Gamestop’s last gasp: A joke that has gone on too long
Gamestop bounced back into the headlines yesterday, with the meme stock’s price more than doubling within an hour of the market opening.
The brick-and-mortar gaming shop has continued its rise today, jumping 75 per cent in overnight trading.
Gamestop might remind us of the funny happenings of the meme stock saga, but for those who have been out of the loop on the situation since, things have got a bit darker and more unbelievable.
A conspiracy theory has formed around meme stocks, falsely claiming that billions are in hidden short positions against certain companies, like Gamestop and Blackberry.
The theory is called ‘MOASS’ or the mother of all short squeezes. It’s based on the idea that short positions held by massive hedge funds will eventually collapse and bankrupt them, leaving the holders of Gamestop stocks rich beyond their wildest dreams.
Yes, seriously.
This isn’t a small conspiracy theory, either. The main Reddit forum dedicated to it, Superstonks, has almost 1m subscribers.
So how does this relate to yesterday’s stock price movement?
Roaring Kitty’s Gamestop journey
Keith Gill, known as Roaring Kitty or Deepfuckingvalue online, was an advocate for Gamestop in 2019, arguing that the company was undervalued. He bought $53,000 (£42,200) of stock in the company, and after the meme stock boom, had reportedly turned it into $48m (£38.2m).
However, Gill had been advocating for the stock based on its fundamentals, arguing that it might be worth three or four times what the market was valuing it. He was not expecting the 1,600 per cent increase that occurred during January 2021.
After encountering legal troubles and seeing the movement warp into an odd cult, Gill made the smart decision and fell off the internet, despite their best effort to turn him into a figurehead. That was, until yesterday.
Since Gill’s disappearance, Gamestop’s price has been on a steady decline, falling 83 per cent between March 2021 and last month.
Neil Wilson, chief market analyst at Finalto, stated there was “no fundamental reason for the move”, as the company’s last earnings report was “abysmal”.
The people who have spent the last three years buying worthless Gamestop stock feel a renewed sense of purpose. Their figurehead is back, their shares aren’t worthless, and they aren’t the losers here.
“I got in somewhat late at around 80-120 pre-split, but there were those who knew back then and were buying with [Roaring Kitty] at four bucks. Now we’re going to be those people,” said one Reddit user last week.
Warped conspiracy theories
This is not healthy. While it might have begun as a joke in 2021, the movement has clearly morphed into thousands of pages of warped conspiracy theories about the financial system, to the point where some think Gamestop shares will be worth infinity dollars.
Of course, not everyone buying the shares now is a conspiracy theorist – some are just hoping to make a quick buck off the hype frenzy.
But it can’t be overstated that thousands of people really believe that Gamestop shares will ‘reach the moon’ and take down the entire financial system.
“I think this frenzy is going to run all summer, with the likes of influencer Andrew Tate, among others, involved,” said Devere CEO Nigel Green. “Their power is immense and it’s going to be a rollercoaster.
“It’s a revival of the trend of 2021 and 2022 last year. Back then, many individual investors – often young and inexperienced – got badly burned by the experience. Without doubt, investors will get burned by this frenzy too.”
The meme stock community has become a huddle of conspiracy theorists and gambling addicts who will continue to funnel every penny they have into Gamestop, hoping that the dying brick-and-mortar store will somehow make them rich.
While it is nice to reminisce about the original meme stock boom, which was genuinely funny, this isn’t a joke anymore.