In February 2020, Game Stop stock was trading at $3.60 a share. The prospects for a brick-and-mortar business selling gaming discs and consoles in an era when direct downloads were taking off wasn’t particularly bright. Game Stop was beginning to look a bit like the next Blockbuster, and the stock was rarely mentioned in the Wall Street Journal and similar publications.
A year later things were dramatically different. Game Stop stock was at the center of an amazing short squeeze as retail investors pushed the stock to almost $350 a share, an almost 100x increase in value. And it’s not like they cured cancer during the intervening year.
Instead, Game Stop was at the center of an amazing confluence of events. Retail traders using platforms like Robin Hood were congregating on a Reddit site called Wall Street bets. Many were following the lead of a 34-year-old financial wellness expert named Keith Gill whose Reddit screen name was Deep[blanking[ Value.
Ultimately the music stopped and Game Stop stock closed at $50.31 on February 9, 2021. Millions of shares were traded, the brokerage firm Robin Hood had to halt purchases in Game Stock shares briefly in late January leading to cries that the game was rigged in favor of the big hedge funds, and indeed one of the largest hedge funds in the world lost nearly half its value due to a large short position in Game Stop.
So how did this obscure stock suddenly become the biggest financial story of January 2021? What is WallStreetBets and how did it become influential? How has Robin Hood changed the world of investing and is it good for the little guy? And ultimately who won and who lost in the Game Stop rise and fall?
We are lucky this morning to have with us Wall Street Journal Reporter Spencer Jakab, author of a fascinating new book, “The Revolution that Wasn’t: Game Stop and the Fleecing of Small Investors.”
