Eat the Rich: The GAMESTOP Saga Review

Eat the Rich: The GAMESTOP Saga Review

Written by Katie Gomez

This new three-episode mini-series is a must-watch for traders of any kind (retail, day, swing) looking for some answers regarding the infamous Gamestop (GME stock) situation that shocked the market last year. The media is slowly becoming a better space to learn about and understand real-world trading situations: including Reddit forums, documentaries, and even films to help people feel more in the loop. In a previous blog article, I reviewed the 2015 film The Big Short, which allowed those not as well versed in the trading world to better understand the 2008 financial crisis. The past decade since the crisis has seen a few stories, but none quite as controversial and mind boggling as the Gamestop debacle. This docuseries, Eat the Rich, is here to provide some clarification. 

Today, the media we consume is polarized and saturated with opinions, essentially running on bias. Whether it is the news we read, the shows we watch, or the Reddit threads we follow, we unconsciously seek confirmation bias in the media we consume. Nevertheless, this docuseries adequately provided multiple perspectives, which is what we need to get the whole story. 

The market has always been divided by wealth, with ordinary people trying to get rich and the rich trying to get richer. There are the elite few at the head table (the hedge fund traders on Wall Street making 7 to 8 figures annually), and then we have the silent majority (retail, day, and swing traders) trading at home. While all traders have the same goal, to succeed in making money, the playing field is anything but even. 

A retail trader can make the same % returns as a hedge fund corporation, but without the power, information, networks, and tools they have access to, their odds are better off playing the lottery. The playing field has always been uneven and the game will never be fair, but that is what allows the beauty of an underdog story, like Gamestop, to blossom.

This docuseries exemplifies the ultimate underdog story of David versus Goliath. Gamestop was destined to endure the same tragic end as other 90s stores now deemed irrelevant, like Blockbuster. However, traders know that when it comes to the stock market, nothing is ever a sure thing, as GME eventually proved. 

In duel with small investors over GameStop, big funds blink | AP News

The trading market was created by people for people with differing opinions, creating a place to wager bets against one another, and that is what makes it so exciting. In this case, the Goliaths are the 1% of the trading population, the billionaires at the big-boy table trading on Wall Street, while the Davids are the less successful, less experienced average traders who trade at home.

In 2008, the Millennial generation watched their parents and loved ones lose their retirement pensions, jobs, and homes, thanks to the recession brought on by big banks. Therefore, many entered the trading world intending to take control of their finances, so they could not be swindled out of their savings and homes (if they could even buy one). These millennials were mainly part-time or retail traders with chips on their shoulders and zero trust for the 1%. 

What Made The Financial Crisis Go From Bad To Disaster? - Hersh Shefrin -  Thought Leaders - Illuminate

In 2020, when Gamestop stock (GME) was given the kiss of death by the elite, the 1% began short-selling it. However, Dr. Michael Burry, the brilliant trader, and private hedge fund manager who first predicted the housing market crash, chose to look deeper. Notorious for proving the big guys wrong, Burry looked at the short float to see what was going on, and he shockingly found 140% of shares short sold, leading him to bet against the majority once again and buy GME shares.

Once Millennial traders caught wind of this news, they took advantage of the opportunity to band together in that collective anger and bet against the big banks and hedge funds. The thought that they could retaliate against the corporations that ruined their parents’ lives was enough motive for them to jump in and buy GME for themselves. 

Reddit became the forefront of this movement in a subreddit named ‘WallStreetBets.’ This subreddit, created in 2012, offered retail traders an anonymous space to discuss trades and share stories. However, it wasn’t until late 2020, when Gamestop became a buzzword, that it peaked in popularity and gained its current notoriety.  

While from an outsider’s perspective, this may seem like a futile concoction of memes and conspiracy theories, /r/wallstreetbets helped lead GME to become one of the most shocking short squeezes in history. In 2021, an influx of these traders who had bought Gamestop arose, and they began encouraging others to do the same, ignoring whatever the 1% preaches. 

R/WallStreetBets Fastest-Growing Subreddit, Hits 6 Million Users
5 reasons GameStop stock (GME) is a roach not a cigar butt a la Warren  Buffett & could short squeeze - YouTube

As more people bought into this idea of sticking it to the corporate suit traders, the subreddit’s subscriber numbers grew to the millions. Reddit became one of the prime sources of information for Gamestop, as it created a safe place for like-minded people to chat, laugh, and learn from fellow traders. Youtuber and Redditor Keith Patrick Gill (username RoaringKitty) helped lead this GME movement by encouraging others to ignore the news and buy more Gamestop. Patrick bought 100,000 shares over four months, turning his original $50,000 investment into a whopping $48 million. 

