Gamestop coup: will David triumph against Goliath?
Small investors have caused billions in losses for the US hedge fund Melvin Capital. The fund had been short selling the stock of computer games retailer Gamestop because the latter's share prices had dropped over recent months. But in a coordinated hit against the hedge fund, small investors joined forces and began snapping up Gamestop shares, causing the stock price to soar. Commentators hope the coup will lead to lasting changes in the financial world.
The rebels have achieved the impossible
Columnist Hakkı Öcal describes the action as a revolutionary act of heroism in Daily Sabah:
“I cannot describe the elation I felt when I heard that the 'cancel movement' had finally reached Wall Street and a group of Redditors had pulled one over on the hedge funds in the GameStop fiasco. Over the past week, individual traders came together to shake markets like never before. Internet revolutionaries, who are only supposed to unhinge Arabic dictators, this time, came for the stock market with such force it was rendered irrational - a feat that can be likened to the cooling of hell.”
The power of kamikaze investors
Sega comments as follows:
“This whole Gamestop affair speaks volumes. ... The most important conclusions can be summed up by paraphrasing Abraham Lincoln: 'You can lie to some of the people all the time and all of the people some of the time. But you cannot lie to all of the people all of the time.' There comes a time when the tactic of misleading people no longer works. No matter how much money Big Finance controls, small investors are gaining more and more clout - mainly because they can afford to lose everything or - to paraphrase Marx now - because they have nothing to lose but their disadvantages.”
Beautiful but scary
Columnist Kostas Giannakidis writes in Protagon:
“It's likely that absolutely nothing will change in the way the markets work. The system could create barriers that prevent these games or, even more effectively, keep organised groups of people out. But what happened with Gamestop is beautiful and at the same time scary. What would happen with the markets if the shoals of little fish were to get even bigger? The situation is reminiscent of what happened to traditional media when social media emerged. ... People set up their own channels of information and communication. ... We can now assume that we'll see a similar trend in the economic sphere.”
A glimmer of hope
For Visão the affair holds out the prospect of change for the better:
“In a world beset by poverty and inequality, with an economic crisis and new political winds in the air, it is increasingly absurd to maintain a profoundly illogical, ineffective and unfair global financial system. ... The financial fantasies that prevailed in the upper spheres are now increasingly being questioned and scrutinised. Some believe that a reconfiguration of the rules of the capitalist game is inevitable. Perhaps. In any case it is still exciting to see attempts to create new balances emerging.”
Nerds wreaking havoc
This is the revenge of the nerds, writes Jutarnji list:
“What happens when a group of nerds - annoyed by the injustices of the financial market, which they also see as a the sexy toy of those situated several insurmountable levels above them - decides to take justice into its own hands? They do it and, as expected, wreak total havoc in a mechanism that has been convinced that nothing bad can happen to it ever since the great crisis of 2007. ... What nobody expected was the massive participation of amateur investors, who were amused but also attracted by this game against Wall Street because if it succeeded they could teach the despised hedge funds a lesson.”
The big investors are the big winners here
Gamestop's business model has no future, writes the Aargauer Zeitung:
“So when the Wallstreetbets rebels drive this stock to these absurd heights, there is nothing reasonable about it. ... The Wallstreetbets rebels bear a strong resemblance to the anti-vaxxers. They deeply distrust the elites and, thanks to the Internet and apps, now feel they can take their financial fate into their own hands. ... Hedge fund managers are lone fighters, not herd animals. ... That's why they don't join forces against the rebels but instead harness them for their own purposes. Do you know who has profited most from the soaring price of Gamestop shares? BlackRock. Larry Fink and co. are now more than two billion dollars richer thanks to the rebels.”
Watch out for the bubble!
De Standaard also warns that these speculative actions by small investors can be dangerous:
“Hit hard by coronavirus, Generation Z has crashed the stock markets' party. This is Occupy Wall Street, but in its digital version. However the recent past has shown that an unpredictable, destructive force is unleashed when the masses are mobilised by the dynamics of social media. Just like many professional speculators, Reddit investors created a bubble, a false value that has nothing to do with the real value of Gamestop. ... Wall Street could really do with this kind of disruption, but it will be interesting to see whether this uprising works out for the better or the worse.”
The system is to blame
It's wrong to hold small investors responsible for the fluctuations in stock prices, Aamulehti comments:
“Many believe that the big hedge funds have miscalculated when taking risks, and that these risks are now being offset by restricting trading by small investors. But this phenomenon conceals a larger problem with the system. With their extremely loose monetary policies, the central banks have encouraged attempts to make profits in any way possible. It's wrong to pinpoint small investors as the culprits in this game. The blame lies with the system, whose shaky foundations are put to the test by such phenomena.”
Stock markets must not become a casino
In the long term the situation could backfire, and not just on small investors, warns the Financial Times:
“The reality is that the shares of GameStop and others will fall. The noise will abate and should not deter long-term investors. But there are broader implications for the credibility of markets. It is important that investing does not become synonymous with gambling for a whole generation of new investors. This would not only be bad for the market but bad for them when they lose - and it would only deepen their antagonism towards Wall Street.”