#40 - GameStop and the continuing revolt of the public
In 2011, Occupy Wall Street. Today, WallStreetBets. The two are symptoms of the same condition.
You know what? I’m not going to lie. I came here to make a quick buck. I thought this was all bullshit and I still think GameStop is a bad business model for the world post-Covid. But, yesterday I said fuck it, and I bought 40 shares at 120. And to be honest, if my account wasn’t restricted, I probably would have sold today.
But, then I dove deep into this sub and I don’t give two fucks about the gainz anymore. I’m here because I’m with my fellow average Joe’s. I’m here because I’m tired of getting fucked by the system and the people who control the system. This is the problem with our world today and this is the type of revolution we need. A revolution to fuck those who’ve been fucking us forever. Not with bullets. But with solidarity and fearlessness.
We may all get fucked here. But I’m with you idiots and you’ve given me a renewed sense of vigor for life - I really mean that. So, thank you.
Now, fuck off. GME gang forever.
— u/Williamnotwillorbill writing in r/WallStreetBets on 1/28
This comment lays bare exactly what this last week was. I argue that, more than having fun, more than hoping to make some money, more than supporting a business, more than anything else, this GameStop craze has been a revolt against the elite.
From Martin Gurri’s excellent The Revolt of the Public and the Crisis of Authority in the New Millennium:
What happens when the mediators lose their legitimacy—when the shared stories that hold us together are depleted of their binding force? That’s easy to answer. Look around: we happen. The mirror in which we used to find ourselves faithfully reflected in the world has shattered. The great narratives are fracturing into shards. What passes for authority is devolving to the political war-band and the online mob—that is, to the shock troops of populism, left and right. Deprived of a legitimate authority to interpret events and settle factual disputes, we fly apart from each other—or rather, we flee into our own heads, into a subjectivized existence. We assume ornate and exotic identities, and bear them in the manner of those enormous wigs once worn at Versailles. Here, I believe, is the source of that feeling of unreality or post-truth so prevalent today. Having lost faith in authority, the public has migrated to the broken pieces of the old narratives and explanations: shards of reality that deny the truth of all the others and often find them incomprehensible.
In his book, Gurri analyzed the public’s revolt in the political sphere. Throughout most of the 20th century, political messages were carefully mediated through a handful of media channels and spoon-fed to the public. Information was top-down and one-to-many. The world of information was shaped like a pyramid, and the public was at the bottom, none the wiser and lacking in power, left with no other option but to trust the “official” message.
Then the Internet came along and flipped the world of information upside-down. Now everyone had a microphone and could theoretically speak to a worldwide audience. The top-down pyramid gave way to a flattened network. The power class couldn’t mediate its own messages anymore. Its failures were exposed, stark naked for the public to see, and the public grew disenchanted with the power class. Meanwhile, the public had increasing power of its own to stand up to existing authority. Against this backdrop, with traditional power waning and public power waxing, the public revolted.
It all happened suddenly in 2011. The pen of history raced across the page faster than the ink could dry. The Arab Spring. Occupy Wall Street. Spain’s indignado (“outraged”) movement. Israel’s “tent cities.” All of the revolts shared a few common characteristics: (1) The public in revolt used technology to mobilize; (2) The public was united by a mindset of negation; (3) The power class tried to stop the public but couldn’t. And now, in 2021, and we’re witnessing the same three characteristics in the GameStop mania. In 2011, Occupy Wall Street. Today, WallStreetBets. The two are symptoms of the same condition: Revolt.
I.
The first common characteristic in the revolt of the public: Technology. In 2011, armed with the Internet, smartphones, and Twitter, the public mobilized against a predatory economic system, a corrupt government, a society ruled by money. Before, to put a crowd on the streets, you needed an organization, you needed a plan, you needed printing presses to make little handouts to plaster on local telephone poles. Now, people quickly and effectively organized mobs on Facebook groups. The video of Mohamed Bouazizi setting himself on fire blazed across social media and catalyzed the the Arab Spring.
In 2021, the people behind the GameStop frenzy are armed with Robinhood, Reddit, and YouTube/Twitter. Throughout modern financial history, participation in capital markets was dominated by financial institutions and sophisticated individuals. Robinhood, however, with its easy-to-use interface and elimination of trading fees, opened the floodgates to the “average Joe” retail investor. These retail investors flocked in the millions to Reddit’s WallStreetBets, using that forum to discuss which stocks to descend upon next. They idolize and follow the likes of Dave Portnoy, the founder of Barstool who infamously picked stock investments by pulling random letters from a Scrabble bag. Those who got insanely rich posted themselves on YouTube dunking chicken “tendies” in champagne, becoming mass cultural icons. The virtual herd, moving together, could meaningfully move the needle on any stock they chose. Stock prices no longer needed to be mediated by the institutions.
II.
Second, negation. According to Gurri, the public in revolt were held together by their shared loathing of the status quo, not in their agreement over a solution. In other words, the revolutionaries all wanted to watch the world burn, but they didn’t know how they wanted to rebuild the world from the rubble. The public created a stir but was never satisfied. Their negation bordered on nihilism. In 2011, the Israeli tent city protesters rejected legislation that addressed their concerns. Many refused even to speak to the government. The crowds that gathered in Tahrir Square to demand the overthrow of Egyptian autocrat Hosni Mubarak were back to demand the same of his duly elected successor, Mohamed Morsi.