January 2021 was the beginning of a new era, in which the Davids began to prevail as GME started to skyrocket at an unprecedented rate. Many of the average retail traders were profiting off their bet, while the hedge funds were bleeding money from the stock they had so confidently shorted months ago. The hedge funds short-selling the stock had lost over $20 billion—justice never tasted so sweet.  

This exponential rise in the price of GME soon evoked a shocking role reversal, wherein the Davids had become the new Goliath. While short sellers were drowning in premium costs, everyone else was busy buying stock in Gamestop, from stay-at-home moms to Elon Musk. Unfortunately, this celebratory role reversal was short-lived, proving that the system is still corrupt and rigged in favor of the 1%. 

Many retail traders bought GME using Robinhood, an app that acted as a trading platform designed for newer traders without a brokerage account. Robinhood originally intended to follow the footsteps of the legendary heroic outlaw, who stole from the rich to give to the poor. However, as their company grew, so did costs, forcing the need for hedge fund Citadel to save the day. 

Robinhood: Stocks & Crypto - Apps on Google Play
Citadel - Crunchbase Company Profile & Funding

Ironically, since the big banking (the rich) had the power now, it was clear their priorities had changed, along with their original objective. So when GME shares had reached uncharted territory breaking $400, Robinhood’s investors panicked. The founders of Robinhood never admitted that the rise of GME was going to bankrupt them because the banks funding them were going broke shorting it. Can you say conflict of interest?

This conflict of interest led to the heart-breaking fall of GME to end the short squeeze before the big banks lost everything. Robinhood removed the buy button option for Gamestop to prevent more loss for the short sellers. Despite the price being at its highest, traders could no longer buy it, so their only option was to hold or sell. Ironically, this app intended to help ordinary new traders make money, yet because of this decision, those were the traders who got the most screwed in the process. 

6 Questions You May be Asking after the Market Drop - McDaniel & Register |  Financial Advisors | Jackson, MS
Did Robinhood Disable the BUY button? I wanna go to the moon! :  r/wallstreetbets

Everyone was shocked, frustrated, and confused, and all they could do was watch as the stock plunged. In a matter of hours, GME’s share price dropped more than 30% ( $507 to $120). With everyone selling in panic, the stock price fell to $48 two weeks later. Gamestop was the saving grace stock to many traders, making up a large chunk out of portfolios, and in a blink of an eye, it was all gone. While some traders sold early and high before the chaos struck, most were not so lucky. Many of these retail traders are known as “diamond hands,” traders that hold on to their stocks, refusing to sell, no matter how low it goes. 

Today Gamestop’s stock has fallen to $24 a share, and most diamond hand traders still refuse to sell. These traders begrudgingly choose to hold onto GME and even buy more, partly because they think it will rise again and also because they refuse to give the Goliaths the satisfaction of profiting from their sale. 

Though many believe this story ends in tragedy, others argue that this story is still going. It is inevitable to feel vengeful, cheated, and scammed after the interference by big banks in the trading world. This docuseries offered an objective point of view with perspectives from Reddit traders, journalists, politicians, day traders, and hedge fund managers alike to get a complete spectrum of Gamestop’s meteoric rise and fall. 

There is no denying that big banks and hedge funds got greedy and used their resources to cheat the system to win, causing GME holders to become collateral damage. Nevertheless, while it is easier to seek blame and villainize the hedge fund managers, they are simply playing the game to win, with the resources they have, just like the rest of us. Additionally, labeling all hedge funds as corrupt is unfair, Michael Burry is a hedge fund manager but consistently bets against big banks. 

Whether we admit it or not, we knew the rules when we bought into the game of trading, the market never has and never will be fair, and it does not exist on a level playing field. The best thing we can do in the face of this adversity is to act like a shark: follow our instincts, stay sharp, and keep moving forward.

In the end, no matter how much money we are worth, we are all human beings with the same goal: to make money and live comfortably. We just have to take different paths to get there. We all get the opportunity to achieve that goal, but we must accept that some paths may seem short and easy, with resources aplenty, while others seem like a grueling never ending journey. 

Although our stories may seem incomparable, we traders all have these core things in common: we have all made mistakes, become blinded by greed, and have all been wrong—we are all imperfect traders. If Gamestop taught us anything about the market, it is that the tables will turn again because there will always be another unexpected twist around the corner.