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The Bull: GameStonk and Gaseous Capital

. 9 min read
The Bull: GameStonk and Gaseous Capital

Prior to the pandemic, internet discourse spun impotently above meatspace life, tucked away deep enough in the superstructural attic that if one decided not to engage, it simply ceased to exist. But, increasingly, the events of the internet are crossing the virtual gap and intruding into the real. The baffling Capitol siege that played out like a very boring video game has been the most tangible instance of this phenomenon to date, but its latest iteration is no less remarkable.

Shortly after edgelords and online patriots participated in the decade’s first flash mob, meme-life invaded reality again. Between January 17th and January 27th, Gamestop’s stock ($GME) rose from $40 to $347, largely fueled by a Reddit forum called Wall Street Bets that describes itself as “4chan meets a Bloomberg Terminal.” If somebody had purchased 10 shares of $GME at $40 and sold at the exact top, they would have made over $3000. Exciting, but, as with all things memetic, the initial energy quickly fizzled. Throughout early February, the stock sank back under $50. Then, after a rather uneventful congressional hearing, it rose again without media fanfare and is currently sitting over $250, marking a 110% increase in the past week. If anybody has any insight into this second rise, please get in touch. For this column I am limiting the scope to the initial burst of financial energy, and its surrounding discourse, which came to be known as GameStonk.

Early in 2020, members of the Wall Street Bets Reddit forum started posting DD (Due Diligence reports) on Gamestock ($GME), focused on the possibility of an enormous short squeeze. Confusingly, over 100 percent of $GME shares were held short as the stock hovered at around $5. This meant that almost all the institutional money (shorts included) was betting on Gamestop’s slow decline into bankruptcy. The double pincer of online downloads for console games and the pandemic made Gamestop close many of their brick and mortar stores, further strengthening the short’s position over the course of 2020. As short interest increased in $GME, a handful of investors read the tea leaves and increased their long position in anticipation of a squeeze. Their theory was that as soon as the underlying equity rose above a certain threshold, shorts would have to begin covering their positions, further increasing the value of the stock, which in turn would force more shorts to cover, sending $GME “to the moon.”

Michael Burry, the subject of The Big Short, noticed this trend particularly early, and though he sold his long positions before the big squeeze, he still managed to pocket close to $40/share. Wall Street Bets poster u/Deepfuckingvalue also noticed this potential opportunity early, as did a handful of other WSB regulars. During the early stages of the pandemic a $GME DD was almost a weekly occurrence on WSB. For them, it was not a matter of if the squeeze would happen, but when.

On January 25th it happened. The promise of new stimulus money and the appointment of Ryan Cohen, the co-founder of Chewy (another WSB favorite from quar), to the board of directors, proved to be the last two elements needed to catalyze the squeeze. Overnight, $GME’s value increased exponentially, and a whole lot of people learned about Wall Street Bets.

The Capitol Siege was easy to parse. The people who stormed the capitol were Bad, and the politicians inside the Capitol, while not necessarily Good, were certainly not as Bad as the armed mob that broke into a national political building looking to take hostages. After the initial wave of contrarian gotchas died down, a general consensus was reached that this was an event that really should not be repeated.

GameStonk defies this ease of analysis. As $GME continued to elude long-held financial logic and redditors bullied short sellers out of position, the general discourse scrambled to form a cohesive narrative for what was happening. Distinct characters began to emerge, attempting to wrangle the event into their tidy political frameworks. These conflicting narratives started to interact with each other and create layers of derivative narratives that came to overshadow any honest discussion of what actually happened.

There were five stock characters in the $GME discourse that were divided into two general coalitions: GameStonk GOOD and GameStonk BAD. On team GOOD there were the $GME Holders, the Literal Communists, and the Chuckling Billionaires, while the Ultra Woke and the Institutional Handwringers held it down in GameStonk BAD, and the Above It All crowd hung out somewhere between the two. Each of these groups could be subdivided degrees further to capture their full complexity, but this model works for these purposes. As the line continued to go up for $GME, the takes started flying faster and looser. On Team BAD the Handwringers lamented the corruption of financial norms and warned of destabilization on par with ‘08, while the Ultra Woke cherry-picked vile comments from WSB to frame the whole event as an Alt-Right-adjacent phenomenon led by the toxic red-brown coalition of Bernie Bros and Incels. Somehow both the Woke and the Handwringers managed to extract a reading of GameStonk as a Trumpian event rooted in a violent nostalgia. Cool!

These early BAD takes rose in conjunction with a more diverse range of GameStonk GOOD takes. First there were the $GME Holders, or memevestors, who were pleased because they were making insane money off a joke. Unfortunately, the opposing teams collided in the arena of discourse and the Holders’ fiscally strategic position began to morph into a sloppy ethical framework to counter the naysayers’ claims of bigotry. Winning the game was not enough: the Holders turned to rhetoric that situated their fiscal actions in the nobel and, more importantly, en vogue, lineage of anti-capitalist struggle because they negatively affected the bottom line of a few hedge funds. Here the $GME Holders shared space with Mark Cuban and Elon Musk, the Chuckling Billionaires of Team GOOD, who watched from afar as the rowdy peons of the market fucked up a business model that benefits when the big dogs struggle.

A quick glance at the WSB front page during the week of the Stonk showed that only a fraction of the posts invoked any “justice” narrative. There were a few heartwarming instances of people paying off long-standing debts, or buying their mother a car, but the majority of posts were about securing tendies (WSB-speak for money) and shitposts about Citron. Thankfully the Literal Communists were there to boost these faint signals and spread the good word that the young retail investors with a bag and a half to blow on a meme were doing epic praxis against “the rich.”

