Can’t Stop Meme Stock
Reading Time: 5 minutesIt Was a Collective Online Delusion That Sparked a Whole Movie. They Still Aren’t Ready to Let Go., GameStop’s truest believers show Reddit’s capacity to foster blind detachment from offline reality., GameStop stock: The pious Reddit conspiracists holding
This is part of r/Farhad, in which MediaDownloader contributor Farhad Manjoo delves into the Reddit communities that bring him peculiar joy.
When I started writing this series on Reddit’s subcultures a few months ago, I knew that sooner or later I’d have to take on one of the internet’s angriest, most irrational, and overzealous fandoms: The people still waiting to make millions investing in GameStop.
The GameStop stock craze of early 2021 was, after all, a breakout moment for Reddit, perhaps the clearest example of the message board’s power to set off bizarro fads that send offline institutions reeling. Over the course of a few weeks during the dog days of the pandemic, investors on the subreddit r/WallStreetBets sparked viral interest in the struggling video game retailer, insisting that it had been long undervalued and unfairly targeted by hedge funds clamoring for its stock to tank.
For a while, they looked prescient. The retailer’s share price shot up from under $20 to nearly $500 within a few weeks, causing massive losses to some of the Wall Street firms betting against the company.
There was something inspiring about it, too. Unlike other asset bubbles that blew up during the pandemic—crypto, fine art, Rolexes, sneakers, and real estate also hit staggering valuations—the GameStop surge carried an undercurrent of social and political revolution: In the kindest telling, GameStop’s social-media champions were unselfconscious commoners (they called themselves ‘apes’ and ‘degenerates’) mounting a David-and-Goliath battle against Wall Street insiders, aiming not just to make a boatload of money, but also to make the markets accessible and fair for everyone in the process.
So why would I need to ‘take on’ the GameStoppers? Because even as GameStop’s share price has steadily declined since the 2021 spike, its most fanatic subcultures curdled into piety, conspiracism, and irrationality. Once an example of Reddit’s power to move the offline world, GameStop’s truest believers have lately become a better illustration of Reddit’s capacity to foster blind detachment from offline reality.
Nowhere is this more evident than on r/Superstonk, home to Reddit’s most devoted GameStop obsessives, and one of the closest experiences you can find to reading missives from a cult. The people of r/Superstonk are dogmatic, unforgiving of alternative views, indulgent of auguries and omens, simultaneously convinced of their righteousness yet constantly fretting about their opponents’ vast and mysterious powers to undermine them. They are kind of pathetic: Many Superstonkers don’t seem to realize that the very company they’re championing might be cashing in on their devotion, to the detriment of their own investments.
This year on r/SuperStonk has felt particularly divorced from GameStop’s fortunes. In March, GameStop reported that in 2023, for the first time in years, it had earned an annual profit. At just under $7 million, it was a very modest profit. But compared to the company’s loss of more than $300 million in 2022, the business appeared to have made a bit of a turnaround under Ryan Cohen, the e-commerce executive who began purchasing a major stake in GameStop in 2020 and became its chief executive last year.
Then in May, Keith Gill—the investor known online as Roaring Kitty or DeepFuckingValue whose analysis on r/WallStreetBets sparked the 2021 GameStop run-up—reappeared online after years of silence. In a series of cryptic tweets and a meandering YouTube livestream, Gill revealed that he’d accumulated a monster stake in GameStop call options, a position that at one point was valued at hundreds of millions of dollars.
In a rational world, modest profitability and inscrutable tweets should not signal a coming stock bonanza. Indeed, because GameStop’s profits are the result of cost cutting rather than improved sales—revenue in the first half of the company’s current fiscal year is running well below that of the same period last year—the company’s languishing share price seems unsurprising.
Yet seemingly every week on r/SuperStonk, members clamor over one or several posts that marshal far-flung factoids to argue that a glorious day known as MOASS is around the corner. What’s MOASS? An acronym for ‘mother of all short squeezes,’ it’s the long-promised day of liberation from Wall Street bigwigs who are ‘shorting,’ or betting against, GameStop’s shares. When MOASS comes, everyone invested in GameStop gets obscenely rich, and everyone betting against it is revealed to be a fraud, criminal, or plain idiot.
Of course, MOASS never comes. But superstonkers are undeterred: When the promised surge fails to materialize, they inevitably find some way to rationalize it—usually it’s evidence that their detractors on Wall Street are far more powerful than they’d ever guessed, and that they’ll just have to wait a week or two more to finally get the upper hand.
Some of these posts offer little more evidence than vibes—some people can feel MOASS ‘coming in the air tonight‘ and need to tell the world. ‘GOOD MORNING – HOPE YOU ENJOYED YOUR LAST POOR WEEKEND. MOASS IS NOW????????????’ posted one user in January. ‘Good night, apes. Sleep well. We’ll most likely have MOASS in the morning,’ another promised in June. Neither came to pass, but there is some self-awareness on r/Superstonk: ‘MOASS TOMORROW‘ is one of the board’s inside jokes.
Other predictions are far more involved, some tying together so many disparate and seemingly unrelated bits of supposed evidence that they come to seem like Charlie Day’s conspiracy-theory crazy board from It’s Always Sunny in Philadelphia. For instance, because Roaring Kitty once liked a tweet showing a still from the movie Run Lola Run, many posters saw clues in the 1998 film pointing to the precise mechanism by which GameStop’s stock would spike: ‘Run Lola Run is alluding to an options move that helps set off the bomb,’ one Superstonker wrote in May. Another pointed out that in the movie, Lola repeatedly bets all her money on 20 in roulette. The poster suggested that Roaring Kitty was subtly pushing people to buy call options at a $20 strike price. ‘My theory is that we will see another huge buy-in of calls with a strike price of 20 today,’ the poster predicted.
The trouble with all this sorcery is that it seems to be keeping GameStop fans from seeing the real cause of their beloved stock’s languishing share price: the company’s push to reap its own fortune from the shareholders’ devotion. The premise of MOASS is that if the stock price gets high enough, the ‘shorts’ who are betting against GameStop will have to buy more and more shares just to cover their bets, sending the stock price even higher and making their short positions even less tenable.
But every time GameStop’s share price has risen in 2024, the company has stepped in to issue even more shares—in other words, staving off MOASS by raking in money for itself, while keeping the stock price from surging. In May, it issued 45 million new shares; in June, 75 million more; and in September, another 20 million. The sales have significantly improved GameStop’s balance sheet; even though its business is just barely scraping by, the company now has more than $4 billion in cash from all these share sales. In a very real sense, GameStop is making more selling its own stock than selling anything else.
Occasionally a brave ape will point out that the company is diluting its shareholders’ interest by issuing so many shares. ‘I’m fairly suspicious of the near universal support on this sub for diluting the float again,’ one user wrote in June. He found some support from the crowd: ‘Thank you,’ wrote a commenter. ‘This place is an echo chamber borderline cult mentality.’
More recently, though, the cultists are back in force. By issuing so many shares, CEO Ryan Cohen has found an ‘infinite cash loop glitch,’ one poster swooned recently. ‘Pretty sure 95% of the negative sentiment is fabricated,’ wrote another. ‘If people were really as upset over the share offerings as they say they are… then why wouldn’t they just sell and move on to a different investment? No one is forcing anyone here to be invested in GME. There is zero reason to be angry enough to post about it online but not angry enough to sell.’
In other words: GameStop is a religion. Just shut up and have faith. MOASS tomorrow.
Reference: https://slate.com/technology/2024/10/reddit-gamestop-stock-wall-street.html
Ref: slate
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