• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Fat Tail Daily

Investment Ideas From the Edge of the Bell Curve

  • Menu
    • Commodities
      • Resources and Mining
      • Copper
      • Gold
      • Iron Ore
      • Lithium
      • Silver
      • Graphite
      • Rare Earths
    • Technology
      • AI
      • Bitcoin
      • Cryptocurrency
      • Energy
      • Financial Technology
      • Bio Technology
    • Market Analysis
      • Latest ASX News
      • Dividend Shares
      • ETFs
      • Stocks and Bonds
    • Macro
      • Australian Economy
      • Central Banks
      • World Markets
    • Small Caps
    • More
      • Investment Guides
      • Premium Research
      • Editors
      • About
      • Contact Us
  • Latest
  • Fat Tail Series
  • About Us
Latest

Reddit versus the Hedge Funds — Latest GameStop Resurgence

Like 0

By Ryan Clarkson-Ledward, Friday, 26 February 2021

We do want to discuss is the catalyst for this latest GameStop resurgence. Because more than just a ‘meme’, it is a fascinating insight. GameStop shares are moving again, and fast...

WallStreetBets is back baby.

Yes, the enigmatic, dogmatic, and dramatic motley crew of internet traders is at it again. Once again targeting GameStop Corp [NYSE:GME] stock.

Well, I say ‘once again’, but honestly some of them never left. At least, that’s what the numerous posts across reddit would suggest.

The difference though is that now GameStop shares are moving again, and fast.

After rising from around US$40 per share to US$50 last week, things really took off Wednesday afternoon (Thursday morning AEDT). With the shares closing at US$91.70 and still climbing after hours. Eventually opening on Thursday morning (last night AEDT) at US$170 each!

Discover three innovative Aussie fintech stocks with exciting growth potential. Download your free report now.

And although the rest of the trading day was fairly volatile, GameStop has closed at US$108.73 per share. Up roughly 104% in a single day. Causing headaches for short sellers once again.

After all, just like round one, this ‘meme stock’ is all about the short interest.

Reddit’s goal (if you can call it that) seems to be burning short sellers for every penny they’ve got. Whether or not they’ll be successful though, is the ultimate question.

But one thing is for certain, this army of retail investors aren’t going to give up easily.

Cryptic tweets whip up a frenzy

Now, I don’t want to get bogged down in the ideological reasons for this GameStop fiasco. I’ve already talked at length about how this portrays the hedge funds, brokers, and broader market actors when this all unravelled the first time.

Instead, what I do want to discuss is the catalyst for this latest GameStop resurgence. Because more than just a ‘meme’, it is a fascinating insight into what modern market news has become.

Here is (by most accounts), the reason for the sudden GME rally:


Ryan Cohen

Source: Twitter

[Click to open in a new window]

Confused?

Don’t worry, you’re not alone.

Let me break down what this tweet is probably referring to…

First of all, let’s start with Ryan Cohen. If you’re unaware of who he is, well he’s basically just a young entrepreneur. A man who created an online pet food and products company called Chewy. Which, back in 2017, he sold to PetSmart for US$3.35 billion.

Suffice to say, he’s rich, outspoken, and young enough to understand how reddit works.

More importantly though, back in September, he acquired a 10% stake in GameStop. A holding that has since grown to 12.9% — making him the largest individual investor in the company. And just like WallStreetBets, he’s been betting big on burning the short sellers.

On top of all this though, Cohen has been quite clear in his desire to play a more active role. Back on 11 January — just prior to the initial surge in share price — he was appointed as a board director. And earlier this week, on Tuesday, it is clear that he helped push CFO Jim Bell to resign. As Cohen announced:

‘Through our private conversations, we have explained to Mr. Sherman and the Board that GameStop has the ability to pivot toward becoming a technology-driven business that excels in the gaming and digital experience worlds,

‘But this pivot requires the type of strategic vision that has not yet taken hold in the c-suite or boardroom.’

So, what the hell does all this have to do with a McDonald’s ice cream and a frog emoji?

Social trading’s social dilemma

Truth be told, no one but Cohen genuinely knows for sure what his tweet was about. But there is plenty of speculation.

One of the more prominent theories is that it is a reference to the notorious McDonald’s ice cream machines. A machine that is known for consistently breaking down and needing fixing. Perhaps suggesting that Cohen has ‘fixed’ GameStop.

