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Inside Beat

GameStop revolution may not be so revolutionary after all

For the first time, working class people leveraged the power of the market to make Wall Street lose billions, but the effect of their efforts may not be as profound as we thought.  – Photo by

As Kate McKinnon said during Saturday Night Live’s cold open, "Let’s take a look at the stock market. That usually works, right? That’s where people invest all their retirement money, so it should probably work.” She quickly concluded that the stock market, in fact, doesn't work.

A week ago, I thought this was the highest form of flattery the GameStop revolution would be receiving. And then last night, I saw a commercial during the Super Bowl. You might not have caught it, as it was literally 5 seconds long, but Reddit purchased an ad that said, “If you're reading this, it means our bets paid off.”

In a split second, the screen would disappear, but the message, immortalized forever by the way thousands of football fans’ hearts stopped when they thought their TVs had been hacked, said, “One thing we learned from our communities last week is that underdogs can accomplish just about anything when we come together around a common area.”

I personally think that’s a pretty big compliment.

If you’re like me and don’t follow the stock market a whole lot, then you might have been confused by all the fuss around GameStop, AMC Entertainment Holdings, Nokia and BlackBerry in the past two weeks.

A precursory look at the memes and general feeling of exaltation and celebration on the web might imply that Wall Street has finally gotten their long-deserved comeuppance and the little guys, i.e., the more than 8.8 million members of the subreddit channel, r/WallStreetBets (WSB), were the ones to give it to them.

Unfortunately, a deeper look proves that that was not the case.

First, to even understand half of what is going on, let’s use an (over-simplified, highly satirized) analogy.

Imagine you’re in a classic, '90s teenage rom-com. There’s a group of cheerleaders, the ones always at the top of the social totem pole, that are putting bets on who’s going to get what superlative. They all vote this one girl in as “ugliest senior.”

Of course, being a '90s movie, this girl gets a makeover and becomes classically beautiful — and the audience collectively rolls their eyes because she was already beautiful to begin with — and the cheerleaders are left feeling like fools.

Now, think of those cheerleaders as the huge hedge funds on Wall Street and that “ugly senior” as the GameStop stock. The people that gave that girl a makeover: WSB. The collateral damage from betting on the wrong girl — i.e., stock — millions of dollars.

In a nutshell, that’s what the “short squeeze” on the GameStop stock was like. On Jan. 25, a post popped up on WSB by YouTuber Roaring Kitty, identified as Keith Patrick Gill, a 34-year-old financial advisor that formerly worked for MassMutual, according to Reuters.

Essentially, Gill believed that the GameStop stock was undervalued and that it still has a chance to grow online, according to Reuters. Either because they actually believed Gill or as a reaction to short-seller Citron Research’s negative evaluation of GameStop, a bunch of people started investing in the stock too.

So much so, GameStop was the most traded stock of the S&P 500 that day, and its trading had to be halted multiple times, according to The Wall Street Journal. Then on Jan. 26, Elon Musk said on Twitter, “Gamestonk!”

You probably know what happened next: The stock skyrocketed, people found themselves in the middle of a movement, and Robinhood found itself in deep trouble, mostly because it purports to make commission-free investing accessible to all, but then halted trading on its platform when GameStop was most profitable.

I’m not really an expert on the material and ins-and-outs of the stock-trading process — for that, you should look to real experts — but I do know that this event was more about its social impacts than its economic effects.

For one thing, Sen. Ted Cruz (R-Texas) and Rep. Alexandria Ocasio-Cortez (D-N.Y.) both agreed on something. “We now need to know more about @RobinhoodApp’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit,” Ocasio-Cortez said, which was then retweeted by Cruz and captioned “Fully agree.”

Maybe it speaks to how corrupt our financial systems seem to us and have proven to be that two people, who could not be further apart on the political spectrum, aren't willing to let Robinhood get away with blocking the common man from accessing his free right to trade.

Then there’s also the fact that people truly believe that they made a difference in sticking it to Wall Street and the hedge funds. I’m not sure that they didn’t succeed, but I'm also skeptical about what they succeeded in.

To be sure, those who traded their stocks wisely, getting in when the proverbial “rocket” was launching itself to the “moon,” were able to come out on top with a lot more money.

But the actual impact, supposedly conquering a hedge fund? Not as great as is perceived. Not to get too caught up in the weeds, but essentially, Melvin Capital, one of the cheerleaders who bet big against GameStop, lost a lot of money. It was then announced that Citadel Securities, the same hedge fund that works on fulfilling a lot of Robinhood orders, provided an “emergency influx of cash” to Melvin Capital to help it stabilize.

All that’s to say: Melvin Capital survives to play another day while GameStop is now experiencing its worst week in trading (its stock value fell by 80 percent) and the workers of GameStop and other companies caught in the trading war, left none the better.

In fact, my previous analogy even extends to this day because what happens to that girl (GameStop) once the people who gave her the makeover are done with her? She goes right back to her “regular” life, without so much as an end credit scene.

Honestly, I don't know GameStop’s future. Maybe Roaring Kitty is right, and we will get to see it flourish in the online gaming industry. But, for now, we’ll have to settle with hoping that Ocasio-Cortez and Cruz can work together long enough to make sure that the common man still has a chance to shake up Wall Street. If there is one thing for sure, we can expect that this isn't the end of WSB or its followers.

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