GameStop rebels take on wolves of Wall Street

Short squeeze: Online forums are fueling a speculative bubble in GameStop shares. © Getty

Will the GameStop revolutionaries win in the end? Activist small investors have beaten the big hedge funds at their own game. But some say the share-buying frenzy will end in tears.

There is mayhem and fury on Wall Street. Last week, panic-stricken stockbrokers strained to keep up with the frenetic activity on the stock market. In boardrooms, horrified hedge fund managers watched as billions of dollars were wiped off the value of their company. Something new and terrifying was happening.

And behind it all: a struggling videogame store, an online forum and a billionaire’s tweet.

Last year, a share in GameStop cost less than $3. Last week it peaked at $469. Soaring stocks are usually good news for big business. But by the normal laws of economics, GameStop’s share price should not be booming. The pandemic has hit high street retailers hard and the shop has been forced to shut stores and lay off workers.

In fact, Wall Street was betting big that GameStop was doomed. Hedge funds make billions by borrowing stocks, selling them and buying them back when the price falls. It is called shorting and it is very controversial. The funds say they are protecting their clients. Critics call them wolves and vultures, preying on the weak. Last year, amidst a global economic crisis, they made $127bn.

And online, a rebel alliance is plotting to beat these big financiers at their own game. WallStreetBets is a community of amateur traders on the social media site Reddit. And they are out to cause trouble. By buying cheap GameStop shares, they aim to squeeze the price higher and watch triumphantly as the uber-rich lose their money.

“Let’s bankrupt these billionaires and hedge funds!” wrote one user. They are calling it a digital Peasants’ Revolt, a bottom-up rebellion against the wealthy. One small trader walked away with $23m. Another wrote they could now afford their sister’s medical bills.

And last Wednesday, the entrepreneur Elon Musk raised the flag for the GameStop revolution, tweeting “Gamestonk!” to his 44 million followers. The battle cry sent stocks soaring into space.

But after the revolt comes the crackdown. Facebook shut down a group linked to the GameStop traders, and stockbrokers limited how much these small investors could buy. Politicians on both ends of the spectrum joined the rebels’ cause, as the financial system pulled up the drawbridge and prepared for a siege.

Economists warn this will all end badly. Like the tulip mania of the 17th Century, GameStop is caught in a stock market bubble. At some point, reality will catch up with the wild speculation and the share price will tumble back to Earth. Anyone holding GameStop stocks will lose all their money.

So, is it game over for the revolution? Don’t bet on it, says business professor Scott Galloway. Income inequality will always be corrected by “war, revolution, or famine” and “These individuals basically stormed the castle.” They used new weapons and took financial elites by surprise. Even if they lose this time, they will be back.

Will the GameStop revolutionaries win in the end?

Gaming the system

Some say no, all revolutions end in failure. Ringleaders are punished and ordinary people pay the price. The super-rich control the financial and political institutions, giving them an overwhelming advantage over amateur investors. And as tech giants like Google and Facebook take over the Internet, it will become harder for groups to organise against the system.

Others say yes, if you take the long view. Feudalism was not overturned by one revolt and democracy was won over centuries of protest, struggle and revolution. An economic system that makes billionaires richer during a pandemic and a global recession cannot last. Like the storming of the Tower of London in 1381 or the Bastille in 1789, this is a symbolic moment when the powerful no longer appear invincible.

You Decide

  1. Is it right to steal from the rich and give to the poor?
  2. Is stock trading just another form of gambling?


  1. The game Monopoly was designed to show how capitalism works. Design your own game.
  2. Research the 1381 Peasants’ Revolt and write an online post, persuading people to rise up against the government of Richard II.

Some People Say...

“Markets can remain irrational longer than you can remain solvent.”

John Maynard Keynes (1883 - 1946), English economist

What do you think?

Q & A

What do we know?
It is generally agreed that the stock markets climbed to record levels in the past year, despite a recession that shrunk the global economy by 4.4%. Some of the biggest winners have been technology firms, as people spend less time on the high street and more time at home and online. Last year, the billionaire Ryan Cohen joined GameStop with plans to move the business online. But experts say it faces an uphill battle competing against Internet giants Google and Amazon.
What do we not know?
One main area of debate is around what kind of revolutionaries the GameStop traders are. Some compare them to Internet trolls or to extreme-right chat forums like 4chan. Others take seriously their critique of inequality and intention to donate their profits to charity. Some critics say they are not revolutionary at all, but are mostly young, bored men looking for fun and a quick win. With 4.5 million subscribers to the WallStreetBets forum, the full picture is probably very complex.

Word Watch

Wall Street
The New York street where the world’s two largest stock exchanges are located. It is also a metonym for the entire American financial industry.
Hedge fund
These are investment companies that use complex strategies to beat the market and make profit, even when shares are falling.
The retailer began in 1984 as Babbage's, named after Charles Babbage, the Victorian inventor of the Difference Engine, a forerunner to the modern computer.
If the price rises sharply, short investors rush to buy back their stock, pushing the price higher. This is called a short squeeze.
Peasants’ Revolt
A major uprising in 1381 led to the sacking of the Tower of London. Around 1,500 rebels were executed, including its leaders Wat Tyler and John Ball.
Elon Musk
The CEO of SpaceX and Tesla described short selling as a “scam” and argued that people should not be allowed to sell stock they don’t own.
Left-wing Congresswoman Alexandria Ocasio-Cortez tweeted that hedge funders treat the economy “like a casino”. Republican Senator Ted Cruz replied, “fully agree”.
Tulip mania
At its height in 1637, a single bulb sold in the Dutch Republic for 10 times the annual income of a skilled craftsman.
New weapons
Mobile phone apps like Robinhood are making it easier for ordinary people to buy and sell shares.
A political and economic system in Europe and Japan in the Middle Ages. Noble families allowed people to live on and farm their land in return for a share of the crops.


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