A larger force was just glad to watch the fight. The scenes were thrilling, and there were lots of big explosions, but it was a prequel-we already knew how the story would end. By the time the smoke started to clear and the public’s attention moved on to the next thing, I saw it more like Star Wars: Attack of the Clones. The apes were so desperate to stick it to hedge fund bosses-the cartoon villains of Wall Street-that they were making a bunch of rich guys on Wall Street a lot richer as they plowed their savings into the fight. The headlines made it seem like a sea change: “‘Dumb Money’ Is on GameStop, and It’s Beating Wall Street at Its Own Game,” “GameStop Soars Again, Wall Street Bends Under the Pressure,” “GameStop Mania Reveals Power Shift on Wall Street, and the Pros Are Reeling.” Hollywood was salivating, because their portrayal of degenerates turning the tables on Wall Street would be like a real life “Trading Places,” where Eddie Murphy’s Billy Ray Valentine outwits the corrupt and greedy Duke Brothers.īut all was not what it seemed. Reality is more complicated, but sometimes a lot more interesting. A trader with the pseudonym DeepF**kingValue became the group’s hero as he made as much as 1,000 times his money. Big hedge funds would lose billions of dollars, and some would go out of business.
Within a couple of days, GameStop became the most-traded security in the world, appreciating more than 20,000 percent from what it had been worth months earlier.
“GameStop became the most-traded security in the world, appreciating more than 20,000 percent from what it had been worth months earlier.” Now it was like throwing lit sticks of dynamite into the theater, and with Robinhood giving its mostly inexperienced customers more bang for their buck through the ability to use borrowed money and derivatives, they were allowed to pour nitroglycerin on top for good measure. Millions of mostly young people set up their first trading accounts with brokers, like Robinhood, which allowed them to join the fun immediately on their smartphones. The ranks of WallStreetBets quadrupled in a week to 8 million people. People on the forum had figured out how to shout fire in the theater, douse the seats in kerosene, and toss a lit match, all by buying as many shares as possible and not selling them no matter how much they rose.Īs the apes started making money and the funds began to panic, the internet turned the rush into a stampede by focusing on the drama. So many of them had made the bet that it was like being in a crowded theater with one narrow exit door. Some of the biggest, most sophisticated investment funds had been so confident that GameStop was going out of business that they bet on a trade that would let them profit from the demise, despite the theoretical possibility of losing an infinite amount of money if they were wrong. The big boys on Wall Street hadn’t bothered. They were trying to do something that hadn’t been done legally in almost a century-stage a stock market corner-and they had organized it out in the open for anyone who had bothered to read their meme-filled site. However, this time they picked a company precisely because it was awful. That by itself wasn’t so unusual, as I had seen them do the same with the shares of lots of companies. My son had told me that members (who call themselves “the apes”) of a Reddit forum he belonged to called WallStreetBets were piling into the stock of a money-losing video game retailer called GameStop, sending it soaring. Hundreds of articles had been written, and four movie deals were in the works. Less than 10 minutes later, I was dashing off an email to the publisher of my book who, like almost everybody, hadn’t heard about it either. One morning in January 2021, I could tell that I had a sure-fire winner of a story, and the person who brought it to me wasn’t even a journalist-it was one of my boys. David and Goliath stories are crowd-pleasers.Ī big part of my job is figuring out which of the many story ideas reporters bring me are going to get read. Listen to the audio version-read by Spencer himself-in the Next Big Idea App. Previously, he wrote “Ahead of the Tape” for WSJ, as well as the “Lex” column for Britain’s Financial Times.īelow, Spencer shares 5 key insights from his new book, The Revolution That Wasn’t: GameStop, Reddit, and the Fleecing of Small Investors. Spencer Jakab is the editor of “Heard on the Street” at the Wall Street Journal.
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