Whether or not this is what Cohen was going for, I don’t know. But it is hilarious seeing reddit and the legions of retail traders try to decipher it.

More importantly though, it is a sign of where markets may be headed.

In many ways, Cohen is a lot like Elon Musk. A CEO of a publicly-traded company that corresponds more often than not through twitter than official market filings. Some of which has proved very costly in the past.

Musk’s infamous ‘am considering taking Tesla private at $420. Funding secured’ tweet is perhaps the most well-known. A nine-word message that personally cost him US$40 million.

But then again, that’s practically pocket change for Musk.

Cohen’s actions are drawing closer to a similar situation though, showcasing a new way for managers and businesses to cultivate a relationship with investors over social media. Even dropping hints or direct news outside of traditional market channels.

Between Tesla and GameStop, it is clear that it can be highly effective too. As long as you’ve got someone with the charisma to appeal to these young and brash ‘investors’.

As for the ethics of it all, well that’s a lot trickier to dissect. Because as Musk and now Cohen have shown, these tweets can move markets. Something that is bound to have the SEC at least a little worried.

Because unless they start cracking down on this sort of thing soon, I expect we’ll start to see a lot more of it. Especially as groups like WallStreetBets flourish. Attracting young and somewhat naïve investors into the market.

Again, whether or not this is a bad thing is in the eye of the beholder. After all, it could ensure this new generation actually learns about the markets while they are young. Meaning that even if they do have to endure a harsh lesson in the near future, at least they have plenty of time to learn from it.

Whether or not it’s good for one tweet to distort markets though, is an entirely different kettle of fish. A predicament that we’re seeing unfold before our very eyes once more.

So, let’s see what lessons there are to learn this time around…

Regards,

Ryan Clarkson-Ledward Signature

Ryan Clarkson-Ledward,
Editor, Money Morning

Ryan is also the Editor of Australian Small-Cap Investigator, a stock tipping newsletter that hunts down promising small-cap stocks. For information on how to subscribe and see what Ryan’s telling subscribers right now, click here.

All advice is general advice and has not taken into account your personal circumstances.

Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

Comments

Subscribe
Notify of
guest
guest
0 Comments
Inline Feedbacks
View all comments
Ryan Clarkson-Ledward

Ryan’s Premium Subscriptions

Publication logo
Fat Tail Investment Research

Latest Articles

  • China’s Game of Commodity Chicken
    By Charlie Ormond

    When commodities become weapons instead of just market goods, traditional investing rules break down.

  • Ride Mining’s Profitable ‘Curve’ this Way
    By Callum Newman

    All week we’ve been on a mission. We’re unpicking the dynamics around gold, and gold stocks. Here’s a bit of advice on this opportunity,

  • Silver & Platinum Squeeze Higher
    By James Cooper

    Cycle Turns: Silver and Platinum on the move… Is it their industrial or precious metal angle that’s getting investors interested?

Primary Sidebar

Latest Articles

  • China’s Game of Commodity Chicken
  • Ride Mining’s Profitable ‘Curve’ this Way
  • Silver & Platinum Squeeze Higher
  • One forecast for gold: 10k per ounce!
  • Three men, $20.8 million, and a $230 million rally… all in a day

Footer

Fat Tail Daily Logo
YouTube
Facebook
x (formally twitter)
LinkedIn

About

Investment ideas from the edge of the bell curve.

Go beyond conventional investing strategies with unique ideas and actionable opportunities. Our expert editors deliver conviction-led insights to guide your financial journey.

Quick Links

Subscribe

About

FAQ

Terms and Conditions

Financial Services Guide

Privacy Policy

Get in Touch

Contact Us

Email: support@fattail.com.au

Phone: 1300 667 481

All advice is general in nature and has not taken into account your personal circumstances. Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

The value of any investment and the income derived from it can go down as well as up. Never invest more than you can afford to lose and keep in mind the ultimate risk is that you can lose whatever you’ve invested. While useful for detecting patterns, the past is not a guide to future performance. Some figures contained in our reports are forecasts and may not be a reliable indicator of future results. Any actual or potential gains in these reports may not include taxes, brokerage commissions, or associated fees.

Fat Tail Logo

Fat Tail Daily is brought to you by the team at Fat Tail Investment Research

Copyright © 2025 Fat Tail Daily | ACN: 117 765 009 / ABN: 33 117 765 009 / ASFL: 323 988