Source – greenwald.substack.com
With AMC Stock Exploding Like GameStop Did, The Founder of r/WallStreetBets Speaks Out
Jaime Rogozinski on the politics, purpose, ethos and future of a rapidly growing group of small online investors and activists masterfully gaming the financial casino.
Major Wall Street hedge funds in January were shaken to their core by a band of anonymous users of a subreddit that now has more than ten million members. Users of that internet group, called r/WallStreetBets, had identified large amounts of short-selling bets placed by some of the nation’s most powerful hedge funds on the video game retailer GameStop. They then began collectively buying the stock to massively boost its price and sabotage the short-sellers’ positions. At least one major fund, Melvin Capital, lost half its assets, while others reportedly lost billions. On the other side of the ledger, at least some small investors became wildly enriched at the expense of those financial titans.
When writing and producing a video about that episode in late January, I called it “one of the most interesting and potentially significant events — not just financially but culturally and politically — to happen in some time.” While the obvious David v. Goliath narrative may not have been pure — there were of course large institutional investors who jumped on the GameStop wave along with the subredditors; short-sellers can perform a healthy function as well as a predatory and destructive one; and some small investors lost more money than they likely could afford — there is no question that what they did was disruptive and threatening to one of the world’s most formidable power centers, as evidenced by the near-panic that set in at CNBC, the media epicenter of corporatism and Wall Street reverence. Mainstream discourse contained numerous explicit expressions of rage over the fact that the wrong people were manipulating the Wall Street casino.
One of the other stocks identified at the time by r/WallStreetBets as having been targeted by institutional short-sellers was the movie theater chain AMC Entertainment. Now, that stock has “more than quintupled in the last month and increased more than 30-fold since the start of the year.” It is tempting but overly-simplistic to assume that the same dynamics are at play with AMC as the ones that drove the GameStop explosion in late January. There are other factors driving up AMC’s price, but there is no denying that the same subreddit has played a significant role in yet again thwarting institutional short-sellers. As CBS News noted in January when reporting on GameStop, “Wallstreetbets members appear to be widening their aim to focus on other companies that, much like GameStop, the rest of Wall Street has left for dead,” causing “troubled movie chain AMC [to] have also soared in January after mentions on the Reddit board.”
Whatever the complexities are of both the GameStop and AMC dramas, the subreddit has become a powerful force and, to hedge funds and institutional short-sellers, a menacing one. Its political ethos is fascinating because it is, at once, vague, heterodox, trans-ideological, defiant, hilarious and anti-establishmentarian. However one tries to define it, it is far more than merely mercenary. It has a purpose beyond profiteering and is driven by collective action, which are two of the factors that make it so unpredictable and uncontrollable and therefore alarming to institutional power.
Founded in 2012, the year after the Occupy Wall Street movement was vanquished without much difficulty, the subreddit has exploded in both membership and impact. Its creator is Jaime Rogozinski, whose life — now married with two children and living in Mexico City — radically diverges from the crude media stereotypes of the group as populated by alt-right incels sprouted from 4Chan. With r/WallStreetBets now proving it is capable of far more than the one-hit record of GameStop, I sat down with Rogozinski on Friday on a new edition of SYSTEM UPDATE for a wide-ranging and thought-provoking discussion about the politics, ethos, function and future of the platform he created but does not control.