Srs Bsns: Has The Squeeze Been Squozed? The Latest On WallStreetBets’ GameStop Stock Short Squeeze

For the last two weeks, the news cycle has been dominated by the story surrounding GameStop’s short squeeze and the subreddit /r/WallStreetBets taking on hedge funds in the stock market. Whether you see this as a massive success for some David vs. Goliath saga, a social movement pitting the rich against the poor or simply a hilarious meme, the story is far from over.

Last week, we covered the basics of what WallStreetBets (WSB) is and what exactly was going on with the whole debacle, but a lot has happened since then as things have continued to develop and pick up steam. Let’s take a look at the recent events to determine where we’re currently at with the GameStop stock surge.

After reaching its peak at nearly $500 a share during last week’s gamma squeeze, the stock has consistently slid downward to its current low around $60. At its peak, interest in GME was at an all-time high that saw massive amounts of retail traders, many getting their first entry to the stock market, buying up shares from anywhere at over $300 or more.

The investing app Robinhood and other brokerages then locked out users’ ability to purchase GME or other meme stocks like AMC and BlackBerry as people scrambled to switch to other platforms and brokers to get in on the craze. Robinhood’s actions kicked off a wave of intense backlash against them.

Dozens of class-action lawsuits were filed against Robinhood, citing accusations of market manipulation, though the company said in a statement that it was due to their inability to post sufficient collateral at clearing houses to execute orders. On Monday, the co-founder and co-CEO of Robinhood, Vlad Tenev, joined in on the invitation-only chat app Clubhouse to defend his platform’s decision to restrict trading on GME where he said, "We had no choice in this case. We had to conform to our regulatory capital requirements."

Tenev's statements closely matched the company's blog post addressing the controversy last week, but it didn't stop Elon Musk, who was also in on the call, from grilling Tenev a bit about the matter. Musk inquired about Robinhood's association with Citadel (one of the hedge funds involved in the event that lost billions), if there was anything "shady" that went down and even asked Tenev "Is anyone holding you hostage right now?"

The app was later review-bombed, pushing its rating down to one star before over 100,000 reviews were then deleted by Google on its Play Store. Several Robinhood employees were also reportedly outraged over the company's actions, which some felt directly betrayed their users. In a viral tweet, it was stated that to remedy this internal anger at the company, Robinhood sent staff members $40 gift cards to use on DoorDash.

WSB members also alleged that the media, namely CNBC, was manipulating the story by pushing viewers to other investments such as silver. Though no one on the subreddit could tell where this news was coming from about Redditors jumping ship from GME to silver, the story was widely reported on by a number of outlets.

Other allegations that we’ve seen develop over the last week include reports from a number of WSB members that the sub has been seeing a massive influx of bots attempting to change mentalities, shake confidence and ultimately get people to sell or become distracted by the chance of getting in on the latest meme stock craze.

Among the hype, viral videos and images of WSB members buying billboards around the U.S. also swept the web by storm, likely an easy buy since the pandemic has driven advertising dollars down since early 2020.

Several prominent politicians, billionaires and other entrepreneurs began speaking out against hedge funds and offering their support for WSB. People rallied to the cause from all walks of life, spiking the WSB subreddit from roughly 2 million users at the beginning of January to over 8.5 million this week.

Just before the weekend, White House Press Secretary Jen Psaki said during a press conference that Treasury Secretary Janet Yellen and others in the Biden administration were monitoring the situation, as well as Speaker of the House Nancy Pelosi. Reporters raised concern over a potential conflict of interest regarding Yellen’s investigation since she received $810,000 from Citadel after the end of her term as Chair of the Federal Reserve and another $7 million from other firms for public speaking appearances.

Numerous other politicians joined the fray, and although we’re still not quite sure what is happening with these investigations, news in recent days surrounding Keith Gill (better known as the Redditor DeepFuckingValue and YouTuber Roaring Kitty who helped to kick off the GME surge) has pointed out that he is now potentially meeting with Congress for a hearing on the matter.

Notable individuals from Shark Tank’s Kevin O'Leary and Mark Cuban to Elon Musk, AOC and Ted Cruz were among those criticizing Wall Street or the hedge funds for their actions. Although politicians on either side of the aisle had disagreeing viewpoints on what should be done or what the root of the problem was, it was quite interesting to see them come together in such a time of political turmoil.

Earlier this week, Mark Cuban even did an AMA (Ask Me Anything) on the WSB subreddit where he thanked Redditors for “changing the game” and “taking on Wall Street,” offering encouragement and advice to the sub’s users.

“So what to do? If you can afford to hold the stock, you hold,” Cuban said during the AMA. “I don't own it, but that's what I would do. Why? Because when RH and the other online brokers open it back up to buyers, then we will see what WSB is really made of. That is when you get to make it all work. I have no doubt that there are funds and big players that have shorted this stock again thinking they are smarter than everyone on WSB. I know you are going to hate to hear this, but the lower it goes, the more powerful WSB can be stepping up to buy the stock again.”

Shortly after the AMA concluded, Cuban then went on CNBC where he defended WSB and his support for retail traders over the hedge funds. At one point, Cuban even said the “hodl” mantra that originally stemmed from cryptocurrency communities has changed his perspective on the market.

Aside from GME, the surge in interest around stocks also resulted in an unprecedented amount of attention on Dogecoin, a cryptocurrency that’s been around for a long time but never really caused a stir aside from its connection to the beloved Doge meme. Whether instigated by WSB members or others looking to take advantage of the next big internet-driven investment, Dogecoin saw a spike of over 800 percent in value.

After a few tweets from Elon Musk regarding the altcoin, Dogecoin has fluctuated wildly from day to day but remains a prominent topic of discussion online as well as a noticeable increase in value. Much like with GME, Robinhood also banned the trading of Dogecoin, inciting further backlash.

With all this attention, it seems like just about anything that garners this much interest winds up a plot for a movie, so it was no surprise when earlier this week Netflix and MGM both unveiled plans to turn the phenomenon into films. Another limited-run series titled To the Moon is also in the works.

Despite GameStop’s struggles this week in the stock market, which saw at least some bailing on the wait for the “big squeeze,” Redditors on WSB like DeepFuckingValue seem to mostly remain unwavering in their decision to hold and wait for the short squeeze that has yet to come to fruition. The outpouring of support from high-profile individuals has helped to continue this confidence undoubtedly.

Hype and interest surrounding the story have certainly waned a bit this week as the value of GME continues to drop, but whether or not the short squeeze ever comes, the events we’ve witnessed so far over the last two weeks will surely leave a lasting impression on Wall Street and the stock market in the years to come.

So, has the squeeze been squozed? If you check WallStreetBets, many seem to think no, as well as the site squeeze.bonner.jp that breaks down why it hasn’t. But if you want a real answer, good luck, as it seems the media leans one way, WSB another and most simply confused.