By Shawn Langlois
The smug factor is running hot in Reddit’s buzzy WallStreetBets community, where a growing number of NSFW stock-flippers are clearly feeling pretty good about themselves these days.
And why wouldn’t they? GameStop Corp. /zigman2/quotes/203755179/composite GME -1.12% , one of the group’s beloved meme stocks, has been absolutely shredding the short sellers for weeks. On Friday alone, mark-to-market losses for those betting against GameStop came to $1.6 billion, according to S3 Partners.
With that, love, and a disconcerting appetite for risk, were in the air:
To say GameStop has been volatile doesn’t quite capture the madness. The stock, despite no news, rallied almost 150% early in Monday’s session, but has since pulled back. This after a frenetic buying spree took the stock up triple digits at one point on Friday, as well. Shares have already been halted for volatility several times amid a huge uptick in trading volume.
As you can see, it’s been a wild ride this month.
What exactly is going on here?
“There’s been an awakening,” Tim Collins wrote. “A large group of retail traders have realized if they work together, using market tools such as out-of-the-money call options or low-float stocks, they can overpower any institution or short seller in the world, outside of the Fed, of course.”
Cramer himself admitted on CNBC that he’s “never seen the guns like this. They can break shorts.”
That “awakening” Collins wrote about has drawn fierce critics of the tactics that have apparently led to such outsize gains. For instance, Andrew Left, editor of Citron Research, said he would no longer comment on GameStop, after “name-calling and hacking,” and the “harassment of minor children” by the “angry mob who owns the stock.”
One of the WallStreetBets moderators felt compelled to address the backlash, taking exception with the “narrative” that the forum is “disorderly and reckless” and is involved in manipulation.
“What I think is happening is that you guys are making such an impact that these fat cats are worried that they have to get up and put in work to earn a living,” he wrote. “Some of these guys traditionally used the media as a tool for them to manipulate the market have failed to further line their pockets and now want to accuse you guys as being manipulators. This is complete nonsense… They hate that you played by the rules and still won.”
From there, the “gain porn” posts were flying across WallStreetBets, a subreddit that has more than 2 million subscribers. Here are just some of the highlights:
At last check, GameStop shares were trading around $75, about half of where they were earlier in Monday’s session. Meanwhile, the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.48% was stuck in red territory. Both the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +0.10% and S&P 500 /zigman2/quotes/210599714/realtime SPX +0.36% were moving higher.