“I got to say I LOVE LOVE what is going on with #wallstreetbets,” Mark Cuban tweeted Wednesday as $GME hit all-time high after all-time high. “All of those years of High Frequency Traders front running retail traders, now speed and density of information and retail trading is giving the little guy an edge. Even my 11 yr old traded w them and made $.”
The last week brought unexpected attention to the stock market as the Reddit community r/wallstreetbets drove the price of several stocks including $GME, $AMC and $NOK through the roof. Redditors, who brought about the rally in equal parts for fun, personal gain and to stick it to Wall Street short sellers, found themselves head-to-head with hedge funds and major figures on Wall Street who were outraged at what they saw as a mob-induced, meaningless rally.
But that wasn’t the only line being drawn in the sand. The stock rally, explosion of the WallStreetBets community and subsequent restrictions on trading from apps like Robinhood created a public divide between people at the very top. From investors like Mark Cuban and Michael Burry to politicians like Elizabeth Warren and Ted Cruz, clear differences and alignments in opinion appeared in unexpected areas, uniting those on opposite aisles and dividing those who would otherwise be on the same page. The investment community is divided on what to think of the WallStreetBets saga, and as the story continues to develop and discourse devolves, a variety of opinions and insights have been calcified into two simplified positions: Either you’re with the people or you’re with Wall Street.
Celebrity investors clash
A few days later, Cuban tweeted in further support of WallStreetBets, lamenting that the SEC doesn’t follow the law and has too much influence over the “little guy.” However, Cuban wasn’t alone in this assessment. Figures like Elon Musk, the Winklevoss twins and more were supportive of WallStreetBets and critical of Robinhood and other trading apps throughout the week.
Investor and former Facebook executive Chamath Palihipitiya was also a vocal presence in support of WallStreetBets and the $GME rally. On Jan 26, Palihapitiya polled his Twitter followers about which stock he should put “a few 100 ks” into over the next several hours. After overwhelming support of $GME, Palihapitiya bought into the stock and appeared on CNBC the next day, where he spoke in WallStreetBets’ defense.
“I think that what you’re seeing is essentially a pushback against the establishment in a really important way,” Palihapitiya said, dismissing the notion that this was simply a gambling mob. “A lot of people [are] doing some incredible fundamental diligence on companies… and in my opinion many of them are doing as good and frankly a better job than a lot of hedge fund analysts I work with.”
Palihapitiya went on to frame the rally as a deliberate, justified effort to punch back at Wall Street for its collective actions before the 2008 crash.
“Coming out of 2008, what happened was Wall Street took an enormous amount of risk, and they left retail as the bag holder. And a lot of these kids were in grade school and high school when that happened. They lost their homes, their parents lost their jobs, and they’ve always wondered, ‘Why did those folks get bailed out for taking enormous amounts of risk, and nobody showed up to help my family?’”
Palihapitiya closed out his position one day after buying in, announcing that all his profits from his GameStop position, plus his initial buy-in, will be donated to the Barstool fund for small businesses in a donation totaling $500,000. Palihapitiya announced that the wire transfer had been sent as of this morning.
Dave Portnoy
Co-founder of Barstool Dave Portnoy joined Palihapitiya last week in defending WallStreetBets, though he took a much more aggressive tone. When Robinhood restricted trading of eight different “meme stocks” Thursday morning, Portnoy began to fervently criticize the company’s actions.
“I will burn @RobinhoodApp to the ground if they shut down free market trading,” Portnoy wrote.
That was only the beginning of what became a rampage of tweets against the app’s decision. In the last several days, Portnoy has responded to multiple tweets from and about Robinhood’s top executives suggesting they be jailed for their actions and promoted competitors like TradeZer0. On CNN, Portnoy called out the hypocrisy in Robinhood’s name.
“The name of the company is Robinhood; steal from the rich and give to the poor,” Portnoy said. “They did the exact opposite. They stole from the poor and gave back to the rich. They had to know what they did was against all their clients. Their clients were the ones who were making money, and they basically cratered the stock on purpose.”
Portnoy has echoed the language and memes used by WallStreetBets users encouraging owners of GME to hold their positions in defiance of wall street. On his live show “Davey Day Trader Global” over the weekend, Portnoy angrily yelled that he was holding and that he wouldn’t be scared off by “people in pinstripe suits who think they know better than me.”
