Power to the Players: Reddit, Robinhood and Bitcoin

Those of you with kids and grandkids may at some point have stepped inside a GameStop. If so, you might be familiar with the video game retailer’s tagline: “Power to the players.”

The same slogan could just as easily be the rallying cry for the millions of millennial and Gen Z Reddit-users who took to Robinhood this week to drive up the share price of the beloved yet struggling GameStop.

(Fun fact: Ross Perot was one of the earliest seed investors in GameStop’s predecessor, Babbage’s, which first opened its doors in Dallas, Texas, in 1984.)

By now you’ve likely heard the full story. But just in case: A number of hedge funds, including Melvin Capital and Maplelane Capital, took out short positions in GameStop, whose sales were lagging even before the pandemic killed foot traffic. In response, anti-Wall Street organizers on Reddit urged readers to buy GameStop options en masse to catapult its shares “to the moon.” This in turn forced Melvin and others to buy GameStop shares at much higher prices to cover their positions, leading to multibillion-dollar losses.

This month alone, GameStop surged from around $19 a share to $325—a more-than 1,600% increase. The stock traded a head-spinning $100 billion worth of shares this week, more than Apple and Amazon, according to Bloomberg’s Eric Balchunas.

To traders who genuinely care about the company’s survival, I would suggest they consider supporting it by spending their money there this weekend.

The Reddit-fueled rally has drastically impacted price discovery in not just GameStop but other underdog stocks as well. Shares of movie theater operator AMC Entertainment, home goods retailer Bed Bath & Beyond, BlackBerry and Tootsie Roll Industries have also popped. Even Blockbuster’s liquidation holding company saw surreal levels of trading, its daily volume jumping from zero just a month ago to nearly 24 million shares on Thursday.

its a mad, mad, mad, mad world: blockbuster stock goes viral in january 2021
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Gil Scott-Heron, considered by many to be the first rap artist, informed us back in 1971 that “The Revolution Will Not Be Televised.”

That may be so, but it will be tweeted, shared on Instagram, upvoted on Reddit and traded on commission-free Robinhood using decentralized Bitcoin and Ethereum. “Power to the players” indeed.