This is one of those stories you can talk about with your family and friends. A few years ago, has-been companies went viral with investors, and their stock prices went sky-high out of the blue.
Because everything is a cycle, it just happened again. After you read this, you’ll know why no one can shut up about GameStop, a company that sells video games, gaming platforms and accessories primarily from its brick-and-mortar retail stores across the country.
To the moon
This past week, GameStop stock shot up 74%, and trading had to be stopped nine different times! Movie theater chain AMC’s stock caught the wave, too. A couple of days later, the hype fizzled, and both stocks deflated — but not without leaving a big mess.
Armchair investors pushed prices up so much that short sellers betting against the companies were forced to buy back their positions, losing a billion dollars.
The man behind the mayhem? “Roaring Kitty,” the same guy who fueled the 2021 GameStop stock mania. He posted on X for the first time in nearly three years, and that sparked it all. A single meme of a cartoon man leaning forward in a chair was all it took for people to think he knew something.
Stop it right meow
To understand what’s going on now, you’ve gotta know the backstory. Investor Keith Gill, aka “Roaring Kitty,” caused chaos on Wall Street during the pandemic, but then he went dark on X in 2021.
Back then, Gill famously posted tons of videos on why investing in GameStop stock was a good idea, and it caught on like wildfire. Users on X and Reddit followed Gill’s advice, causing GameStop’s shares to rise in value by 2,000% in less than one month.
This drove up the stock prices for some other failing companies, too, including BlackBerry, Bed Bath & Beyond, and, yep, AMC. But we all know what goes up must come down — and boy, did they.
Trading apps like Robinhood put a pause on buying and selling of GameStop stock. Prices crashed and burned, and tons of people ended up with stock worth way less than what they paid.
You gotta be kitten me
Back in 2021, Gill was called to testify in front of the House, but (shocker) claimed he did nothing wrong. He said he only invested in GameStop because of its growth potential. Remember, we’re talking about a chain of retail stores operating when retail as we know it is dying.
Whenever a market frenzy like this happens, it’s over almost as soon as it starts. We all want to think we can still get in while things are hot but wind up losing big instead. Play stupid games, win stupid prizes.
If you want to get a firsthand look at the “Roaring Kitty” fiasco and the fallout it caused for investors, check out the 2023 movie “Dumb Money” starring Seth Rogan and Paul Dano. (Warning: The movie trailer has some F-bombs.)
PSA: Don’t take investment advice from a dude on X, Reddit or wherever. These guys aren’t credentialed financial advisors, a role that’s heavily regulated and taken very seriously in the real world.🐬 My first real estate investment was for campers and dolphins. It was for all in-tents and porpoises!