In 2021, the WallStreetBets crowd is similarly united in their hatred for the financial institutions. Again, from the opening quote: “I’m here because I’m tired of getting fucked by the system and the people who control the system. This is the problem with our world today and this is the type of revolution we need.” And here’s another Redditor, very explicitly: “People are risking their lives to wage war against the suits and it brings tears to my eyes to watch them do it . . . The amount of years so many of you are willing to put on the line is an amazing testament to how dedicated this sub is to fucking these bastards raw. The bastards who steal thousands of years off the regular man’s lives every single day. You’re fighting the good fight, and your sacrifices will not be forgotten.” This deep-seated contempt arises from the 08-09 financial crisis, in which the high-flying suit-people “managed” other people’s money, lost all of said money, and got bailed out by the government while the common folk lost their homes, their jobs, and their livelihoods. More than anything, the crazy quilt of GameStop buyers is stitched together by a rage against the financial machine.
And what do retail investors envision for the future of GameStop and financial institutions after this is all over? They don’t really know. Sure, the public hopes that the financial institutions will eventually need to cover their short positions and buy back all the GameStop they’ve been letting go of. This gives the public a way to dump all the $GME they’ve been accumulating, making like a 1000% return in the process. But even if this does come to pass, will the nature of the financial institutions be fundamentally changed so as to appease the public? Will the rage of the public subside? My bet is no. The level of hatred will stay the same, and I expect similar revolts in the years to come.
And finally, yes, this negation does border on nihilism, too. The public is bent on destruction. They know that $GME makes no sense financially. They aren’t even here necessarily to make a buck. They’re here mainly to stick it to the elites. Plus, their rhetoric is so sardonic that it verges on nihilistic. Here are some replies to the opening quote: “Apes together strong;” “Welcome to the front lines, autist;” “Well said retard.” Yes, you read that right: They fondly refer to themselves as apes, autists, and retards. Perhaps this is what Gurri meant when he said the public dons “ornate and exotic identities, [borne] in the manner of those enormous wigs once worn at Versailles.” The WallStreetBets crowd knows that what they’re doing is exaggeratedly insane, yet they bulldoze onwards nonetheless.
III.
Third, failure to suppress. In 2011, autocrats tried to clamp down on viral content, but they couldn’t. They tried to turn off the TVs, they tried to take posts down on Twitter and YouTube, they tried to throw journalists in jail, but they were just pouring gasoline on the fire. Content kept spreading, and people continued mobilizing. Before the autocrats knew it, the public was already banging on their doors.
In 2021, the hedge funds are similarly trying to clamp down on retail investors. Hedge funds are in a game of chicken with the WallStreetBets crowd, and the former are betting big that the latter will blink first. Indeed, even though hedge funds have lost $20 billion this year so far shorting GameStop, they aren’t backing down. They want to beat the public into submission. According to one finance expert: “As soon as some shorts are covering, there are a line of new short-sellers looking to locate and short GME at these high stock price levels. Much like in trench warfare, after the first wave gets decimated, the second wave takes up the banner and marches onward.”
But the public also isn’t going down easily, and my money is on the public to outlast the elites. On Wednesday night, the WallStreetBets Discord channel got temporarily banned. The sub-Reddit also went down temporarily. Robinhood even temporarily halted trading of $GME on Thursday, bringing the stock down about 40%. But right when the suit-people were heaving a sigh of relief and wiping the sweat off their brows, $GME rebounded on Friday, up 70%. After the WallStreetBets sub-Reddit came back online, hordes of people were urging their fellow “apes, autists, and retards” to have “diamond hands” ( “💎🤚”), to hold onto the stock even in the midst of hedge fund shorting because the stock would eventually rocketship (“🚀🚀🚀🚀”) to Mars. According to a Redditor, “We can remain irrational longer than they [the hedge funds] can remain solvent.”
Finally, the tenacity of the public and the failure to suppress it is, in no small part, also thanks to the first two factors, technology and negation. The public continues to rally using technology. Even when Robinhood blocked $GME trading, the public mobilized on Fidelity. The elite cannot silence the public’s heroes on social media. On Tuesday, Elon Musk tweeted “Gamestonk!!” sending the stock up 160%. As people like Chamath Palihapitiya and Mark Cuban take the public’s side, I expect WallStreetBets fervor to dial up even higher. The nefarious actions from the nefarious hedge funds also fueled the public’s negation, bringing the public even closer together in their hatred for the elite.
IV.
So what do I personally think about all this? In some respects, I’m just an observer with a bag of popcorn watching a comedy unfold. As you might be able to tell, from my vantage point I do think the public is slightly more of the protagonist, and I am sympathetic to their struggles. But at the same time, I feel like something is going to go wrong at some point, and many retail investors will be hurt. To make matters worse, at the end of the movie, even if the public ends out “on top,” I’m afraid that nothing will change moving forward. Will the public shed its bent towards negation? Will the institutions change their predatory behavior? Like the same exhausting re-runs of Transformers, over and over again, perhaps the revolt of the public in the stock market is bound to reincarnate itself repeatedly in the years to come. Perhaps what we witnessed this past week was only the series intro.
📚 What I’m reading
Of course, lots about GameStop. While my piece is more about framing GameStop as a revolt, if you want to know what concretely happened, read some of these.
The battle of GameStop. (Paranoid Enough)
How will the GameStop game stop? (Matt Levine, Bloomberg)
Robinhood, in need of cash, raises $1bn from investors. (New York Times)
And, here’s some non-GameStop stuff:
Working on the Neuralink robot. (YouTube)
The importance of ‘existential hope’ and grand futures. (The Long-termist’s Field Guide)
Loon’s final flight. Last week, X, Alphabet’s moonshot factory, decided to shut Loon down. Loon was basically building solar-powered, balloon-borne LTE base-stations—really cool! I was actually originally going to write about Loon this week, but I suppose Loon will have to wait. Maybe I’ll release something mid-week. (X blogpost)
Introducing Birdwatch, a community-based approach to misinformation. (Twitter)