Jordan Incel-fort, Elon Sweaty-Musk, Warren All-You-Can-Eat Buffet - for the past few weeks, an unexpected group of investors from Reddit has given a financial wedgie to Wall Street's powdered butt through investments surrounding the retail gaming store, Gamestop. Unless you're Amish (in which case, welcome to the internet, and please Google creampie for some good recipes), coverage of the story has been unmissable. MGM, HBO, and Netflix just entered into movie deals covering the events, and Reddit ran a Super Bowl ad thanking Gamestop investors who helped skyrocket the stock. Still, attention spans nowadays are even tinier than Gamestop trade-in values, so let's recap.
Basically, with the coordination of Navy seals and bodies more similar to actual seals, a band of mostly amateur investors used the power of internet collectivism via Reddit to drive-up Gamestop's share price through mass purchases of its stock (GME). This was bad for certain Wall Street investment funds, which had expected Gamestop to go bankrupt in the near future and made bets that the company's stock would fall in value. When the opposite happened, these Wall-Streeters had to buy Gamestop stock themselves to cover their positions, which only drove Gamestop share price higher. All thanks to users like r/feetpic_enthusiast and r/butt_barnacle69. By the end, some hedge funds suffered massive losses, with a few even going bankrupt (please reach out to any guy named Tanner near you to check if they've been personally affected by this loss). On the flipside, Reddit users made bags of money off the trades that will likely be used to purchase earth's remaining Mountain Dew: Code Red supply.
Where did this all happen? Most of the planning spawned from a Reddit page called r/wallstreetbets, which seems like it would smell like pickles and Adderall if it were an actual place. It is the largest of many Reddit pages about investing, and like other sub-communities, it has its own tribal language and culture. What it boils down to is a unique orgy of memes, shitposting, and actual investment advice that sometimes earns people thousands. "Tendies," for instance, are what r/wallstreetbets users call profits made on investments - a joke reference to earning chicken tenders for good behavior. A "$BECKY" stock or portfolio refers to investments in goods/services beloved by the typical white college girl - things like Starbucks, Athleta, or cocaine. You can learn more of the terminology here, but be warned, most of these Redditors care less about political correctness than they do about bathing on a regular basis.
Lately, "GME" (the label for Gamestop stock when traded in markets) has become frequent in the page vocabulary given the chatter about Gamestop bets. Even as larger coverage of the Gamestop story dies down, war chants like "GME to the moon🚀🌑" still fly across the message boards to express the belief that Gamestop share price will keep rising.
While the Gamestonk army makes battle plans on Reddit, most participants actually buy and sell Gamestop shares on a platform called Robinhood. Robinhood is a free-trading app that makes it easy for anyone to trade stocks and other securities. Your goldfish probably has an account. And it is this very accessibility that made it possible for a bunch of memers from Reddit to molly wop Wall Street (so much so that Robinhood temporarily restricted Gamestop trading - read more here).
Given such a molly whopping from an unlikely group, the mainstream media has often portrayed these Redditors as everyday heroes bent on democratizing investing and throwing up carpal-tunnel middle fingers to Wall Street's greed. But is what they think of themselves? One look at the current r/wallstreetbets message board shows somewhat of a civil war brewing between those who believe everyone should hold onto their GME stock in the long run and those who already sold it for a profit (and you're not gonna believe this, but there's rampant shaming on both sides - what happened to sweet, innocent little Reddit?!). This divide makes you wonder...How many hopped on this trading wave just for an excuse to yell "stonks" as their returns went up? Just for the money? Did some simply want to protect Gamestop and their childhood memories there from Wall Street? Is this collective group of investors as strong as some think it is, or does the money get in the way of unity? And why am I still banned from every My Little Pony subreddit?
We posed these essential questions to college student, Reddit user, and recent Gamestop investor u/LukeAhhh to get the perspective of a player at the heart of this recent investment escapade.
1) What was the first investment you ever made?
I started my Robinhood accounts last August. The first two stocks I invested in were Snapchat and Apple, so pretty blue-chip names. They did decently for me – I still have stakes in those stocks.
2) You mentioned you trade on Robinhood – what is that?
Robinhood - it’s a platform in which you can easily with the touch of your fingers invest in almost any stock on the stock market. Stocks, bonds, ETFs, cryptocurrency. Robinhood gives you a lot of freedom, and it is commissions free so they don’t take a lot of money from you.
3) What was the first you heard of the Gamestop investment?
I was hanging out with one of my housemates…maybe five, six weeks ago…anyway he’s been investing for a while and he’s done well. So he’s inspired me to do more, to invest more. Early January is when I really got back into it.
