WallStreetBets and GameStop saga reveals the cultural power of social media

The self-reinforcing nature of discussions within Reddit groups and other platforms leads users to eventually tune out dissident opinions and throw their weight behind conformist ones in search of acceptance from their online community

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GameStop has started important conversations about social media and equality in markets. Photo: Reuters

Anson Au, PhD, is an assistant professor of sociology, in the Department of Applied Social Sciences, at The Hong Kong Polytechnic University.

Published: 6:45am, 11 Feb 2021Updated: 7:20am, 11 Feb 2021

One stock that has taken the US financial market by storm is GameStop. Its propulsion from a beaten-down stock to one with a moon-shot valuation in less than a month owes much to the now-notorious Reddit group WallStreetBets.

As a long-time member of this group, I can say with some certainty that the development of mass retail investor interest in GameStop is a cultural story, rather than a financial one, about the power of social media. (Full disclosure: I have not purchased any GameStop shares).

The first chapter of the GameStop saga began in late 2019. During this time, due diligence posts began to trickle in, offering arguments about why GameStop – an old-school, bricks-and-mortar retail outlet for video games – was undervalued.

Posts by one particular user, now known to be Keith Gill, stood out when he backed his idea with proof of a sizeable purchase of GameStop shares. More than the due diligence, it was his “GME YOLO update (You Only Live Once)” – taken to mean an investment using a large proportion of one’s life savings – that really drew interest.