follow simple trends, and if you can get the momentum going it usually works pretty well. I haven't tossed nearly as much money as some people have.
I do. I think it would probably lead to an addicting personality in very negative ways. I mean, it’s gambling – the subreddit is called WallStreetBets. I can enjoy my time at the casino just as much as anyone, but it won’t affect my ability to do anything I want to do if I lose it. I don’t get the impression that all of the people who visit this subreddit share that belief. When you see a few people turning $ 20,000 into $ 20 million, I think it’s really difficult for some people not to chase this kite.
The more people there are in the market, the more it is better for many things. However, this appears to be the precursor to yet another crash. These decisions aren’t always made well, and people don’t really know what they’re doing. I hope that the right guard rails are in place and that the SEC is paying enough attention. A lot of people doing irresponsible things with their money feel like they were in the 1920s. I’m a little worried about what happens if everyone loses the money they put into GameStop. Perhaps life through 2008 made many of us this way, but it seems like something to me that just can’t go on. Someone will find a way to centralize all of this.
I’ve done that a couple of times. ACB [Aurora Cannabis Inc.] bought a few last year that I landed roughly flat on. It may have made some money. I played an Activision tune before BlizzCon for years. I bought calls and then it jumped to BlizzCon. I stopped that three or four years ago when I had a kid and I didn’t have that much cash. I’m glad I did that because it wouldn’t have worked anymore. I’m pretty sure I’ve seen this strategy on WallStreetBets. They have a strong focus on exactly what you want from Reddit – video games and PC tech.
I’ll be holding them for a while. If they were options I would think harder about them. Even if there’s the biggest short squeeze in history, I’ll make a few thousand dollars and it’s not worth too much stress. Once I feel like I’ve made enough money to be happy, I’ll just sell them. If I lose the money on it and GameStop goes to zero, it’s no big deal. I am honestly more stressed that I sold the options I had. If I had held on, I could potentially have hit five-digit amounts on an investment of $ 200.
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