However, this morning Portnoy announced that he had sold all his "meme stocks," saying, "I lost 700k ish. Vlad and company stole it from me and should be in jail." Portnoy's followers were outraged at his decision to sell after a week of encouraging others to hold and after just recently saying he wouldn't give up his position. One user accused him of taking payment to sell off his shares, and others expressed frustration that his encouragement was what convinced them to hold their positions.
"Fucking Paper Hands. What about taking it to the grave dammit?" user Toomerud tweeted.
"Disgrace to the process, you’re the reason I held and still will because I’m not going out like that!" user NickvalstynE wrote.
Investors lash out
While those in support of WallStreetBets and the GME rally found a home on Twitter, investors who were upset or concerned by the sudden stock rally found their spaces on CNBC and in financial editorial pages.
One major target of Portnoy and WallStreetBets supporters’ ire was billionaire investor Leon Cooperman, who made a Thursday appearance on CNBC where he characterized WallStreetBets investors as lazy and attacking the wealthy.
“The reason the market is doing what it’s doing is, people are sitting at home, getting their checks from the government. And this fair share is a bullshit concept. It’s just a way of attacking wealthy people, and it’s inappropriate. What we have to do is work together and pull together.”
Cooperman’s appearance was amplified by figures like Portnoy and others, who mocked his anger and what they perceived as an entitled attitude.
“Who knew it would end in tears cause billionaires like him got their teeth kicked in so they broke the law and changed the rules of the game to ensure they stay rich,” Portnoy said. “They planned on cheating.”
Michael Burry of “The Big Short” fame also criticized WallStreetBets investors, calling the rally “unnatural, insane, and dangerous” in a series of tweets that were quickly criticized and deleted. Burry’s criticism seemed counterintuitive as he himself had a significant stake in Gamestop, which increased greatly in value thanks to the stock rally.
Despite his criticism of WallStreetBets, Burry was on the side of figures like Portnoy when it came to Robinhood’s trading restrictions. When U.S. Representative Alexandria Ocasio-Cortez tweeted Thursday calling for a possible hearing on and investigation into Robinhood’s trading restrictions, Burry and Portnoy agreed with her.
“Never in my life did I think I could actually agree with her about something,” Burry wrote. “This is truly a crazy day.”
“Enemies make strange bedfellows. Lock em up,” Portnoy said.
Unlikely allies weren't just made by investors, but also across political aisles in general. Ocasio-Cortez found an unlikely ally in Ted Cruz, who quote tweeted her initial statement saying he fully agreed. Surprisingly, Elizabeth Warren, a long-time ally of Ocasio-Cortez, landed somewhere in the middle with a letter to the SEC that criticized both Wall Street and WallStreetBets. Warren's statement was wildly unpopular on Twitter, where general opinion seems to have leaned in favor of WallStreetBets. She later revised her statement on MSNBC where she shifted her language to be critical of hedge funds and Wall Street specifically rather than retail investors.
Allies across the aisle
Financial figures weren’t the only ones who found themselves standing with politicians they normally stood at odds with — lines were drawn in politics as well. Ocasio-Cortez was one of the major figures speaking out against Robinhood’s trading restrictions, and even she found an unlikely ally in Ted Cruz, who similarly criticized Robinhood’s decision. Cruz quoted Ocasio-Cortez’s tweet and simply said, “Fully agree.”
Elizabeth Warren, a long-time ally of Ocasio-Cortez’s, surprisingly appealed to the SEC to stop “market manipulation” in a letter that criticized both the actions of hedge funds as well as WallStreetBets.
“This epic contest between Wall Street traders who bet against stocks and legions of small-scale investors has fueled a level of speculation not seen since the tail-end of the dot-com boom two decades ago,” Warren wrote. “There is a troubling lack of clarity regarding who the major market participants are in this case and the degree to which their activities may be coordinated. With many of these traders cloaked in anonymity, there is no way of knowing whether messages touting GameStop come from average Joes — or scam artists executing a ‘pump-and-dump’ stock scheme.
Warren’s letter received its share of hate from Twitter users who saw it as an attack on WallStreetBets and a defense of hedge funds, though it was perhaps a mix of both. In later days, Warren clarified her messaging. She appeared on MSNBC to talk about the GameStop incident and captioned the interview clip in a tweet that said, “GameStop shows that the Wall Street game is rigged for hedge funds and giant corporations - and it’s been rigged for a long time.”