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Stonks indeed

There was a version of this story where memes triumph over money. Then Robinhood reminded everyone that the house always wins in the end.

Seamus Byrne
Seamus Byrne
3 min read
Stonks indeed

Last time I sent this newsletter the price of Gamestop stock was US$65.01. It was already 10x over its price since the middle of 2020. In the past week it had grown another 7x and made the business world pay a lot more attention to WTF meme loving Redditors were doing to their precious Wall St casino.

When I talk to my kids about memes (yes, they love the memes) they like to point out there are a wide variety of meme cultures. Image memes are different to video memes are different to… you get the drift. Knowing how to 'read' one of these cultures doesn't mean you have a clue about reading the others.

This week it feels like, after years of 'stonks' memes, it spilled into the real markets. But in the process showed just how broken the levers are on who gets to decide what is and isn't acceptable in 'real' financial markets.

Yesterday I thought I'd be here making jokes about how Robinhood, an app that makes it easy to become a retail investor, had played a big role in transferring wealth from rich hedge funds to the less fortunate. Today was the day when hedge funds were due to pay up on a lot of short selling contracts, which was always the target of these meme investors who were being led by other Redditors who had actually done a lot of research on the nature of short selling and the potential opportunity in targeting stocks that were so short sold it was crazy.

I'm not going to try to explain it all. I've got the gist of what's been going on, but I'm no finance guy. But Gamestop was targeted because it was the most short sold stock on the market. 140% shorted – yes, more short sales than stock existed. Crazy town.

So it wasn't just some trolls buying Gamestop because they like games and hope their game stores stay open in the face of the digital transition. And as they succeeded they started on other heavily shorted stocks that are businesses facing huge uphill battles, like AMC cinemas, Nokia, and Blackberry.

[Meanwhile, other idiots were being idiots, buying an Australian GME mining stock because they thought it was the GME on the US market… it's crazy all the way down…]

I digress.

"We didn't restrict trading, we only restricted buying."- Vladimir Tenev, Robinhood CEO

When Robinhood decided to halt the buying of stocks the story changed. Suddenly it felt like the "democratise markets" startup was protecting markets right at the moment those hedge funds were about to lose their shirts. Terms and conditions were scoured, law suits have been filed.

But that classic line felt like it was crossed – the difference between what is legal and what is fair.

As some put it, the stock market has felt like a casino for a long time. Some people are allowed to bend the rules to breaking point and if something goes wrong they get bailed out. And here it seemed again. The wrong people were counting the cards, and pushing them away from the people who usually get to control the market movements. And so efforts were being made to tilt the scales back to where "they belong".

We can't ignore that it's all been a big laugh, but we must remember that the money is real. The opportunity for some of these 'Reddit trolls' was proving to be an amazing chance to make some money after a ridiculously difficult year, for health and for finances, for many people. The moment they were forced off the table, some being forced to sell at the lowest point in yesterday's Gamestop market position is a moment when they will be feeling that they were forced to give up very real money that would have made a big difference in their lives.

This isn't the same as spotting a crazy accidental $1 laptop on a store website and trying to buy ten. This is a moment when a strategy to beat a part of the market that intentionally bets against companies (with stocks they don't even have) worked, but as the moment came to be rewarded for your cleverness you were told you were the one who was cheating.

A lot of internet trolls, and meme lovers, are part of a disenfranchised generation that feels like an older generation is doing everything in its power to keep the good stuff for itself. It's hard to imagine they're feeling any different today.

Maybe this week is a catalyst for change. At least in the way people get to sell things they don't own in order to intentionally force a stock down. But then we also hoped for change after 2008. And even meme-worthy movies like 'The Big Short' didn't help to see anything real change out there.

PoliticsArt & Culture

Seamus Byrne Twitter

Founder and Head of Content at Byteside. Brings two decades of experience covering tech, digital culture, and their impacts on society.


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