The Misfits Shaking Wall Street

Zane Bannink, a high school senior in Wisconsin, said that he has used the Robinhood stock trading app since he turned 18 two months ago. So far, he’s made over $800.

Jude Folmar, a 19-year-old college student in Dallas, said he’s been trading stocks since he was 13 under a custodial account his great-aunt helped him set up. He’s earned over $22,000.

And Liam Gavaghan, a 21-year-old university student in Kingston, Ontario, started trading about six weeks ago. He now spends hours scanning Reddit message boards focused on finance and talking to his friends about potential trades in a Discord voice chat room. He has made more than $9,000 on an initial investment of roughly $1,900 — money that he received as part of Canada’s Covid-19 stimulus relief package.

“It’s risky as hell,” Mr. Gavaghan said about trading stocks. “But holy cow, it’s almost like getting a high.”

In the world of high-stakes finance, these three new entrants might have once been outliers. No longer.

They are part of a legion of young people — primarily male — pouring into digital trading floors in recent years, raised on social media and eager to teach themselves about stocks and trade quickly using an array of apps catered to Generation Z. In just a few short weeks, this new cohort of retail investors has completely upended some of the most professional traders by coordinating over social media, forums and chat rooms to trade shares of GameStop, sending the stock price for the video game company skyrocketing while leaving a number of sophisticated short-sellers holding the bag.

Their motivations run the gamut: Many are unapologetic, cash-seeking capitalists. Some consider themselves idealists, would-be 99 percenters who were too young to occupy Wall Street in the movement’s heyday. Some are nihilists who simply want to tear down a system they feel is rigged against them from the start. Then there are those kids just doing it “for the lulz.”

What many of them have in common, though, is that they buy and sell equities regularly, right from their smartphones, while posting their gains, or “tendies,” to online forums, all out in the open for their peers to see. They often view the trading as a sort of video game, similar to chasing a new high score on a puzzle app or accumulating likes on an Instagram post.

Their impact on the market has been nothing short of extraordinary. GameStop’s stock has seen violent swings, with daily percent increases jumping into the triple digits. Pressure on investors who had previously “shorted” the stock — a bet that the price would drop — nearly bankrupted at least one hedge fund. Elon Musk, the world’s richest person, has made the group of Redditors his cause célèbre, cheering them on in a series of tweets this week. At the same time, numerous Wall Street analysts railed against the traders, arguing that they had made a mockery of the markets.

The blowback against them has even made for strange bedfellows in Washington. Politicians on both sides of the aisle united briefly in their contempt for Wall Street’s response to the young traders.

GameStop vs. Wall Street

Let Us Help You Understand

    • Shares in GameStop, the video game retailer, have soared because amateur investors, starting on Reddit, have bet heavily on shares of the company.
    • The wave gained momentum in response to large hedge funds short selling GameStop stock — basically they were betting against the company’s success.
    • The sudden demand has driven up the share price from less than $20 in December to nearly $200 on Thursday. On paper, anyway.
    • It’s not just GameStop. Amateur investors have backed other companies that many big investors had shunned, such as AMC and BlackBerry.
    • This bubble around GameStop may force big investors to raise money to cover their losses, or dump shares of other companies.

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