The GameStop Reckoning Was a Long Time Coming
This week, the biggest story in the financial markets is the absurdist, pretty-sure-I-hallucinated-it drama involving GameStop, a struggling video-game retailer that became the rope in a high-stakes tug of war between Wall Street suits and a crusading internet mob.
The simplest explanation for what happened is that a bunch of hyper-online mischief-makers in Reddit’s r/WallStreetBets forum – a clan of self-described degenerates with user names like “dumbledoreRothIRA” and “Coldcutcombo69” – decided it would be funny and righteous (and maybe even profitable, though that part was less important) to execute a “short squeeze” by pushing up the price of GameStop’s stock, entrapping the big-money hedge funds that had bet against it.
The strategy worked. Within two days, GameStop was the most heavily traded stock in the world, Elon Musk and Representative Alexandria Ocasio-Cortez got behind the revolt, and r/WallStreetBets users were posting screenshots of their suddenly inflated account balances. The scheme’s originator, whose Reddit user name is unprintable in a family paper, claims to have turned an initial investment of $50,000 into a windfall of more than $40 million. One of the hedge funds that had shorted GameStop’s stock, Melvin Capital, had to get a $2.75 billion bailout from two other investors after it was hammered with huge losses.
这个策略见效了。两天内，游戏驿站成了世界上交易量最大的股票，埃隆·马斯克（Elon Musk）和众议员亚历山德里亚·奥卡西奥–科尔特斯（Alexandria Ocasio-Cortez）支持这一反抗行为，r/WallStreetBets用户纷纷贴出他们突然膨胀的账户余额截图。该计划发起人声称，他最初的5万美元投资变成了逾4000万美元的意外之财。他在Reddit网站上的用户名无法出现在一份老少咸宜的报纸上。其中一家做空游戏驿站股票的对冲基金梅尔文资本（Melvin Capital）在遭遇巨额亏损后，不得不从另外两家投资机构那里获得27.5亿美元的救助资金。
In any reading, the most unusual thing about Wall Street’s being challenged by a rowdy band of Redditors is that it took so long to happen. This kind of populist revolt – internet-based insurgents gleefully pulling down the pants of the unsuspecting establishment – has been happening for years, to many powerful institutions.
Wall Street was among the last powerful institutions to be overrun by online populists, in part because it had a higher barrier to entry. Anyone with an internet connection and a Twitter account can start a hashtag campaign, but because trading stocks costs money – and required some level of expertise and time commitment – it was mostly left to professionals.
Smartphone-based trading apps like Robinhood changed that, by introducing commission-free trades and an interface that made executing a gamma squeeze as straightforward as ordering a burrito from Uber Eats. Suddenly, millions of amateurs could organize themselves, generate their own market research and investment theses, drum up excitement in Reddit threads and TikTok videos, and enter the casino with the big boys. (Whether storming the high-roller tables has helped them financially is another question entirely.)
But for the Reddit day traders, the important victory was always the symbolic one. They might lose their shirts, but they’ve sent the message that with enough passion and rocket-ship emojis, a crowd of profane, irreverent degenerates – again, their words, not mine – can turn the stock market on its head.
The hordes are here, and Wall Street will never be the same.