By now, you will probably have heard something about the stock market tug of war between online traders and Wall Street hedge funds over the surging stock prices of several companies, primarily GameStop and AMC. As our Tiana Lowe explains in this week’s Your Land, a handful of Wall Street hedge funds staked out a massive short position on these companies: They bet big on the stock price of GME, AMC, and others to go down. Amateur traders on Wall Street Bets, an investing-focused forum on Reddit, noticed that this position was untenable (for example, hedge funds had collectively shorted 140% of GameStop shares available) and began to buy up these companies’ stock in massive quantities. The coordinated deluge of purchasing drove up the stocks’ prices, which forced hedge funds to buy up more stock to maintain their positions, further driving up the price — known as a “short squeeze.”
The desire to make money and stick it to the fat cats is definitely a motivating factor here, but it’s important to recognize the deeply memetic and ironic motivations that helped propel this squeeze play to national significance. As Bloomberg’s Jason Schreier aptly noted, GameStop is a company almost universally loathed by gamers and Redditors. The company’s M.O. is about ripping off consumers by underpaying gamers for their used games, only to turn around and overcharge customers for those same games (often pretending they are new, not used).
“If this was just Google or something, no one would care that much,” a Wall Street Bets poster explained. “But the fact that it’s GameStop, that we’re going to take on a hedge fund because they shorted GameStop, it’s funny. There are great memes to be made out of it.”
Such is the nature of the internet. In March 2016, the British Natural Environment Research Council naively decided to let its newest polar research vessel be named via an online poll. The overwhelming winner as chosen by the public was a write-in: RRS Boaty McBoatface. The name, jokingly suggested by BBC Radio Jersey presenter James Hand, had gone viral. (The British government named the ship the Sir David Attenborough.)
The scale of pranks has naturally increased with the advancement of information sharing, first in print and then electronically. In 1708, satirist and Gulliver’s Travels author Jonathan Swift played a prank on England’s then-foremost astrologer, John Partridge, a charlatan who sold fake predictions to public almanacs. After Partridge had predicted a fever would descend on London, Swift assumed a pen name and wrote a public eulogy for him, convincing many a Londoner that Partridge had died at the hands of his own fraudulent sickness.
Such high jinks have existed as long as humanity. The adolescent Roman Emperor Elagabalus, who ruled from 218 until his death at age 18 in 222, was reportedly fond of seating disliked patrician dinner guests on whoopee cushions. An 1888 issue of the Magazine of Western History tells the story of a fifth-century Greek architect who got the upper hand in a feud with his neighbor by constructing water boilers in his own house and connecting them to a hose he had sneaked into the cellar next door, letting loose steam with earthshaking force on his neighbor.
In what appears to be naked collusion between big funds and online public brokerage firms, Wall Street has, as of now, put the kibosh on continued average Joe investing in GameStop and other such companies. This has changed the tenor of the whole ordeal to something considerably darker. Now, it’s a fight for a fair system, but before, it was about the lulz.