These critiques came from three general directions:
1) Rich people always say “invest” but then when poor people actually invest rich people get mad.
2) Capitalism is so easy that these staunch Anti-Capitalists from WSB managed to become Capitalists overnight and break the system.
3) Pumping a stock will break the market and cause the economy to collapse, which is good.

Unfortunately, this is a smooth-brain reading of events. There is nothing anti-capitalist about a Reddit forum dedicated to making money in the open market, and opening five YOLO calls on a memestock is much closer to gambling than it is to investing. Most importantly, rich people did not lose money! Outside of the few shorts who went deep in the red, the only people who lost money were retail investors who decided to Hold the Line (a common refrain that the Ultra-Woke wisely pointed out was also used in the Capitol Siege). The analysis was so shockingly thin that it actually hurt my feelings. Donning my political binary hat here, if the Left is going to cede 100 percent of the hard (ie. economic, labor, math, science) skills to the Right and express a general allergy to effectively leveraging any capital on an institutional or individual level, they should at least maintain their time-tested critical thinking skills borne from rigorous analysis of material conditions. Knee-jerk reactionary politics isn’t a cute look for anybody.

As soon as the Literal Communists joined the fray, any hope of a productive discourse went out the window. The Woke and the Holders exchanged catty barbs, the Communists and the Handwringers yelled about how good or bad it would be for the current economic system to collapse entirely, the Billionares chuckled and profited off of front-run transaction ledgers supplied by Robinhood, and the world slowly continued to spin.

It’s easy to see how each of these groups reached its respective logical conclusion. Their analyses all have enough grounding in reality to perpetuate themselves. The scope and complexity of GameStonk allowed for enough purchase from any position, as long as one was comfortable ignoring anything that challenged their decided narrative. None of the groups capture the whole of the situation because they confuse the subject for the object of the tale. GameStonk is not a story of people using the tools of finance to wage a human battle; it is the story of Capital instrumentalizing human actors to continue its multidimensional evolution into the main organizing and propelling force of the world.

A Trojan Horse entered the market in January of 2021, and while everybody was busy discussing what type of horse it was, the noxious, invisible gas of Capital flowed forth from the mouth and nose of the beast, expanding into every nook and cranny, expressing itself at every turn. I used to think Capital was liquid in its movement, travelling the path of least resistance and collecting in basins, waiting to be collected and distributed to other arid climes. But Capital is a gas, and once released into the atmosphere, gas is hard to control—it just spreads.

Stages of Joule expansion of ideal gases

The gas is as slow-acting as it is fast-moving, and as of now, nothing has happened in the wake of GameStonk. A heterogeneous group of people made a lot of money. A heterogenous group lost a lot of money, and a heterogeneous group neither made nor lost money. A lot of people downloaded brokerage apps and officially entered the market. In doing so, they forked over large amounts of consumer data to financial institutions who will use it to increase their share of ascendant Capital. There were some major oversteps in the Big Tech World with Discord banning the WSB server for hate speech and Robinhood pulling some shady shit. The global economy is still standing, shorts are still shorting, MSNBC still exists, and Mark Cuban is still on Shark Tank. Hopefully this episode will spur some new regulation about how much of a company can be held short, who has access to options trading, and just how fast high-frequency algorithms can operate, but I doubt it. Likely, the only lesson we will learn from GameStonk is that our methods of narrative comprehension are woefully inadequate to make sense of the modern world. In the future, perhaps, we will have the vocabulary and hindsight to articulate the effects of GameStonk, but for now, all we can do is ask...

What Comes Next?

The easy answer is Capital will continue to expand and evolve in novel ways. The recent resurgence of crypto has seen the blockchain move beyond finance with vehicles like the NFT in a way that threatens to fold every interaction into an increasingly socialized financial marketplace. We still have some time before Capital no longer needs a host body to thrive, sheds us like last years’ exoskeleton, and takes $SPY to never-before-seen heights. In the interim we have to decide whether we want to resist, or whether we are along for the ride.

In any case, moving forward, we need to decenter the human and resist narrative impulses when discussing Capital. Events like GameStonk will remain inscrutable until we understand ourselves as a collective subject at the mercy of a monster of our own creation, a monster that hijacked our corporeal form, turning us into Capital cyborgs who can, at the touch of a button, enter highly leveraged derivative positions we read about on a forum to resuscitate a dying company. We are in the era of Frankenstein Capital. In order to properly interpret the implications of GameStonk, one must extricate oneself from the anthropocentric position and consider acceptable and productive cohabitation with the financial other. Capital is not fully human, and neither are we. The past century-and-a-half of economic territorialization and semiotic confusion has brought humanity to an evolved state of Capital fealty.  Even the socialist tradition of anti-capitalist kritik is rooted in this ecosystem and can rarely escape its gravity.

Simply, we’ve got our work cut out.  

I’m always a proponent of making your money work for you, so while we work on ourselves, we might benefit from looking into positions in Fintech stocks like $UPST, $ARKF, $BLOK and the upcoming Coinbase IPO. Or don’t. It’s your life, after all.

*The Bull has a 210 IQ and a PhD in Deleuzian psycho-econometrics. Unfortunately, these alone do not qualify him as a financial professional. If you’re looking for legitimate market advice, seek it elsewhere.

**The Bull and The Bear is a (Psy)Op-Ed column and does not reflect the views of Laid Off NYC’s editorial staff.