So, my next step was what do I invest in. I’ve been using Reddit for a year or two now. I’m mostly in other communities, but I started looking for subreddits where I could learn more about the stock market. I joined r/stocks, I joined r/investing. But when I first heard about Gamestop, it was through r/wallstreetbets. I heard about that subreddit through one of my fraternity brothers. So I took a look at it. I thought it was full of memes at first – there are memes there. But when you take a closer look, there are some really smart people who do a lot of research on stocks. I started looking through their posts and seeing a lot of stuff about Gamestop. I did some due diligence through that subreddit that seemed pretty convincing to me and I became convinced it could be a decent investment.
4) That subreddit community – r/wallstreetbets – what’s that like? It’s the Internet, so anyone with a Wifi connection can post something, whether they’re a veteran investor or a Bigfoot conspiracist.
I think it’s a mix of both types. I think a lot of people go on there for the memes and want to be a part of meme culture when it comes to the stock market. This is why some people do “YOLO” bets, where they just throw thousands of dollars on stocks they think could go up or it’s just a stock that they like. It is a bit of a boisterous platform in terms of tone and attitude, but there is a good mixture of people who are smart and may or may not know what they’re doing but seem to at least know more than me. It’s not like I trust everything I see and hear, but for me, when I started to hear Gamestop could be a good investment is when I saw multiple people posting research and bullish theses about Gamestop.
5) You mentioned some people are on there for meme culture. Do you think that the Gamestop bet was just another way to memeify the stock market? Did you see a lot of people investing as a joke?
I think it could be partly that. I also think a lot of these people, you know, grew up going to Gamestop. Buying games from there, buying consoles and whatnot, so the fact that there were hedge funds throwing huge bets against the Gamestop stock and believing Gamestop would go bankrupt – a lot of people didn’t like that and wanted to defend Gamestop.
What also pushed things forward was when Gamestop added a guy named Ryan Cohen to their board – he’s the guy who brought Chewy the pet food brand off the ground. So he bought a couple of million shares. A lot of people saw this as good news that the company was going in the right direction. That combined with feelings and sentiments for Gamestop kind of pushed people into investing. But a lot of it does go back to meme culture.
6) So out of all these reasons, why did you invest?
To be quite frank, I feel like I was a bit naïve going into it. I didn’t know too much. Over time I realized this could get really big. I wouldn’t say that I was in it for the meme. At first, it was just an investment for investment's sake. As I read more on the stock from the subreddit, I realized it had great potential.; and that’s when it hit the mainstream. I just rode the wave basically.
7) What was that subreddit like leading up to the big headlines?
I’d say about half of the posts I’d see had something to do with Gamestop. A lot of the posts were about it – either hyping people up to see the stock or people just trying to help everyone understand the stock. Posts that really dumbed it down and told people to trust the process. At that same time, I started seeing other posts about “hot stocks” like Blackberry, Nokia, AMC.
8) Around when did you buy Gamestop shares and how much did they cost?
So I first bought stock in Gamestop on January 12th, and then some more on the 13th as well. At this point, a share was around $19. Then on the 13th, it jumped to $30. I made a larger investment on the 14th when the share price was $37. By the 14th, I had about 5-6 shares, and in the end, I had about 11 shares. I sold off my position here and there as the price rose higher and higher. This was about a week before the hype started.
9) What was the peak price that you sold your shares for?
I ended up selling one share for $440 on January 28th. The highest the stock went was about $483. I’m still holding onto four shares, which are sitting at about $62 dollar. So all-time, I’m still up on my investments.
10) Gamestop as a business itself is to some extent questionable – do think it’s dangerous that internet collectivism can save a company even if it might be dying?
A lot of people think Gamestop is just a dying brick-and-mortar business. They haven’t really done well during the pandemic. Not only did I realize this new leadership could be a sign of good things. They have changed their vision and want to get into e-commerce, especially for gaming. I’ve also heard rumblings of becoming an e-sports service. So not only did I believe in the leadership, but I believe in the business plan going forward. They’ve made a lot of good moves recently, and that’s why I still have a position in the stock.
I think there are a lot of people in that subreddit jumping in for the market exposure because there are high profile hedge funds betting against Gamestop, but I also think not as many people would have the desire to invest in this stock if they didn’t trust Gamestop’s new vision.
11) Has this whole Gamestop bet made you more or less likely to take investment advice from the internet?
I don’t think I’ll be deterred from looking for investment advice on the internet, especially on Reddit. You can’t really believe everything you see on the internet, but there is some credibility because I don’t think it’s a place where anyone is trying to swindle others. They express what they truly feel. If I read something on Reddit, I do my own research behind it. In general, the safest thing is to do your own research as well.
So there you have it, folks. Whether you need financial advice, a surefire recipe for a pipe bomb, or legal counseling to get out of your third DUI case, Reddit is your friend. Invest now.