This past week has seen the highest density of frigid, glacial, Coca Cola polar bear commercial cold takes since the 2014 Grammys. If the news cycle doesn’t move on soon, the cooling power of just the tweets containing the words Reddit, Wall Street, and GameStop alone will be enough to reverse the effects of the past five decades of carbon emissions on the environment. Seriously, since Monday, when GameStop stock began its skyrocketing price increase in earnest, 50% of Bangladesh has risen from the Ocean — that’s science.
If you somehow have managed to go this whole month without hearing about GameStop, or GME, which is the company’s New York Stock Exchange listing, then congratulations on being dead. Not sure how you’re reading this from beyond the veil, but I appreciate your time nonetheless. In return, I will take a moment to recap this week’s turmoil so that you and your mediums can follow along, and not because I need an excuse to explain something everyone already knows about for the sake of structure.
So here’s the sitch, ghosts: Institutional investors on Wall Street had decided that GameStop, a mostly brick and mortar video game retailer and franchised panopticon for women, could not keep up with the increasingly digitized world, and was no longer capable of providing a profitable service. Despite a high profile investment from an online pet food mogul (sick) named Ryan Cohen, wealthy hedge funds like Melvin Capital, and activist short sellers like the infamous Citron Research founder, Andrew Left published “short positions,” best understood as bets against the value of the stock in the market. In fact, confidence in GameStop had gotten so low that the total value of shorted stocks had exceeded the company’s market cap.
Short selling is an investment tool that allows a short seller to borrow shares from a broker and sell them off at the current market price. Since the shares are borrowed, you, the short seller, have to give them back at some point, which requires you to buy back those same shares. If you buy them back at a lower price, then you pocket the difference in price as profit, which is good for you. The fun part is when the share price doesn’t decrease and instead goes up, in which case the potential losses are infinite until you “cover” your short position, buying back the shares at a higher price than what you sold them for. In this case, when you give them back to the broker, they make the difference in price as profit instead.
What happened with GameStop is that users on the Reddit forum r/wallstreetbets all banded together in a month of virginal business major solidarity and bought GameStop and other heavily shorted stocks in droves. This sent stock prices up through the roof, and as the climb picked up momentum, short sellers were forced to cover their positions in the face of massive increases in share value. This further increased market value, because remember you have to buy stock to give them back, and by the end of this past week, GME was up over 1900% in the four weeks since 2021 began.
Okay, now that everyone, living and dead, is aware of what has gone on, because I’m sure it hasn’t been explained to you five times already by everyone and their shitty boyfriend, we can get to what I really wanna talk about, which is the sheer volume of sweltering hot garbage this financial anomaly has spawned. From the side of the fedora fiesta and sympathetic media, dumbass David and Goliath references abound. From Wall Street and associated bourgeois interests, whiny protests of foul play that would embarrass even the most Spanish of soccer players. And from politicians, just some really fucking weird tweet threads.
We’ll start with the Redditors because I’m literally barely containing my need to bully them, so please just let me get it off my chest. Firstly, this narrative of “sticking it to Wall Street” is so goddamn childish it could star in the anime porn all Reddit users watch. On Saturday, Business Insider reported that short sellers have lost about $19 billion on GameStop, which isn’t nothing, so cool, eat the rich. However, the website institutionalinvestor.com reported that in 2019, the top 25 hedge fund managers made a combined $20.2 billion in fees alone. I’m sure the 19 billion stings, but I don’t think it’ll spell the end of capitalism as we know it, comrade.
And I’m not sure if you know this, Reddit, but you don’t buy or sell shares like GameStop’s from your La-Z-Boy for free. Even if you use a free amateur trading app like RobinHood, which I’ll talk more about in a bit, that app makes money by routing your purchases through a “market making” firm which in turn makes money based on the frequency of trades on the market. In other words, when large numbers of people, like, let’s say, a Reddit mob, start making lots of trades, these market makers — the very same Goliaths you were trying to David — profit. So, get fucked, basically, is what I’m saying.
Speaking of these market makers though, let’s flip to the other side of the coin: bitchy billionaires. I need to talk about a guy named Ken Griffin. He owns one of those market making firms, a company called Citadel Securities. He also owns a hedge fund called Citadel LLC, which bailed out Melvin Capital, one of the higher profile short sellers that ate it last week. Citadel Securities receives a large portion of its retail order flow, its revenue base, from transactions made by amateur traders on RobinHood — in exchange for fees called “payment for order flow,” a mechanism apparently pioneered by Bernie Madoff, the Ponzi scheme guy, so you know it’s gotta be real healthy.
