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Photographer: Patrick T. Fallon / Bloomberg
Photographer: Patrick T. Fallon / Bloomberg
There is a certain irony in the fact that Reddit, an online chat community full of gamers, has propelled GameStop Corp. at incredible levels. After all, video game fans have loved to hate the struggling retailer for decades.
Over the past week, a collective of individual traders from Reddit’s r / WallStreetBets community sent GameStop stock to astronomical heights as part of an experiment to stick it to the hedge funds, which had sold it. open action. At the start of this year, GameStop was trading at $ 17. As of Wednesday afternoon, it exceeded $ 340, valuing the unprofitable company at over $ 25 billion.
GameStop’s revival may seem like good news for video game fans. But unlike beloved retailer Toys R Us Inc., GameStop has never been very popular among gamers. Perhaps the Reddit community that chose GameStop as their stock to pump was a giant joke.
“It’s like in the movies when bullies vote for the nerd to be the prom queen just for the joke,” said Andy Cortez, host and producer of the video game YouTube channel Kinda funny.
Gamers have a long list of complaints about Grapevine, Texas-based GameStop from the way they treat employees with their pushy and controversial sales tactics.
Over the years, many gamers have reluctantly bought from GameStop purely because they had no choice. The store made it easy to exchange old games for cash or use them for other purchases, which cash-strapped fans might appreciate. But values have become a punchline. A brand new game, which costs $ 60, can fetch $ 30 at your local GameStop. Older games would fetch a few dollars at most. Social media is full of jokes about how you can trade GameStop stock at the retailer for a fraction of the price.
The company has also become known for its questionable practices such as selling open copies of games as if they were new. Sometimes customers would take home a “new” game only to find someone else’s save file was already on the cartridge.
Many video game fans grew weary of the way GameStop treated staff and how those employees were expected to deal with customers. Worker performance was linked to the number of game pre-orders and reward cards sold, resulting in constant peddling. It was impossible to call or visit a GameStop store without being pressured into pre-ordering the games that would come out next.
In 2017, GameStop made headlines for its controversial Circle of Life program, which essentially punished employees for selling new games instead of used games. As a result, some staff have said they will lie to customers about whether they have new copies in stock.
Video game publishers don’t like GameStop either. When customers bought used games, the people who actually created those games didn’t see a dime, which led to companies like Electronic Arts Inc. has started strategies to get people to buy new copies. The publisher decided to put a one-time code in every copy of certain games, rewarding whoever got there first – and punishing the second-hand market.
So, for many gamers to see GameStop as the butt of a Wall Street joke is a dose of schadenfreude.
Such widespread contempt for the retailer from all corners of the gaming industry has likely helped fuel the frenzy behind GameStop on Reddit.
Soaring stocks make no sense. GameStop struggled as many former customers switched to purchasing digital copies directly from their consoles. The coronavirus pandemic, which has kept most people out of the malls where many GameStops operate, has exacerbated the company’s decline and reported a 30% drop in sales in the quarter ended Oct. 31.
The r / WallStreetBets campaign shows that most investors who push stocks up are motivated by a populist desire to eliminate hedge funds with big shorts. But the whole room was also boosted by internet jokes or memes. And for gamers, there are few memes bigger than GameStop.
“If it was just Google or something like that, nobody would care that much,” said Allen, the ar / WallStreetBets poster who asked to be identified only by his first name, during a telephone interview. “But the fact that it’s GameStop, that we’re going to take a hedge fund because they bypassed GameStop, it’s funny. There are great memes to do with it.
Allen said he now owns more than 1,000 shares in the retailer, which he bought a few months ago for less than $ 20. He said he sees this as an opportunity for GameStop to become a better company without the pressure from Wall Street short sellers. “If this company is to go out of business, it deserves to go out of business on its own terms,” Allen said.
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