GameStop: One year on from the ‘war on Wall Street’ and the rise of ‘meme stocks’

They wanted to bring down Wall Street.

They were David taking on Goliath – amateur investors going up against the might of the financial system.

A year on from the GameStop phenomenon and interest in the “meme stock” has not died down.

Image: Jonah Tulis tracked the GameStop frenzy last year, which sparked global media attention. Pic: Jonah Tulis

“I call it ‘the events’ because so much happened in that month,” says Jonah Tulis, producer and director of GameStop: Rise of the Players.

The documentary, which was released in US cinemas this week, follows GameStop investors as their actions explode into an international news story.


“That was a moment. It was the beginning of a new era,” the 31-year-old says.

The saga began in January 2021 when the struggling video game retailer saw an unprecedented rise in its share price.

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Amateur, or retail investors, communicated on social media, particularly Reddit, and created a surge in interest in the company.

They thought the market was undervaluing the “bricks-and-mortar” computer game store, and rallied around it, forcing the price of the stock upwards with their purchases.

“It was wild… they acted on instinct. It was impossible at the time to gauge what retail investors could do,” says Tulis.

These investors had also realised that large hedge funds were “short-selling” GameStop – they were betting against the value rising.

So, when the opposite happened, and the value went up, they were dealt a heavy blow, losing billions of dollars – and the “war on Wall Street” narrative was born.

By the middle of the month, shares in the company had soared over 500% since the beginning of the year, with many saying the online Reddit group r/wallstreetbets was responsible.

“Overall, our subjects made life-changing money – in the millions. And these were not rich people to begin with,” adds Tulis, who also directed the film Console Wars.

‘The end of the Wild West’

Image: The GameStop phenomenon became popular on social media website Reddit

Today, many on Reddit thread r/wallstreetbets are optimistic that this was not a one-off phenomenon.

The community of mostly well-informed amateur traders now boasts over 11.5 million followers.

There are “definitely gonna be some major fireworks late Jan start Feb”, one comment reads.

“Only if you get the word out and make it a real event. Imagine the campaigning we can do to advertise the anniversary,” says another.

Despite the continued hype, GameStop share prices have been falling since the start of this year.

Other “meme stocks” like cinema chain AMC Entertainment are also still spoken about, despite the share price almost returning to its pre-hype norm.

Some users seem pessimistic about the future.

“It’s probably the end of the Wild West,” writes one.

There are “tough days ahead”, says another, in reference to higher interest rates on the horizon, which would dampen stock market gains.

“A few will make it big on meme stocks but most will lose a lifetime of savings,” warns one.

These are thoughts echoed by some experts.

Investing for profit “can be like a pyramid scheme in that the first ones in make a lot of money, the last ones in are the suckers and they get burnt,” says Dr Jorge Guira, associate professor at the University of Reading.

He thinks pandemic lockdowns played a big part in the phenomenon.

“GameStop has done well relatively compared to how it was before, however it dropped 35% – more than the S&P 500 which dropped 10% this year,” he adds.

“This seems to reflect that people are now living more regular lives, rather than acting out the ‘boredom market hypothesis’ where people express themselves through these trades.”

The day the ‘buy button’ was turned off

In light of current market volatility, we are restricting transactions for certain securities to position closing only, including $AMC and $GME. Read more here.

— Robinhood (@RobinhoodApp) January 28, 2021

On 28 January 2021, trading app RobinHood temporarily restricted the buying of some volatile stocks, including GameStop, in a move that sparked outrage.

Many felt it was unfair.

The company explained that it was forced to take action to make sure it could meet its requirements as a broker with the unprecedented volume of trade happening.

“We never want our customers to be surprised with trading restrictions again,” it said in a statement this week.

RobinHood is continuing to make changes to its operations in response to the saga, doubling their customer support team and strengthening their compliance and risk infrastructure.

“The retail investing revolution has shown us that a new generation of investors wants their voices to be heard,” it added.

“Our work has only just begun.”

Regulation reform may be coming

Image: Financial regulations may be reformed in the wake of the GameStop saga

The US Securities and Exchange Commission (SEC), a government agency founded to prevent market manipulation, has proposed reforms as part of its investigation.

It may bring in tougher rules for hedge funds to improve the transparency of their activities.

“We can definitely expect the SEC to do something,” says James Angel, a finance professor at Georgetown University’s McDonough business school.

“Those who engage in short-selling say that more disclosure will make them public targets… and I think they have a point there, but at some point there does need to be the right amount of disclosure. Right now, we have too little.”

A new era in investing for ordinary people

On Reddit, the “armchair investors” doubt Wall Street is scared of them.

“The big dawgs rule the market,” warned one, “and most of the retail folks that play this game lose.”

Despite these sentiments, there remains a loyal community of excited investors backing GameStop.

Tulis believes this is the beginning of a trend which isn’t going away.

“There is something special about how people are finding companies they believe in – companies they’re connected to,” he says.

“When I think of AMC or GameStop, there is an automatic sense of comfort.”

“Things have changed so much – you don’t have to call a broker to buy a stock anymore.

“It’s so much more accessible and that is going to allow a lot more people to invest with their hearts, whether it is for better or worse.”

GameStop: Rise of the Players is expected an international release later this year.