GameStop Stock Soars, On The Wings Of The Gadflies Of Reddit
The hard-pressed video game retailer, “GameStop”, a struggling brick-and-mortar store with which, until recently, only the most ardent of gamers and avaricious of investors were even distantly acquainted, has gripped our national attention, and shocked the financial world.
Over the course of the past few weeks, GameStop’s stock price has enjoyed a meteoric rise. On the seventeenth of January, for example, before blind Plutus—hobbled god of wealth—stumbled onto its path and redirected its glorious fate, the humble vendor of games offered its shares at $17.52 a piece. Even that price, some might argue, was probably an inflation of its genuine worth. In July of 2020, for example, its stock was traded at a meager $4 per share, and it showed little promise of improving on this modest sum.
Now, strapped to the wings of a million gadflies from Reddit, by whom its climbing value has been wondrously propelled, it’s soared to $396.50, as of yesterday, the twenty-eighth of this month. For those of us little enamored of math, that change marks an increase in excess of 2,000%, the type of drastic change and unanticipated spike to which, often belatedly, unsophisticated investors will be inevitably allured, and securities fraud analysts, glaringly alerted.
At this point, the inquisitive and economically-savvy listener might be asking herself a perfectly logical question: to what great innovation in the realm of internet gaming and televisual play does GameStop attribute so fantastic a rate of growth? Has this stagnant company, but only recently dismissed as obsolescent and beyond hope, created a product so novel and engrossing, so precious and fun, that we’ll never be made to feel the dull bite of tedium again?
To each of these fair questions, dear listener, I answer in the negative.
GameStop, while an admirable and nostalgic company, was responsible for the creation of no such thing. On the contrary, it was sliding into the depths of unprofitability, a hole out of which, sadly, so few businesses ever fully climb. Knowing this, keen market-watchers and deep-pocketed investors were eager to earn a buck from its steady decline. Such people have earned not only great wealth from so mischievous and clever a technique, but a somewhat detested name; those who foresee the opportunity to profit from a company’s fall are known as “Short Sellers”, and it’s to them we now turn.
In the shared opinion of these perspicacious investors and well-heeled hedge fund managers, GameStop was ripe for a “Short Sell”. They all joined to bet on its coming failure, and patiently awaited its imminent demise.
They were doubtless startled to learn, then, that the share price suddenly began to increase…and increase…and increase. The cavalry, it seems, had arrived in support of this bleeding company, into which it proceeded to pump a huge bolus of healing dollars. If only temporarily, these “Wall Street Betting” Redditors, a group of internet-enthused investors by whom the institutional Goliaths were for once laid low, bandaged, propped up, and rescued GameStop from the field of battle on which it writhed.
With the type of collective wrath to which only an angry mass gathered on the social media site, Reddit can give birth, they decided to “stick it” to the establishment finance class. They did so, whether consciously or not, by creating a “Short Squeeze”, a phenomenon at which “long-term” investors (like me) tend to shake their conservative heads and chuckle. The share price of GameStop climbed ever higher, as the Short Sellers did their best to cut their mounting losses.
Those losses, by the way, are thought to be as high as twenty-three billion.
Never before has there been so unusual a week in finance. What’s more, this story, only half-written, isn’t yet done.