On Sunday night, Patrick, a 33-year-old from Texas, noticed his dog was limping. Concerned, he took him to the vet Monday. He got bad news: pay $4,000 for surgery, which he didn’t have, or put his dog down.
“I cried all night,” Patrick told The Daily Beast. “I didn’t know what to do.”
He remembered a conversation he had with his boyfriend’s sister, about how people on the Reddit forum r/WallStreetBets were making money trading GameStop stock. With his day job—working at his family’s construction company—struggling, he decided to put $1,000 in savings in GameStop and the movie chain AMC on Tuesday. By Wednesday morning, he had the money he needed for the surgery. His dog, Toshi—named for Bitcoin founder Satoshi Nakamoto—would get another chance.
“I’m overwhelmed,” Patrick said. “I just wanted to thank them for helping me save my best friend.”
Patrick and his dog, Toshi.
HandoutPatrick, who asked for his surname to be withheld, is just one of the thousands of r/WallStreetBets users making money off investing in short-sold stock—shares in a company that Wall Street firms have bet against.
Through their trades, they’ve pumped GameStop stock up from just under $4 a share last year to over $300. They forced an elite hedge fund that was shorting GameStop stock into billions of losses. CNBC anchor Andrew Ross Sorkin called it “Occupy Wall Street, but with actual money.” NASDAQ CEO Adena Friedman threatened to halt trading of the stock and the SEC said regulators were investigating.
On Wednesday night, r/WallStreetBets went private, preventing non-members from seeing the forum. And they’re not done yet.
“They say the stock market is the rich man’s casino, and it’s always been the richest guys on Wall Street, who’ve made money while other people in the real economy had been suffering,” Patrick said. “I don't think it should only be available for the fat cats.”
“Short-selling” a stock refers to a practice in which an investor borrows someone’s shares in a company and immediately sells them. The more a company’s stock goes down, the more the original short-seller makes when they buy it back.
GameStop, a brick-and-mortar video game store struggling in an era where gamers mostly buy their games digitally, made the ideal candidate for would-be short-sellers.
“This is an old school, failing mall-based video retailer and investors can’t change the perception of that,” Andrew Left, who runs the investment newsletter Citron Research, told Reuters on Tuesday.
Left had been one of the most notorious GameStop short-sellers, calling buyers “suckers at this poker game.” On Wednesday, in a YouTube video, he said he’d pulled out of shorting the stock, at a loss of 100 percent. (Citron did not return a request for comment for this story.)
He wasn’t the only major player to take a bath short-selling. Melvin Capital, a hedge fund that had been short-selling GameStop, received billions in bailout money, including from New York Mets owner Steve Cohen.
“Rough crowd on Twitter tonight,” Cohen wrote, following news of his investment. “Hey stock jockeys keep bringing it.”
But Chamath Palihapitiya, the CEO of the venture capital firm Social Capital—who made $500,000 from trading on GameStop and has become a folk hero on r/WallStreetBets countered: “I would encourage anyone who is dismissive of this thing to go into r/WallStreetBets and read the posts. These kids have the courage to do it transparently in a forum.”
Steven Theodore, a 23-year-old home health aide in Manhattan, didn’t have much experience trading stocks before December. He’d tried trading Tesla stock through the trading app Robinhood last year, but didn’t end up getting much out of it.
While browsing r/WallStreetBets earlier this month, he saw the posts about GameStop stock. He decided to put down $500.
“Then, literally at that moment, Elon Musk tweeted something,” Theodore told The Daily Beast. “And I was like, yo, he tweeted about it, we’re going to the moon, we’re going to the moon. So I’m like, fuck it, let’s throw another $500 in there.”
Theodore then sold the remainder of his Tesla stock, buying more in GameStop. Right now, he says he has 18 shares in the retailer, which are currently trading at about $300 apiece.
Henry, a 52-year-old from California, said he got into stock trading last year, after he was laid off from his job as an electrician with AT&T. He had made money off his investment in Bionano Genomics—a genome analysis company and another r/WallStreetBets favorite.
“My goal was two fold. Make money and pay off my student loan,” Henry, who asked that his surname be withheld, wrote in an email. “Discovered how Melvin Capital OVER shorted GME and was pretty pissed that institutions take advantage of individuals.”
However, GameStop isn’t where the majority of Henry’s portfolio lies. Last week, he said, he bought 1000 shares of BlackBerry—another Reddit favorite—at $11.08 each. Those shares have almost doubled in value since.
At the end of his video Wednesday, Left had one last piece of advice for new investors.
“When you make your profits, make sure you put some away from the IRS,” he said.
Sorkin, the CNBC anchor and New York Times columnist, had a different concern.
“I covered the financial crisis + I watched all the finger pointing in its aftermath. The blame was on the banks. It was uncouth to raise the idea that some regular folks made mistakes or speculated,” Sorkin wrote Wednesday on Twitter. “When $GME music stops, watch the people on here pumping it blame someone else.”
However, the big players haven’t been upended by the GameStop surge. On Wednesday, Business Insider reported that BlackRock—already the world’s largest asset management firm—owned a 13 percent stake in GameStop, and thus had likely profited more than $1 billion from Reddit’s pumping.
Another 12.9 percent stake in GameStop belongs to Ryan Cohen, a billionaire who co-founded the online pet supply retailer Chewy. Cohen’s stake, which was worth $76 million when he purchased it last August, is now worth more than $3 billion, according to Insider.
“When the music stops, somebody’s going to be left without a seat,” Sorkin told MSNBC on Wednesday. “The likely loser is actually not going to be the hedge funds, it’s actually going to be, quote/unquote, the protesters in this case.”
On Reddit, users were desperately encouraging each other to hold on. “Do not fucking sell gme,” read one post on the subreddit Wednesday that had 12,000 upvotes.
But the users The Daily Beast spoke to said they didn’t feel worried so much as vindicated. Henry, the man from California, said he was interested in GameStop’s stock because of Cohen’s involvement. He’s waiting on his BlackBerry stock to hit $100 a share, he wrote.
“I took a risk to trade stocks. After 6 months of learning the hard way, I have a huge grasp of the fundamentals, and know how to recognize an opportunity,” he wrote in an email.
Theodore, the New Yorker, said he’d wait until the end of the trading week on Friday to determine his next steps, but added he planned to continue trading.
“My only experience is just from trying it out,” he said. “I’m definitely reinvesting.”
And while Patrick, the man from Texas, went against the grain to sell some of his shares in order to pay for his dog’s surgery, he said he’d keep trading, too.
“I want those institutions and those greedy fat cats to feel the pain. I want them to lose billions and billions of dollars,” he said. “Once I see that they’ve felt the pain, or, you know, gone under.
“Then, I might sell later on, to help pay for the capital gains tax I’ll be liable for next year.”
