GameStop Is Tanking. But It Was Never About the Money

By Jose Antonio Lanz

Crypto investors upset over Bitcoin’s price dropping by $10,000 in a matter of days could learn something from the members of the WallStreetBets subreddit, who have dutifully pumped the price of GameStop’s stock this past week.

Today, following the temporary halting of trading for GameStop on the New York Stock Exchange and trading apps like Robinhood blocking purchases, this ragtag group of several million day traders watched the stock's price go from an open of $263 to a high of $492 and then all the way down to a close of $193.

They took the hit as if it were a walk in the park.

Why? Because for many of these traders, it isn’t about the money—or, at least, not just about the money. It’s about a collective effort to give Wall Street the finger and hit hedge funds, specifically those who took out short positions on GameStop, where it hurts: their pocketbooks.

The History

GameStop is a company specialized in selling physical copies of video games. The business was good but declined as digital content distribution boomed and as online retailers beat out mall-based businesses.

Over the years, several institutional traders started short selling its stocks with huge leveraged positions, generating a downward spiral for the stock price. The company’s stock went from around $45 per share to less than $5 in 2020. The people on r/WallStreetBets took notice and pitted themselves against the big, bad capitalists who opened shorts, such as Melvin Capital and Citron Research.

GameStop stock from 2012 until just days before the pump. Image: TradingView

The self-organized army started buying up huge amounts of shares, driving up their price in a matter of hours. The hedge funds, backed by millions in capital, initially held out, but they were no match for the millions of retailers united. At least two major funds had to close their positions with huge losses—although one of them, Melvin Capital, received a $2.8 billion bailout shortly after that. 

The Present

GameStop shares today opened at $265 and rose all the way up to around $480. After the spike, news came that the Robinhood trading had barred further buying of the stock. GME subsequently crashed to $113 before rebounding somewhat. In normal times, that would be enough to spook any investor back into complacency. But judging by some of the responses on r/wallstreetbets, it’ll all be worth so long as the big guys go down as well.

"Call it an opportunity, call it revenge, or justice, I know we are on the right side of this. I'm proud to be holding next to you fellow brothers and sisters in arms. I will not sell," said user u/Zdubzz19. "I will hold until Melvin and Citron and any other fucker who think that they can get away from the inevitable by using dirty tactics and mis-information to [deplatform] us fails at their own game."

There is no technical or fundamental analysis to explain this. There is no sentiment analysis around the $GME stock. It all seems to be primarily driven out of resentment—a collective vendetta against the big capitalists.

When GameStop’s stock goes down, these retail investors could be wrecked, but they don't think they need a bailout—no matter what Robinhood says. Today many of them gladly embraced the losses as a sort of necessary evil to send a collective message.

One user wrote a missive to Melvin Capital, calling “a firm who makes money off of exploiting a company and manipulating markets and media to your advantage. Your continued existence is a sharp reminder that the ones in charge of so much hardship during the '08 crisis were not punished." 

The user, u/Ssauronn, continued: “This is personal for me, and millions of others. You can drop the price of GME after hours $120, I'm not going anywhere. You can pay for thousands of reddit bots, I'm holding. You can get every mainstream media outlet to demonize us, I don't care. I'm making this as painful as I can for you."

So, losses don't seem to bother these people, who see every red candle as one more provocation that boosts their morale during this sort of financial war. "GME is about more than just money, GME is about sending a message," said u/aoechamp, who has 25k invested in GameStop stock. 

With policymakers and regulators monitoring the situation, it is difficult to say how or when this uprising will end. But it seems that even at a loss, many feel like some good has come from all of this.

"I only have one measly share. I missed the boat on this, I was preoccupied the last few months with my wife's cancer battle," said u/Sir-xer21, "but thank you for letting me feel invigorated… For the first time in a long while, I feel a fire inside me. Thank you for this."

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