GameStop Mania Lecture Notes

Introduction

• Community for everything on the internet, but unique phenomena surrounding GameStop.
• Early 2021 mania in media regarding GameStop stock.
• Ordinary citizens gathered to buy shares, causing madness in the stock market.
• David vs. Goliath narrative: small investors against hedge funds.

The GameStop Phenomenon

• GameStop's stock price surged, shaking Wall Street.
• Hedge funds lost billions, leading to speculation on the future of GameStop.
• Speaker's personal investment: belief in GameStop as a company, buying shares daily.

Investigation Journey

• Initial investigation turned into an obsession with the community's motivations.
• Conspiracy theories and cult-like behavior emerged within the investor community.

Media and Information Sources

• The role of sponsors like Ground News in providing reliable information.
• Importance of political bias and reliability in news sources.
• Example: Brazil suspended the use of X; Ground News helped analyze the varied coverage.

Marantz Rico's Perspective

• Marantz Rico, a YouTuber and Costco manager, invested heavily in GameStop.
• Shares personal experiences with investing and community engagement.
• Community dynamics: r/superstock for research and discussions on GameStop.

Hedge Funds and Short Selling

• Hedge funds like Melvin Capital shorted GameStop, betting on its failure.
• Short selling explained: borrowing shares, selling, and repurchasing at lower prices.
• Risks involved in short selling and potential for a short squeeze.

Roaring Kitty (Keith Gill)

• Keith Gill, aka Roaring Kitty, became a pivotal figure in the GameStop movement.
• His investment thesis: GameStop was undervalued and had potential for growth.
• Initially ridiculed but gained popularity as the stock rose.

WallStreetBets Community

• WallStreetBets: a Reddit community of retail investors with a gambling mentality.
• Emphasis on YOLO bets and meme culture.
• Transformative impact of Roaring Kitty’s investment strategy on the community.

Trading Platforms and Accessibility

• Robinhood app's role in facilitating easy trading for retail investors.
• The frenzy surrounding GameStop shares and community solidarity.
• Strategy: buy and hold to force hedge funds to cover short positions.

Aftermath of the Mania

• Peak price of GameStop shares reached $348, with Roaring Kitty’s investment ballooning.
• Market volatility followed: Robinhood restricted trading, leading to outrage.
• Congressional hearings followed due to the buy button controversy.

Persisting Beliefs and Theories

• Continued belief in a future short squeeze (MOAS - mother of all short squeezes).
• Delusional aspects of community: belief in corruption and conspiracy theories.
• Naked short selling discussed as a possible explanation for perceived market manipulation.

Community Dynamics

• Shift in discussions from investing to broader social and economic critiques.
• Formation of Super Stonk subreddit after moderation issues on WallStreetBets.
• GME Meltdown subreddit: a counter-narrative mocking extreme beliefs of GameStop investors.

Ryan Cohen's Role

• Ryan Cohen, CEO of GameStop, seen as a messiah figure by retail investors.
• His background with Chewy and perceived intentions to turn GameStop around.
• Critique of Cohen’s effectiveness and community's cult-like adoration.

Conclusion

• The ongoing saga of GameStop illustrates the intersection of finance, community, and ideology.
• The potential for future events, such as MOAS, remains a point of contention.
• Broader implications for capitalism and the financial system discussed.

Key Takeaways

• GameStop phenomenon reflects deep-seated beliefs in retail investor empowerment.
• Community dynamics can lead to extreme behaviors and conspiracy theories.
• Importance of critical thinking and reliable information in financial markets.