The GameStop phenomenon kicked off a new era in the stock market and introduced the world to the concept of the meme stock.
A new generation of retail traders – mobilized on Reddit, Twitter, and StockTwits – made headlines in January 2021 when they caused shares of ailing video-game retailer GameStop to skyrocket far beyond what analysts saw as the fundamental value of the company.
The army of retail traders drove the share price from low double digits in early January to a record high close of $US347.51 ($AU473) on January 27. Analysts scoffed at the high-flying share price, saying it went against everything they knew about picking stocks based on fundamentals or financial analysis.
But traders were focused on a bigger goal – something they called the “mother of all short squeezes.” The Wall Street Bets crowd hoped to deal a blow to short sellers betting against the stock. And they did just that. The massive short squeeze came to represent a David versus Goliath moment in the eyes of Wall Street Bets users, and an airing of grievances similar to the Occupy Wall Street movement a decade earlier.
A revamp at the company appears to be underway. The brick-and-mortar retailer has appointed Chewy co-founder Ryan Cohen to spearhead an ecommerce-focused turnaround for the business. Cohen, predictably, has become a hero to the GameStop bulls on Wall Street Bets.
As GameStop shares surged, so did the number of Wall Street Bets users. Now boasting close to 11 million accounts, the thread has been a gathering space for retail traders boosting “meme stocks.” GameStop was the first of its kind, and others, including AMC Entertainment, BlackBerry, Bed Bath & Beyond, and Virgin Galactic, have followed.
This nonfungible token, better known as an NFT, is a unique piece of memorabilia from a historic time in the financial markets.
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