In mid–November, Fage138 bought shares of GameStop, a staple mall tenant that sells electronics and gaming merchandise. The shares cost $13 a unit, and he bought around 50 of them. Then, over the next two months, as he bought a couple of hundred more, he watched the stock price blow up, setting markets afire with controversy and inducing one of the most dramatic short-squeezes in history.
Fage138 isn’t his real name, of course. Like most members of the Reddit channel WallStreetBets, he prefers the anonymity of his handle. He’s been in the channel since late 2018, when it had fewer than 300,000 members. At the time, WallStreetBets hadn’t yet made its name as a kind of collective investment vehicle, rousing members to pour money into stocks they considered undervalued. It also hadn’t become infamous for taking pointed aim at traditional institutional investors and short-sellers.
Compared to many other members of WallStreetBets, Fage138 comes across as reserved and thoughtful. He says he is an engineering student at the University of Alberta, in Canada—“not much of a party person,” by his own admission, and happier playing Minecraft or scouring the heavens with his telescope.
He invests on the side, as a hobby. “I must have invested maybe $10,000 or so, at the most,” he said. Many of his peers on WallStreetBets are older, in their 20s or 30s. “They’re going to be making or losing $100,000 or so,” he said. “It isn’t millions—it isn’t like hedge funds. The most I know that anyone here ever lost is $2.5 million.”
In essence, Fage138 said, WallStreetBets is a forum to advocate good buys or risky deep-value plays. Back when he joined, everyone was pitching for AMD, the semiconductor company, and anyone who made money off AMD shares earned the nickname “Su Bae,” after Lisa Su, the company’s chief executive. It is just one of the terms in the channel’s distinctive lexicon. Among the less profane are the phrase “to the moon” and the rocketship emoji, which accompany posts that exhort members to buy a particular stock and boost its price.
Fage138 insisted that WallStreetBets’s members care about the fundamental value of a company. “In fact, any company with a market cap under $1 billion is banned from the forum to prevent attempts at manipulation. No penny stocks,” he said. But the forum is also animated by a naked mistrust of Wall Street. “A lot of people here were early in their careers back when 2008 happened,” Fage138 said. “They lost their jobs, and maybe their money. And then they saw that the banks and other institutional investors who leveraged the economy to the moon and back—they suffered no consequences.”
One WallStreetBet eminence, with the handle DeepFuckingValue, has been propounding the value of GameStop for months now, posting videos on YouTube to explain why he felt good about the company: it had cash in hand, it was pivoting to online retail, it was growing less unprofitable. Slowly its stock price rose, and at $10 a share, members started to take note. It was in the middle of a pandemic year, and Fage138 admits it felt like what the Bloomberg columnist Matt Levine calls a “boredom market”—a lot of sitting around with nothing to do and, as long as your job was safe, a lot of disposable income to do something with. But also, Fage138 said, “we’re all, at the end of the day, a bunch of schmucks who’re having fun.” Buying GameStop, perhaps with the hope that it would hit $30 a share, seemed like a fun thing to do.
In mid-January, the stock popped 60%. Fage138 remembers how the joke, at the time, was that everyone ought to hold until the price hit $420.69—droll references to marijuana and a sexual position. But shortly thereafter, traditional investors and short-sellers—those who had borrowed GameStop stock to bet against the company—began railing against the company, Fage138 said. “The media would only listen to major hedge funds who had a vested interest in having the price of GameStop decrease.”
At that point, Fage138 said, WallStreetBets developed “a vendetta” against short-sellers, squeezing them by buying up shares and options. “That’s when we started saying: ‘Don’t sell till it hits $1,000 a share.’” (And also, as one post advised: “Call your broker. Do not allow your shares to be lent to these fucks.”)
Short-sellers were then compelled to buy GameStop stock themselves, to guard against the possibility that the price would rise further—a spike of demand that only pushed the price higher still. In January, GameStop has risen 700%; after Elon Musk tweeted about it, its value soared past $13 billion, up from $1.2 billion on Jan. 1. In a booming market, GameStop added to the $91 billion in losses accumulated this month by short-sellers.
A $1,000 share price for GameStop is, Fage138 admits, absurd: “Anything above $70 a share is pretty ridiculous. But when you get a short squeeze, intrinsic value and market value are completely discontinuous.”
Through January, Fage138 persisted with his studies, trying not to live the stock price. He noticed the media frenzy, of course: “Being on every news channel for an hour, or being on Jim Cramer—that was more than we expected.” And he noticed more than half a million new members flood into WallStreetBets, looking to make money off the next play. “They’re all welcome, although if they’re just there without having any idea of what to do, we tell them to go away and read a little about the stock market.”
Fage138 doesn’t know what happens next, he said. He and his colleagues have certainly made money; DeepFuckingValue is believed to have turned $50,000 into at least $14 million. He was worried when he heard that Redditors had harassed and hacked Citron Research, which was perpetually bearish about GameStop. “We kept saying: ‘Don’t do it. Don’t act like the establishment. No death threats.’”
But more than anything else, he said, “we don’t know what’s going to happen to this channel, with regards to the SEC.”
The legality and dangers of the coordinated moves on WallStreetBets are contentiously debated. The channel can simply be seen as a transparent forum for the exchange of market analysis and advice. Or, to its detractors, it could rouse a manipulative, anarchic kind of market speculation. Institutional investors claim to be concerned, in particular, with the anonymity of WallStreetBets’ members, and therefore with the possibility that anyone can use insider information or false facts to choreograph market moves.
On Wednesday (Jan. 27), after GameStop shares more than doubled in value, a government spokesperson said that the White House and the Treasury Department were monitoring the situation.
Fage138 doesn’t expect the GameStop journey to last much longer—maybe a month, at most. When the price hits $1,000, he said, he will take the profits, and re-invest them when the price crashes back down—a development he said he sees as inevitable. He decided he would donate $1,000 to an environmental charity. “But it’s good to ride it out and see what happens, be a part of history—a part of the mother of all short squeezes.” In any case, another stock will come along soon.
On WallStreetBets, members want to believe they’re at an inflection point. “So much information is available for free now,” a user with the handle benaffleks wrote on Jan. 27. “There’s no more fees for trading. We have large communities that discuss stocks and trade openly.”
“TLDR: Fuck hedge funds. This is a crosspoint into the future.”
A while later, though, benaffleks made an edit. He was being lavished with “awards”—a form of paid Reddit appreciation for a post. Go spend that on GameStop, he exclaimed. “THIS IS NOT FUCKING FINANCIAL ADVICE AAAAHHH. Thanks.”