The Hopes That Rose and Fell With GameStop
Some wanted to be on the front lines of a revolution. Some wanted to be rich. And at the end of a wild two-week fortune made and lost drive, some just hoped they could pay their rent.
Winners and losers are determined every day on Wall Street. And for a while, the improbable trading boom in the beleaguered video game retailer GameStop brought the little guy to the top. A staggering fortune appeared overnight.
But they disappeared almost as quickly.
At its highest point, GameStop shares were priced at $ 483. On Friday the stock was worth $ 63.77. The trade frenzy – fueled by online hype about a rebellion against traditional Wall Street powers – had created around $ 30 billion in fortune on paper and then destroyed it.
Many retail investors trapped at the height of the mania lost a lot. Perfect timing of a trade is next to impossible even for the best stock pickers. Even those who made money have missed out on far greater fortunes if they didn’t sell at the height of the rally.
Regardless of whether they wanted to make a coin or a point, these traders rode up and down the GameStop wave.
Money on the table
What do you do when you’re 19 and suddenly have a quarter of a million dollars in store? Shawn Daumer went to Hooters.
Armed with cash that came in part from graduation gifts and profits from trading stocks like Tesla, Mr. Daumer had spent about $ 47,000 on GameStop stock the week before it hit the roof.
It was January 26 – just two days after GameStop’s big week – when he and his brother hit Hooters, peeled off 30 wings, and had 10 more left. Two days later, GameStop hit its intraday high of $ 483 and Mr. Daumer, a real estate agent in Valparaiso, Indiana, held 1,233 shares. It had risen more than half a million dollars on its initial investment.
Mr Daumer pursued his interest in GameStop in the same place many others did: Reddit’s WallStreetBets forum, where chair vendors gather for slippery jokes, success stories, and even bragging about enormous losses.
“Really the biggest part is when you see everyone buying stocks day in and day out and seeing them live on their own screen and watching them go up,” Daumer said amid GameStop’s surge. “It follows the trend, you know? If that’s the trend, follow it and you will make money. “
GameStop versus Wall Street
Let us understand you
GameStop’s stock declined abruptly, however, when the trading app Robinhood and other brokerage firms announced a series of restrictions on trading a handful of stocks that had soared. Mr. Daumer made about $ 200,000 in profit almost immediately.
“I was still up 500 percent,” he said at the time. “I’m OK.” Also, Mr. Daumer and his fellow editor-in-chiefs believed GameStop would skyrocket again: “We’re going to make $ 1,000,” he said.
They never came close.
He’d had enough last week when the stock fell 72 percent in two days. Mr. Daumer placed an order for sale Tuesday afternoon and the order was filled Wednesday morning at a price of $ 91.22.
He made more than $ 65,000 in profit, doubling his investment.
Not everyone was so lucky.
A rude awakening
For Nora Samir it seemed like a dream.
She woke up at her home in Sydney in the middle of the night of January 27th. On the other side of the world, GameStop grew rapidly.
The $ 735 she’d invested the day before had doubled. She ran down the stairs to tell her mother who was sleeping.
“Nora, don’t be greedy,” warned her mother. “You have to take it out.”
But Ms. Samir, 24, a child health researcher at the University of New South Wales and a newcomer to the stock market,
not sold – she bought.
After investing about $ 800 more, she owned just over nine shares of GameStop. She later plowed $ 1,800 into BlackBerry, the cell phone maker that once dominated and had mobile email was swept in the frenzy.
“I was at a peak,” she admitted. “When the stock goes up, don’t think about how deep it can go.”
The high didn’t last long – and the decline got worse when her trading app crashed and she had no choice but to hold on while GameStop stocks fell.
She managed to sell a share for $ 134 on the way down. The shares she still owned on Friday were worth $ 528. She lost more than half of what she put in GameStop.
In the lesson, Ms. Samir said, “Don’t be greedy.”
You only live once
Jacob Chalfant, a high school graduate from Westfield, New Jersey, enjoyed the way his “diamond hands” put pressure on hedge funds.
Mr. Chalfant, now 18, a poster on WallStreetBets since he was 15, enjoyed the GameStop rally because of the pressure it put on hedge funds like Melvin Capital, which had bet GameStop stocks to fall would.
In Reddit’s parlance, Mr. Chalfant’s diamond-hard hands, unlike the “paper hands” of the salespeople, will not fold. He’s still holding the stock he bought for $ 1,035 – roughly a month’s wages from his pizza shop job and freelance photography business – when GameStop was trading at $ 290. On Friday, his investment was worth $ 220.
“I’ve come to terms with the fact that I’ve already lost the money,” he said. “Realistically, the stock won’t go where it was before.”
But the losses are also an investment, said Mr Chalfant. They earned him “internet points” at WallStreetBets. “If you say, ‘I’m still holding,’ you have more influence than if you didn’t,” he said.
(Many on the WallStreetBets forum insist that GameStop stocks could rise again. On the other hand, another Reddit forum opened last week where users report losses from trading stocks whose ticker symbol is GME: GMEbagholdersclub.)
Mr Chalfant said he and other teen traders enjoy gamifying the investment, and many of his friends got onto GameStop just because they thought it was fun not to make any money.
“We live in a system where there is no more justice and the whole world is falling apart,” said Chalfant. “Nothing really matters, so we might as well try and have fun while we’re here.”
For Terrell Jones, it wasn’t a GameStop investment that taught him a lesson.
Instead, Mr. Jones, a student from Kenosha, Wisconsin, bought $ 300 from AMC, the cinema chain whose stocks were also driven insane.
“I just caught the social media hype and got into it right away,” he said. “I fell for it.”
When AMC began to fall and lost $ 112, 24-year-old Mr. Jones panicked.
“I just had to get out of there ASAP,” he said. “It’s a lot of money, we’re in the middle of a pandemic and I have rent that has to be paid.”
Lose your head
Usually C. Arthur Davitt is a model of financial discipline.
He automatically pays $ 200 a month into an index fund, saves enough to score a corporate match on his 401 (k), and has aggressively paid off his $ 35,000 debt.
But 29-year-old Davitt thought it might be fun to get into some of the skyrocketing stocks. He’s invested less than $ 1,500 in GameStop and AMC – GameStop’s stake is now down almost in half, and his stake in AMC is down more than 20 percent.
“I’m not a player by nature,” he said, “and that’s money I’ve already written off.”
Mr. Davitt, who lives in Chicago and works for a company that offers employer assistance programs to employers, might as well stick with both companies. GameStop has just named several new leaders who could help breathe new life into the company, and AMC could see a recovery once people venture out of their homes again.
“If I didn’t like GameStop or AMC,” said Davitt, “I wouldn’t find it pleasant.”
Another on the line
In almost every way, Mr. Daumer, the Indiana teenager, is one of the winners of the GameStop deal. He more than doubled his money even if he didn’t make the biggest payday possible.
“Are you fishing?” he asked, trying to find a way to explain the experience.
If you’re fishing, he said, and you feel a tug on your line, it might just be a nibble or a bite. If you wait to feel a stronger jolt, you risk losing the fish you didn’t know you had.
The climax, he said, was such a moment. He thought it was just a little nibble and decided to wait.
“The fish got away,” he said.
But there are others who are addicts, he said. He is already trying his hand at a penny stock, Castor Maritime, based in Cyprus. So far this year it’s over 300 percent.
What kind of business is the company in?
“You know what? I wish I could tell you,” said Mr. Daumer. “I just like the numbers.”