Jan 28, 2021 - Economy

GameStop as a metaphor

Illustration of a video game controller with an absurd number of buttons.  

Illustration: Aïda Amer/Axios

A half-forgotten and unprofitable videogame retailer is, bizarrely and incredibly, on the lips of the nation. That's because the GameStop story touches on economic and cultural forces that affect everyone, whether they own a single share of stock or not.

Why it matters: In most Wall Street fights, the broader public doesn't have a rooting interest. This one — where a group of small traders won a multi-billion-dollar bet against giant hedge funds by buying stock in GameStop — is different.

The appeal of fables: The core GameStop story is a simple morality tale. A scrappy band of Wall Street outsiders, armed with little more than moxie and their stimulus checks, have not only made millions for themselves, but have also humbled big-name fund managers who had dared to bet against a blameless retailer.

  • Schadenfreude: Gabe Plotkin is a hedge-fund gazillionaire who just spent $44 million buying two adjoining properties in Miami Beach. He's also famous for short-selling — for betting that companies will fail. If he and his ilk lose money, many people would feel happy.
  • Lol nothing matters: The Reddit slogan "putting the FU in fundamentals" is perfectly calibrated to enrage investors who purport to care about things like valuation and price discovery. There's nothing worse than losing a game to people who aren't even taking it seriously.

Shamelessness: The conspiracy to bid up GameShop stock took place in broad daylight, enraging old-time traders with a tendency to go on unhinged Twitter rants about "market manipulation". (They never complained when Jim Cramer was doing it.)

  • Eat my shorts: There's a highly complex financial system underlying the GameStop rally, involving discount brokerages, payment for order flow, short sales, margin calls, delta hedging of call options, and much else. Lots of people bear longstanding grudges against some or all of that system, and are taking this opportunity to shout loudly about how the GameStop story proves that they're right about... something. (Spoiler alert: 99% of the time, it doesn't.)

The attention economy: GameStop stock has risen in direct proportion to the number of people paying attention to it. It went viral in much the same way that a white-and-gold dress does.

  • The internet has become reality: The GameStop story was born on Reddit, cultured on YouTube, popularized on TikTok and Twitter. Like any internet joke, the longer it lasts, the funnier it becomes — and the more attractive it becomes to memelords like Elon Musk.
  • Media wars: If you want to know what's really going on with GameStop, the place you need to be is Reddit's wallstreetbets channel, not CNBC. Both are cacophonous and confusing, and both can consume hours of traders' attention. On some level, they are competitors — and for now Reddit is winning the relevance wars.

The Trump vacuum: Now that Donald Trump is no longer taking up a permanent position in news consumers' brains, other parts of the news cycle expand to fill the space available. Quite literally: CNBC expanded its programming by an extra hour Wednesday, thanks to all the demand for GameStop-related content.

The bottom line: Whatever your interests, there's something in this story to grab your attention. Grab the popcorn, it's not over yet.

Go deeper