Diamond hands. Rocket emojis. Stock memes and parodied clips from movies plastered all over social media. Otherwise divided American politicians coming together to back an unlikely underdog movement against Wall Street elites that have exploited the working people of this country for far too long.
This is the central narrative coming from social media about the recent focus on GameStop shares, in particular those on the subreddit r/WallStreetBets. For these investors, the squeeze they performed on Melvin Capital’s GameStop shorts was an act of justice and retribution stemming from the common sentiment that hedge fund managers and billionaire investors have, for far too long, gamed the financial markets, cheated the people, and gotten away without repercussions.
Mainstream media has reported on these events quite differently. The story from the media, the hedge fund elites themselves, as well as their rich and powerful friends is that the hedge funds have been taken advantage of by an army “propelled by a mix of greed and boredom.” The hedge fund managers, made victim by the tribal mentality of retail investors, have little choice but to sell off tens of billions of dollars of assets in order to cover their short positions for which they would otherwise risk even greater loss.
A short position is an investing options contract in which an investor sells a stock and repurchases it after a period of time, making money if the stock price falls during the period but also placing themselves at risk of theoretically infinite loss. Melvin Capital went big on shorting GameStop shares, but after the famous activist investor and former CEO of Chewy Ryan Cohen was appointed to the GameStop board and redditors realized there was a once-in-a-lifetime opportunity for a short squeeze, the latter quickly purchased GameStop shares in bulk in order to drive up the price and “squeeze” out money from the shorts who would have to repurchase the stocks eventually.
The two narratives play out in some sort of semi-asymmetric warfare, in which the intended audience of the Reddit narrative are retail traders – individual investors buying and selling from personal accounts – and people who may not even trade normally, for which the message acts as a sort of recruitment to participate in sticking up to the hedge fund elites. Participation involves either buying GME shares to shore up the price if you don’t already have them or holding them with “Diamond Hands” regardless of price fluctuations if you already do. On the other hand, the message promulgated by much of the mainstream media is entirely targeted towards the same audience as well as some of the less hardcore retail investors themselves in an attempt to get them to abandon their positions and sell their shares.
The excitement and fervor of the retail investors is evident across their posts and comments in their subreddit, their primary social media platform. One extremely popular post asked that everyone “Double down, triple down, quadruple down, take every penny of your rich boomer clients money and put it on the table. Sink the entire already artificially propped up economy over it”. Another one, dedicated to the author’s father, states about the hedge funds that “this is all the money I have and I’d rather lose it all than give them what they need to destroy me. Taking money from me won’t hurt me, because i don’t value it at all. I’ll burn it all down just to spite them.” To the Redditors trading in GME shares, this is one of several things: a cool and trendy social movement they want to ride along with, an opportunity to make money while the sun shines, or a once-in-a-lifetime chance to stick it to the man. But no matter where they come from, there seems to be an overwhelming feeling that they are doing something together, something that is unquestionably good because of some deep-seated distrust and dislike of the greed of corporate investors.
As evidence, some of these retail investors have even chosen to use some of their profits to make philanthropic donations as a reaffirmation of the movement’s focus on social good and justice rather than just pure profits. One user used a portion of their profits to buy Nintendo Switches from GameStop before donating them to a Children’s Hospital, while another made a $5000 donation to a Children’s Hospital. Many have even talked about using the money to support themselves through means such as paying off their college debt. For them, this money is life-changing both culturally and materialistically; it reinforces the narrative that their online movement is about helping each other rather than helping themselves, a pointed strike at the greed that is commonly associated with investments by capital firms.
The messaging of the mainstream media, however, has been far more sinister. Not only have they resorted to harmful and false characterizations of the movement as a whole, speculating that the retail investors are linked to alt-right groups and arguing that there are “scores of similarities between Donald Trump’s ‘Make America Great Again’ movement and the GameStop uprising,” but they have also blatantly pushed or even outright lied about information in an attempt to instill fear in the GME buyers.
For example, several media companies have claimed that the retail investors on r/WallStreetBets have lost interest in GME and are now trying to get in on silver. This is not true: even though they’ve cited the existence of a subreddit called r/SilverSqueeze, the subreddit has just a paltry 3k members to the 8.5 million in r/WallStreetBets, with no indication of any crossover, past, present, or future. In fact, several very popular posts on r/WallStreetBets have derided this, with one calling this media narrative “a hedge-fund coordinated attack so they can keep fighting the $GME fight”. Another argues that every news organization promoting silver using the r/WallStreetBets name represents “news channels and people not only manipulating… insiders who you definitely can’t trust ever again”. They point out that Citadel, the hedge fund that owns Melvin Capital, is also one of the largest owners of SLV, a popular ETF – a type of large investment fund – indexed to silver. Buying silver would thus increase the value of the SLV portfolio and therefore benefit Citadel.
The false narrative around silver is either a gross oversight by the media, which is quite unlikely, or, as the Redditors suspect, an intentional effort by their corporate backers to distract from GME growth so that more people don’t buy GameStop shares. Either way, the message is incredibly misleading, and goes to show that the media is willing to do whatever it takes to protect the financial interests of the powerful at the expense of its viewers.
It is clear that there are two primary yet exceedingly disparate narratives behind what has been happening these past few weeks with GME shares. They show both a deep disdain amongst the American working people for the power of the corporate elite as well as a willingness by the powerful to mitigate losses through media narrative tools. The mainstream media continues to reinforce their reputation as an elite machinery that will protect the wealthy at any cost.
Photo: Image via Adobe (Mat Hayward)