Stop, In The Name of Love
Public opinion on the Gamestop/Reddit/Hedge fund saga
Last year, a Reddit user known as “Roaring Kitty” made a $53,000 investment in GameStop, a way-past-its-prime retail gaming store. He was roundly mocked for betting on a struggling retailer in the digital age. That is, until last week, when his investment brief skyrocketed in value — to put it lightly — to $48 million. How that happened is one of the more bizarre financial sagas in recent memory, in which a band of online traders took GameStop’s stock price on a wild ride from $20 to $480 a share, and in the process brought a multi-billion dollar hedge fund to it’s knees. It’s a complicated story full of so investing jargon like “shorting” and “squeezing” that nearly every news source has an explainer to help the uninitiated untangle it. The gist? A big hedge fund bet big on GameStop to sink. When a growing army of armchair investors bought up loads of shares, at least in part to squeeze the ‘short’ hedge fund, the stock price soared, and that hedge fund lost billions scrambling to cover their bet.
The chaotic week on Wall Street triggered renewed scrutiny from Washington that even drew bipartisan support from Senator Ted Cruz and House Rep. Alexandria Ocasio Cortez. Some are noting the populist similarities between the Gamestop surge and the “Make America Great Again” movement. But will the GameStop revolution lead to an overhaul of Wall Street’s investing practices or just cause more problems? For more insight, we asked Americans their take on the GameStop rollercoaster. Here are the three biggest takeaways:
Rooting for the Little Guy
The 2008 stock market crash is still fresh in the memories of many Americans with Wall Street bankers bearing the brunt of the blame. That may be partially why half of Americans — a bipartisan coalition that includes half of Democrats, Republicans, and Independents — say the Reddit GameStop rebellion is a “gratifying story of the little guy sticking it to the elites” and 55% say they are rooting for the Redditors compared to only 6% who say it’s “scary” story and the 10% who are rooting against them. That’s despite about a quarter of Americans saying they’ve heard the story but don’t really know what it’s about, though a plurality (33%) consider it an “important event” and 19% say it “bodes poorly for the stock market.”
Populist Sentiment
On Jan. 6, a MAGA mob surged the Capital building to stop the certification of now President Joe Biden. A majority of Americans (56%) say the non-violent and online GameStop surge isn’t in the same spirit of the Capitol riot, but 32% of respondents say they believe that it’s another indication of the rise of populists in the U.S. compared to just 5% who think the opposite. Slightly more (36%) say that the moves in GameStop shares aren’t indicative of a rise or fall.
Big Short But Little Long-Term Impact
GameStop investors were riding high after the stock price shot up 1,200% last week, fueled by frantic Reddit trading. It didn’t last long. Buying restrictions imposed by Robinhood and other trading apps help cause the shares to trade down 20% Monday to $384.19, and a majority (52%) of Americans predict that the share price will tumble down below $200 a month from now. Point and click investors may change their focus to other stocks by then, but a plurality (33%) of Americans say the shock to the system won’t end up causing or fixing any problems in the market, while the rest of respondents with an opinion are roughly split on the two paths. With a Gamestop Reddit vs. Wall Street book and movie already in the works, this story isn’t going away any time soon. Either way, Americans are invested in the outcome.
Related Polls:
In 2015, a plurality of Americans (40%) said that the Wall Street Journal was the best media source to read/watch to improve your investment results, followed by Fox Business (30%) and “None of these” (20%). Reddit was not listed as an option at the time.
In 2016, only 3% of Americans said that Wall Street had the highest business ethics, edging just past Hollywood (2%) and Madison Avenue (0%), and lagging far behind Silicon Valley (18%). A large majority (66%) said none of the selections has an ounce of ethics.
When asked two years ago which internet platforms and social media sites had reached a state of omnipresence such that being denied access to them would be unconstitutional, Reddit ranked near the bottom with only 10% of respondents. Facebook was at the top with 28%.
by Landry Harlan
