If you’ve been following the news the past few weeks, you’ve most likely seen GameStop making headlines – and it isn’t about their stores closing nor do they have the new Xbox or PS5 in stock. GameStop, as well as some other companies like AMC and Koss, experienced a surge in their stock prices.
For those of you who aren’t familiar with GameStop, they are a small retailer that is often found in malls around the country. Many have believed that they were approaching the same fate as Blockbuster (RIP), being driven out by Steam and online platforms that newer gaming consoles support. The current state of the company makes the sudden surge in the stock value a surprise since it goes against the general “rules” of the market, where companies with a smart business model and future outlook tend to have the stocks that increase in value over time, while companies that aren’t adapting and struggling to drive revenue lose value in their stock.
But while many of us were ignoring GameStop, Keith Gill saw the possibility that the stock could swing upward. There were new consoles about to be released, GameStop had a large base of reward members and GameStop brought on new board members with a background in e-commerce. Known on Reddit as DeepFuckingValue, Keith was one of the first people to start betting on GameStop. He invested $53,000 in GameStop (GME) in 2019. That investment made him over $40 million! And he wasn’t alone; Ryan Cohen, the co-founder of Chewy, owned 13 percent of GME shares and saw the value of the stocks swell to $1.3 billion!
These events have led many of us to wonder: Does the stock market accurately represent the market and its trends? Or is it just a mirage? Are we in a huge bubble that will inevitably pop?
We were joined on our most recent episode of The GoGedders Podcast by CJ Krawczyk, a partner at Kravit, Hovel & Krawczyk and a securities litigator, as well as Joe Taylor, founder of Penrod Software where he made the Inc 500 list multiple times has turned $30,000 into $250,000 during the pandemic through high-risk trading. They help break down how this all started, what’s happening, where we could go from here and what restrictions could be put in place to help make sure stocks accurately reflect the value of their companies.
CJ and Joe do a great job of breaking everything down, from what happened on r/WallStreetBets, why hedge funds lost billions of dollars, whether this is a normal occurrence, why Robinhood blocked trading of certain stocks during this and what they see as solutions to the problem of stocks not reflecting the true value of their companies. Give the episode a listen by clicking the link below, or find The GoGedders on Spotify, Apple Podcasts, and Google Podcasts. Also, follow us on Facebook and Instagram to be the first to know about our podcast releases, as well as see additional content that we put out with each episode.