Source: Google.
Ike bought shares of GME at around $ 30 and says he spent around $ 600 on his position. He says his option is now worth around five times that value, but is still waiting before selling it.
When asked why they got into GME, Ike said it took “a little bit of persuasion” and due diligence, but it was “mostly FOMO [or, Fear of Missing Out]. “
Another trader named Tj says they are investing “on the side for fun” while working as a full-time engineer at a large tech company. Their option is worth six figures after entering at a purchase price of around $ 18 per share.In keeping with their 4chan with a Bloomberg Terminal mantra, these traders prefer to make their way through Wall Street, using terms like FOMO or YOLO. [You Only Live Once] to explain their investment decisions.
An investor named Sage said he has only been following r / WallStreetBets for “about two months” and that investing is a “side business”. For “about five minutes,” Sage’s GME options were worth $ 33,000, based on an initial investment of $ 1,000. Although they chose not to sell.
The biggest achievement is someone going through u / DeepFu * kingValue on WallStreetBets who regularly updates the subreddit on the price of their option which is currently valued at $ 13 million.
The energy that the subreddit brings to trading can only be described as chaotic. A thread from user u / dumbledoreRothIRA is titled, “I DON’T SELL THIS UNTIL $ 1000 + GME” with an additional swearword and rocket emojis for good measure.
The sub-reddit also claims a ‘victory’ over hedge fund Melvin Capital Management, a short seller who the Wall Street Journal says is getting outside investment to help stabilize the fund after a variety of bets fail. short. One of them was Melvin’s bet against GameStop.
GameStop, a meme?
One of the reasons that GameStop’s inventory situation is so absurd is that for the past three years, GameStop has struggled as a business. A physical video game retailer, GameStop has not been able to compete with digital retailers like Amazon, as well as the growing tendency for customers to primarily buy digital versions of games through portals like Steam, PSN, or Xbox Live.
When IGN spoke with GameStop’s director of customer service, Frank Hamlin, in 2019, he explained, “As a specialty retailer, we are tied to this category of video games. We are competing with a group of general retailers that don’t have the same seasonality as us because they sell paper napkins and loaves of bread and they can use video games as a leader to sell. a loaf of bread.
Increased competition has forced GameStop to close around 400 and 450 stores in 2020, and the COVID-19 pandemic has not helped physical retailers like GameStop at all.
But GameStop is a mainstay of the game’s public consciousness, and brand recognition has pushed WallStreetBets to embrace the struggling brand. While investors on Wall Street proper saw a struggling retailer, WallStreetBets saw an underdog and a childhood part of the game.
GameStop – Experimental Stores
Sage says that while “Reddit Hype” factored in their decision to take on GME, “Childhood Memories” did too. Meanwhile, Tj tells IGN that their non-retirement investment comes with extra income. “So I thought I might as well throw it in the last meme and let it roll,” they said.
Branyan, another trader who spoke with IGN, said knowing GameStop helped them take their own position.
“I did my fair share of shopping there,” Branyan says. “It really made a difference that I knew the company was blindly opposed. I trusted them for my business, so I should be able to trust them for my jobs. “
Ike says they were very aware of GameStop both from their childhood and the latest news. “Like most of my age [GameStop] I was a place I often went for games as a kid, and I knew its decline by watching the closing of a [of the stores] near me.”
However, Ike cites the addition of animal retail giant Chewy’s co-founder Ryan Cohen to GameStop’s board and the company’s attempts to turn some of its stores into experiential event spaces like signs of positive change.
What happens next?
One of the side effects of the GameStop inventory squeeze is the increased control over r / WallStreetBets. Mainstream and finance-focused posts have been covering the subreddit in recent days – and not in a way the community finds useful.
“The media coverage has been unfair and misleading, often referring to the BMS as a single entity that makes decisions for millions of people,” Ike says. “But just take a look at the sub and you will see how wrong it is, [it’s] full of people taking all sides [on an investment] and people post random messages half the time. “
Tj says they’re worried the media coverage could hurt inexperienced investors “who get into stocks without doing any research.” They believe “a lot of people will lose more than they can afford” because of notoriety.“Well to tell you the truth [the media coverage] is very worrying, ”adds Branyan. “Many subreddits have been shut down in the past and wiped out due to negative media coverage. The coverage we are getting now seems to suggest that we are trying to manipulate the market as a single collective body. This is not the case. We are just a group of investors who like to discuss what we do. “
“People make huge YOLOs and succeed sometimes and people like to see that. This is what you will find at the base of WSB. People either succeed or lose while trying. We are not trying to manipulate the market, we are trying to go big or die trying. Each of us. “
As for their GME options, investors say they will eventually sell and hopefully turn a profit.
“I will sell when u / deepfu * kingvalue sells,” Sage says.
Matt TM Kim is a reporter for IGN.
