GameStop’s stock has enjoyed a whirlwind price surge that is baffling Wall Street. Trading in the stock was halted nine times on Monday as shares reached a record $159.18, more than double its previous high. It ended the session up 18.1 percent at $76.79—and on Tuesday is surging even higher, to as high as $132 as of this writing. As Alex Kirshner explains in Slate, much of this activity has to do with online enthusiasm for the stock that seems disconnected from the underlying fundamentals of the chain. Indeed, online video game retailers like Amazon and Steam have been eating into GameStop’s brick-and-mortar business, a trend that was rocking the company even before the pandemic. But thanks to an unlikely confluence of events, resentments, memes, and buzz—largely led by posters on the subreddit WallStreetBets—the stock has hit new heights. Not unrelatedly, r/WallStreetBets describes itself as “like 4chan found a Bloomberg Terminal.”
To get a better sense of GameStop’s rally and the online culture behind, I spoke to one of the many, many people who have bought stock in GME in recent days. He’s an online engineer in the Southwest U.S. who bought shares after monitoring WallStreetBets (I’m not using his real name at his request). The interview has been condensed and edited for clarity.
Why did you buy the GameStop stock?
I’ve had a passing interest in that WallStreetBets subreddit for a few years. I just thought it was funny, but every once in a while, they’ll have some stocks that they get really hot on. They were just going nuts about GameStop, so I bought some calls, which I did not hold long enough. I probably could have made a lot more money. [A call option is a contract that gives a buyer the right to buy a certain stock at a certain price within a certain amount of time.] I have a little bit of the stock right now, nothing much. I saw some people making truly massive plays with it, and it seems crazy to me. I had two calls for Feb. 12 at $60, which I paid $1.99 for, and I sold when they were at $5. I think they’re sitting at like $70 or more now.
What was it like watching the GameStop stock prices fluctuate?
It was crazy, because none of it is tied to reality. It’s tied to online enthusiasm. I know that big institutions are going to find a way to win. They are very smart people. They are very unscrupulous. A bunch of people putting in a half-hour a day into memes aren’t going to crack anything that they can’t crack. I’m apprehensive about getting too excited about any of it. This is stupid and it can’t go on forever, but I might as well see if I can get a few free dinners out of it.
What did you see on WallStreetBets that made you think GameStop would surge?
I know this would be the time to have sound due diligence and look for a somewhat observable, repeatable pattern, but honestly it was just idiotic enthusiasm. It was people saying that they’re taking money out of their retirement savings and dumping it into this. Basically, a bunch of people behaving irresponsibly made me think, “OK, any fundamentals about GameStop are probably irrelevant if this large population of people is now doing something stupid.” I have no doubt that the large institutional investment firms are going to find a way to screw all of these people. They’re not trained investors, but at the moment it seems like if everybody just keeps buying the stock, there’s only one direction it can go.
It’s a little hard to quantify, but it’s mostly just a lot of people posting memes about a stock and a lot of enthusiastic posts mixed with a little bit of positive due diligence. I saw one or two people post serious analyses about what’s going to happen to the short sellers [who have positions in GME] and that if everyone just holds them, there has to be a short squeeze and then the stock has to go up. Then beyond that, just the waves and waves of people screaming “Hold!” and posting Braveheart memes where they’re holding the stock until the British go bankrupt.
Do you think these Redditors were investing in GameStop strategically for profit, or did it seem more like a stunt or meme?
It’s probably mostly people doing it as a meme, but not entirely just because it’s a joke. I think they think that they’re investing soundly. If you follow that subreddit, there’s a small population of people who seem to really know what they’re doing and look at the fundamentals of businesses, and they will post really in-depth due diligence and try to teach people things. There’s a much larger portion of people probably doing what I’m doing: It’s just watching for easy trends to follow, and if you can ride the momentum up, it tends to work pretty well. I have not thrown anywhere close to the amount of money some people have.
Do you worry that a lot of these people are just throwing money around willy-nilly?
I do. I think that it would probably feed into an addictive personality in a very negative way. I mean it’s gambling—the subreddit is called WallStreetBets. I can enjoy my time at the casino as much as anybody, but it’s not going to impact my ability to do anything I want to do if I lose it. I don’t get the impression that all of the people who frequent that subreddit are of that persuasion. When you see a couple people turning $20,000 into $20 million, it’s really difficult I think for some people not to start chasing that dragon.
What do you make of the culture and online enthusiasm around the GameStop stock?
The more people that are in the market, the better it is for a lot of things. But this does feel like the sort of thing that’s the precursor to another crash. These decisions aren’t always being made soundly and people don’t really know what they’re doing. I hope that the right guardrails are in place and the SEC is paying enough attention. A bunch of people doing irresponsible stuff with their money feels 1920s-ish. I’m a little worried about what happens when all of them lose all the money they put into GameStop. Maybe just living through 2008 made a lot of us this way, but it strikes me as something that just can’t go on. Somebody is going to find a way to centralize all this.
Have you purchased stocks based on what you’ve seen on WallStreetBets before?
I’ve done that a few times. ACB [Aurora Cannabis Inc.] last year I bought some of, which I wound up about flat on. It may have made a little bit of money. For years I was doing an Activision play before BlizzCon. I was buying calls and then it was jumping after BlizzCon. I stopped that three or four years ago when I had a kid, and I didn’t have as much liquidity. I’m glad I did, because it would’ve stopped working. I’m pretty sure I saw that strategy on WallStreetBets. They’re heavily focused toward exactly what you’d expect of Reddit—video games and PC technology.
What are your plans for your remaining GME shares?
I’m going to hold them for a little while. If they were options, I would be thinking about it harder. Even if there’s the biggest short squeeze in history, I make a couple thousand dollars and it’s not worth too much stress. Once I feel like I’ve made enough money to be happy, I’m just going to sell them. If I lose the money on them and GameStop goes to zero, it’s not that big a deal. I’m honestly more stressed that I sold the options I had, which if I were still holding could potentially have made me five figures on a $200 investment.