GameStonk: Millennial Cyber-Investors Are Poking The Bears On Wall Street
GameStop (GME) has been a dog of a traditional investment for years. This brick-and-mortar video game seller hasn't made a profit in 2 years and is projected to lose more money in 2021 and 2022. Yet this stock has rallied more than 680% in January 2021 by mob of retail investors marshaled against short-sellers using trolling, resentment to Wall Street, meme magic, and buzz — largely led by posters on the subreddit WallStreetBets all to the chagrin of many big hedge fund managers and traditional brokerage houses.
Why I give rip about this story:
Individual and smaller internet investors are able to have a significant impact on the big Wall Street titans.
Wall Street (and established institutions) still doesn't understand how the mass movement of information and motivated mobs on the internet can create havoc in their cloistered and precious worlds.
I am curious at what the Wall Street power brokers and government regulators do to crack down on the "retail investors" since they have exposed the broken and easily manipulated trading system that exists.
Internet tricksters, trolls, and "meme magic" can hype anything from elections to Wall Street wealth and their influence should be recognized instead of being ignored and outright reviled.
Motivated mobs can enrich many and in the same action cause havoc and destruction for others.
WallStreetBets describes itself as "like 4chan found a Bloomberg Terminal," and a large portion of the 2 million-strong on this subreddit seem to have gone to war with hedge fund managers and established wall street "shorters" who bet that GameStop's stock value will fall. For the record, GameStop began the year as one of the most shorted companies on the market. So far in this investment battle of wits, the retail investors are winning. Short-sellers have lost $5 billion betting against the stock in 2021, with losses totaled roughly $867 million on Tuesday January 26, 2021 alone, as the stock rallied over 73%.
GameStop's meteoric stock rise started with Michael Burry, the "Big Short" investor (Christian Bale played this dude in the movie) who made a billion-dollar bet against the US housing market and won, his fund bought 3 million shares of GME stock last August. After that, he wrote an "agitated" letter to the company for big changes to modernize. That led to Chewy.com's co-founder Ryan Cohen getting on the GameStop board, the buzz starts, and then the retail investors and day traders (esp. on Reddit) started a campaign to drive shares upward squeezing out the short-sellers. By using no-fee or low fee stock apps like Robinhood, these amateur traders started to buy as a mob on a mission to inflate the stock. Lastly, Tesla's Elon Musk has joined the party by tweeting GME stock memes, pushing the stock value even higher and forcing the short-sellers to have to cover their position or sell out entirely at a huge loss.
While some WallStreetBets users posted portfolio screenshots showing an over 1,000% return on GameStop's stock, this is not the norm for everyone. As of today, it seems the rogue "retail investors" are winning the GameStonk stock battle; but I am pretty sure the Wall Street powers-that-be will win the War.
I will be watching this epic battle of memes, emotion, wits and nerve.
This is not a blog advising anyone to invest in any stock, commodity, cryptocurrency, business, or any more time my blogs. I am an slightly above average thinker, clever visual artist, and wanna-be podcast star who has managed to piss away millions of dollars. Hell, I even gave away a successful company I founded to my partners because "I didn't feel appreciated." Day trading and retail investing is not for the timid and you can lose a ton of money, especially when the trading is more based on emotion rather than fundamentals. So, anything you read in this blog is for entertainment purposes only.