…and you’re tired of reading about it. But this is too good not to discuss.
First, a refresher:
- GameStop traded as high as $483 in January after an army of amateur investors, led by a man called ‘Roaring Kitty’, assembled on Reddit to launch a short squeeze that forced hedge funds to seek emergency bailouts. It was interesting and very funny. Until it ended - GameStop closed at $40.59 last week.
… the House Financial Services Committee hauled the cast of the GameStop tragicomedy into a virtual hearing
: “Game Stopped? Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide?” Answers below.
cult hero Keith ‘Roaring Kitty’ Gill, who began his testimony
with an apt clarification: “I am not a cat.” He then made a bullish case for GameStop, announced he is a millionaire, and ended with the sentence: “In short, I like the stock.”
Losers: us because the other testimonies were less fun. The main takeaways:
Vlad Tenev (Robinhood CEO): defended Robinhood’s controversial ‘payment for order flow’ model. He said it makes room for innovation e.g. the no-commission trades that made Robinhood popular.
Steve Huffman (Reddit CEO): made a slightly out-of-place speech on metrics, concluding (a) the activity in WallStreetBets was “within normal parameters”; (b) Reddit investment advice is “among the best.”
Lawmakers: bickered over whether or not the hearing was “political theatre.”
Game, please stop
. Money Stuff
guru Matt Levine has the best take
on what’ll happen next:
“Once you call a congressional hearing on a topic, you are pretty committed to the conclusion that the topic is serious and something should be done about it. You can’t call everyone in and write memos and testimony and ask ‘what was this all about?’ and have everyone reply ‘well we just thought it would be dumb and fun to do this, and it was’ and then conclude ‘ah, well, as long as everyone had fun.’ But that might be the right answer.”
Still, the hearing follows a general trend of lawmaker confusion over how easily ‘meme-ification’ can dismantle Wall Street hierarchies e.g. the recent rise of NFTs
Elsewhere in the Roaring Kitty-verse
: Keith Gill is being sued
for ‘posing’ as an amateur investor and manipulating the market.
- Hot take: arguing someone committed securities fraud by posted opinions online is probs not a winning case.