On Thursday, RobinHood and other amateur trading platforms suspended the purchasing of GME and other shorted stocks like those of AMC, a movie theatre company, and Blackberry, a brick maker. RobinHood was instantly accused of yielding to pressure from Griffin, who presumably doesn’t like all these poor people up in his business. Statements from both RobinHood and Citadel Securities deny wrongdoing, but a number of high profile congresspeople have shown support for investigations into this shady shit, and RobinHood has backed down and allowed trading again.
On top of RobinHood and other trading apps’ decisions to take their collective ball and go home, bootlicking pundits have accused the pajama people of market manipulation, an accusation that the Securities and Exchange Commission, the States’ biggest financial regulator has said it’s “monitoring.” Colloquially, the type of market manipulation r/wallstreetbets has been accused of is called ‘pump and dump,’ where you conspire to pump up the price of a stock, and then sell it off before it crashes back down to earth.
The thing is, this was an online message board, not a renaissance coffee shop. It’s not like you couldn’t have seen this coming, and at no point has there been any mention of the ‘dump’ part of that equation — Redditors seem to truly believe that they’ll save GameStop as a company even though it doesn’t do or make anything anyone wants to pay for, and a high stock price does nothing for revenue. Pump and dump, more like pump and dumb amirite?
Yikes, anyway, I find it insane that somehow Wall Street losers want to argue that telling a bunch of people to buy stock online should be illegal, but telling a bunch of people not to buy stock online (like, you know, how publishing a short position works?) is perfectly fine. The hypocrisy of their world was exposed by a community of basement-dwellers, so they complained that the hypocrisy wasn’t working well enough. Cool, guys.
And just real quick, I wanna take a second to make fun of politicians. In response to RobinHood’s suspension on Thursday, New York congresswoman Alexandria Ocasio-Cortez tweeted out her outrage. Ted Cruz, who I think definitely has a crush on her, tweeted his support, to which AOC swiftly responded by accusing him of trying to have her murdered on January 6th, and calling on him to resign.
At best this accusation is half true; Cruz’ support of conspiracy theories alleging election fraud in the 2020 presidential election no doubt spurred the Capitol Hill raiders on, but the only direct threat against AOC's life, which is under investigation by the FBI, was made after the riots had begun, and no congressperson was harmed in the invasion. The exchange just made them both look silly, Cruz because if he really gave a shit about reigning in Wall Street, he wouldn’t have given his full throated support to a president who consistently cut taxes for its biggest profiteers, and AOC because, while she does have a point: Ted Cruz can definitely suck a dick, this is a Twitter thread about financial misconduct ma’am, not fucking Ace Attorney Phoenix Wright.
That last one doesn’t really have the biggest impact on the situation, it’s just in my contract that I have to shit on as many politicians as possible, I have a quota. The point is that this past week has pissed me more and more off, as both sides of this billion dollar scuffle have spewed increasingly inane platitudes about either “trust in our financial institutions” or “the biggest redistribution of wealth in history,” like shut the fuck up. Nobody has had trust in our financial institutions for a decade, and there are literally billions of people I would rather redistribute wealth to than Redditors.
The thing is, as misguided as these “power to the people” celebrations are, I’m in a position at this point where I don’t want to take away from anything that might be able to actually motivate a movement toward defanging the rich fucks on Wall Street who do everything in their power to further crowbar apart wealth inequality. We got kinda close in 2011 with Occupy Wall Street, but nobody could ever really discern what it was those guys wanted, and Bernie Sanders got primaried, so the executive branch is out of the question — it’s not like Joe Biden is gonna bring about radical systemic change, the only thing radical about him is his views on the incest taboo.
I’m willing, as much as it makes me wanna vomit, to put my support behind Reddit’s crusade against short sellers if it means stifling Wall Street’s stranglehold on market participation even a little bit, because at this point I’m getting desperate for any indication that things are going to get better. So fuck it, cue the dramatic music: In a battle of titans, history's two biggest communities of gatekeeping white boys come head to head for a brutal battle with billions at stake. Will GameStop survive? Will Ted Cruz ever confess his forbidden love for AOC? Will people who buy stocks ever stop being such cucks? Find out this week, on the newest episode of Countdown to Extinction: 2021.