GameStop: autopsy of a revolution on Wall Street

Posted on Feb 4, 2019 2021 at 7:00Updated Feb 4, 2019 2021 at 10:46

There’s a new sheriff on Wall Street. Hedge funds, used to blowing hot and cold on the stock market, had to bow down to a horde of stock marketers. At the origin of their fall? A poorly calibrated bet against the video game distributor GameStop, parent company of Micromania in France. Carried along by a mass of small carriers determined to impose their views, the price of the company soared by more than 1,600% in January, valuing it for a time more than 20 billion euros, or nearly twice the value of Crossroads. Short sellers had to capitulate after racking up billions of dollars in losses. But how did a bunch of amateur traders manage to overthrow the well-established Wall Street hierarchy in a matter of days?

Far from being an epiphenomenon, the revolt of the American stock marketers is the pure product of an alternative culture of investment, which has developed thanks to free brokerage and has gained momentum with the pandemic. Its colorful heroes prefer Reddit to CNBC, WallStreetBets to Goldman Sachs. No “daddy” investing for this new generation of traders: holding stocks for the long term is way too boring. We invest here as we play in the casino. Losses are frequent and high, but the payoffs can be staggering. The revolutionary patina arrived late, like an ulterior motive.

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