Economist Writing Every Day

He’s been found and he’s talking to the press. He’s known as “Roaring Kitty” on Youtube, and his Reddit username is… something else. The WSJ even talked to his mom which tells you just how much public attention was directed at the event this week that he might be the prime mover of.

The man who convinced a Reddit “army” to drive up the price of Gamestop ($GME) says that he originally simply saw it as a value investment. He believed people would keep shopping there, even though some short sellers on Wall Street bet money on the store going the way of Borders (the way of all flesh).

One of the strange turns of this story is that now people are buying the stock as a means of self-expression. Some of them claim they don’t care if they lose the money they put in. A friend of mine described the scene thusly on his social media account:

#SaveAMC #gamestop Amid the global turmoil, some big banks made billions ‘shorting’ floundering businesses, profiting off of the struggles of failing businesses. Recently those targets were brick and mortar retailers like GameStop and AMC. But the banks got too greedy and shorted too far, so individual investors rallied to invest in these businesses to simultaneously save their favorites and stick it to the banks. Power to the people.

He describes GameStop as a “failing business” and simultaneously declares it a favorite of consumers.

The $GME episode might have been as fun as playing a video game. Will anyone think it’s exciting to shop at GameStop 2 years from now?

If the short sellers were right, then who is helped by prolonging the agony? If the short sellers were wrong, then they will pay anyway.

Another way to “stick it” to the short sellers would be to patronize GameStop regularly. Boring. Is anyone still reading? Do people who shop at WalMart instead of small businesses understand why their Main Street is dying?

Lots of retail investors will lose money from this sortie against the hedge funds. What if they had spent that money at GameStop instead? That would hurt the short sellers and also help GameStop. How much does it help GameStop when “Roaring Kitty” makes millions off of retail investors who are late to the party?

The Reddit-inspired stock movement was accomplished by people sitting and staring at their screens. Is that more fun than finding a parking spot and walking into a Gamestop store or an AMC theater? The people who leave the house will have the biggest say in how their city looks.*

*It has been much harder to leave the house during the Covid pandemic.