Inside the GameStop Saga: A Lesson in Narrative Attacks and Market Manipulation
In January 2021, a group of individual retail investors on the WallStreetBets chat forum organized an extensive buying campaign of GameStop stock (ticker: $GME), causing stock prices to soar. Within days of this campaign, the $GME stock price hit a pre-market high of over $500, costing hedge funds an estimated $19.75 billion yearly. On January 28th, 2021, several retail investment brokers restricted trading of certain stocks, including GameStop. Before these events, Robinhood was known for making it easy for retail investors to buy and trade stocks. However, these restrictions only allowed users to sell their positions, restricting the purchase of the store. The sudden shutdown sparked outrage among its users and on social media, leading to a surge of conspiracies that cluttered the information environment. The new film Dumb Money is a powerful example of how narrative attacks can cause financial and reputational harm to financial institutions.