I never take pleasure in seeing people lose money. But I must admit to feeling some schadenfreude in seeing a short-selling suit go crying to the Securities and Exchange Commission like a baby, when the scare and rabble-rousing tactics he uses against retail “suckers” are turned against him.
The short squeeze on US videogame retailer GameStop (US:GME) will long be remembered. For the first time in a long time – perhaps ever - retail traders (or reckless gamblers, or the Robinhood mob, or however you want to put it) managed to mobilise themselves effectively via social media platform Reddit and put the hurt on hedge funds that had for so long dominated the stock by shorting it, not least well-known short activist Citron Research.
Perhaps we can consider retail traders as this story’s Joan of Arc. The hedge funds (the English, for the purposes of this narrative) had become so accustomed to winning that they became complacent. The conditions were set for an explosive conclusion. As of 21 January, more than 130 per cent of GameStop stock – a bricks-and-mortar business whose model looks largely defunct in an era of digital downloads – was sold short.