By Thornton McEnery
It has been one year since retail traders began their unprecedented move on GameStop stock /zigman2/quotes/203755179/composite GME +0.98% , sending the price soaring and short sellers scattering, creating both a Wall Street panic and the “meme stock” phenomenon.
And the year that followed was indeed a wild one, giving birth to a new classification of equities, fostering even more market volatility, populist outrage, a thriving social-media community, congressional hearings, tons of confusion, and a realization that the stock market isn’t a fair place…and maybe never has been.
On Thursday, GME’s Ape army attempted to celebrate the anniversary by re-enacting Jan 20, 2021 and it looked promising at first, with shares kissing a nearly 5% gain after one hour of trading. But thanks to a broader market selloff that culminated in a final hour reversal that gave investors of every stripe some financial whiplash , GameStop closed 3.7% lower on the day.
And while it was a one-day market phenomenon, it also felt like something of a microcosm of the past year.
Overall, the GameStop squeeze felt like it was ushering in a big important moment in American finance, and the tremors of that impact would be felt far and wide for a while as we came to reckon with how prolonged low interest rates and a global pandemic had pulled back the curtain on galling wealth inequality and an opioid-level economic addiction to cheap money, forcing regular Joes and Janes to light their virtual pitchforks aflame by opening a Robinhood /zigman2/quotes/228268942/composite HOOD +1.37% account.
But, one year later, how different are things, really?
Well, if were to use a meme…
Not only were both GameStop and AMC Entertainment /zigman2/quotes/200235402/composite AMC -0.77% both trading at their lowest levels since the first half of 2021, they were also doing so on what were essentially average volume with negligible visible short interest.
What meme stocks were really about were getting rich while toppling a broken system that allowed market makers and hedge funds to make billions shorting a stock market that excluded individual investors as regulators looked the other way.
And while early returns were exciting, the hedge fund that Apes hate most, Melvin Capital, appeared to be managing about $19.6 billion at the end of 2021 while the firm that Reddit has ID’ed as its evil enabler, Citadel Securities, just closed a $1.15 billion deal with Silicon Valley titans to make it even more omnipresent and powerful.
Overall, the hedge-fund industry looks poised to announce that it ended 2021 with net inflows, the first year that has happened since 2018, and regulators are still looking pretty unconvinced that things are blatantly rigged enough that they need to anger politicians by going after their biggest donors.
And in terms of populism, the widespread awareness of wealth inequality between Wall Street and Main Street is so palpable now that investment bankers are getting record bonuses while omicron rages, and Wharton students really believe you can make $300K tossing salads at Sweetgreen.
We’re not saying that meme stocks have failed –who doesn’t love a comeback in the final seconds?– but it is becoming clear that one year into this stock market “revolution,” things have gone pretty damn quiet on the barricades.
Well, at the risk of irredeemably mixing metaphors, it is because retail investors attempted to bankrupt a casino by hitting only a few tables and just those tables.
Getting stuck in positions like GameStop and AMC has become more religion than tactic at this point, and the move to direct registration of shares in the early moments of what looks like a liquidity crisis is just self-flagellation.
If retail really wants to screw the casino without getting the attention of the pit bosses, it needs to go back to the other part of January 2021, when it diversified the attack and came at shorts from different angles, making it harder for the powers that be to pin them down and stop them.
Getting furious online about how unfair this whole thing is has become officially tired, which is a shame because Apes are making some very good points inside the tonnage of sometimes nonsense that is circulating daily.
Payment for order flow is causing major market inefficiencies and creating huge piles of proprietary data for major financial firms doing a lot of things at once to feed into the algorithms that still fuel some very inorganic market volatility. And the consolidation of wealth and power inside our financial structure is objectively pretty wild at this point.
Those points lose their messaging potency, however, when the days are spent obsessing and theorizing over the moves in stocks that are no longer germane to the wider debate. It is time for retail traders to forget about anniversaries like Thursday’s and keep pushing into other stocks and other corners of the market that will reinvigorate the conversation that we never really had.
But if Apes really want to honor the spirit off January 2021 in January 2022, they should be doing it on their Robinhood accounts, the muskets of retail trading.
Alas, that won’t happen because even we have to admit that the Ape uprising did claim two billionaire casualties; Robinhood closed down another 1.4% lower on Thursday, keeping co-founders Vlad Tenev and Baiju Bhatt out of the “Tres Commas Club” that they were ejected from thanks to a stock price that is now down 61% from its IPO price.
So there is some hope for 2022 for the Apes.