Photographer: Patrick T. Fallon / Bloomberg
Photographer: Patrick T. Fallon / Bloomberg
There is some irony in the fact that Reddit, an online chat community full of gamers, has been propelled forward GameStop Corp. to incredible levels. After all, fans of video games have loved to hate the struggling retailer for decades.
Over the past week, a collective of individual traders on Reddit’s r / WallStreetBets community sent GameStop stock to astronomical heights in an experiment to hold it to hedge funds, who had sold the stock short. At the beginning of this year, GameStop was trading for $ 17. Wednesday afternoon it was over $ 340, valuing the unprofitable company at over $ 340 $ 25 billion.
GameStop’s resuscitation may seem like inherently good news to video game fans. But unlike the beloved retailer Toys R Us Inc. GameStop was never very popular among gamers. The Reddit community that chose GameStop because of the stock it needed to pump was perhaps a giant practical joke.
“It’s like in movies when the bullies vote for the nerd as a prom queen, just to make fun of her,” she said Andy Cortez, a host and producer for the video game’s YouTube channel Kind of funny.
Gamers have a long list of complaints about Grapevine, Texas-based GameStop, from the way they treat employees to their pushy and controversial sales tactics.
Over the years, many gamers have reluctantly shopped at GameStop just because they had little choice. The store made it easy to exchange old games for cash or to be used for other purchases, which fans could appreciate with little cash. But the values became a punch line. A brand new game, priced at $ 60, can fetch $ 30 at your local GameStop. Older games would only net you a few dollars at most. Social media is full of jokes about how to get GameStop’s stock back to the store for a fraction of the price.
The company also became known for questionable practices, such as selling opened copies of games as if they were new. Sometimes customers took a ‘new’ game home to find that someone else’s save file was already on the cartridge.
Many video game fans grew tired of the way GameStop treated its staff and the way those employees interacted with customers. The employees’ performance was tied to the number of pre-orders of games and reward cards they sold, leading to constant hawking. It was impossible to call or visit a GameStop store without being pushed to pre-order the games that came out next.
In 2017, GameStop made headlines with its controversial Circle of Life program, which essentially punished employees for selling new games rather than used ones. As a result, some employees said they would lie to customers about whether they had new ones in stock.
Video game publishers have little love for GameStop either. When customers bought secondhand games, the people making those games didn’t see a dime, which companies liked Electronic Arts Inc. pioneers strategies to get people to buy new copies. The publisher decided to include a single-use code in every copy of some games to reward whoever came first and punish the second-hand market.
So for many gamers, seeing GameStop as the butt of a Wall Street joke is a dose of gloating.
Such a widespread disdain for the retailer from all over the gaming industry has likely fueled the madness behind GameStop on Reddit.
The stock increase makes no sense. GameStop has struggled as many former customers have switched to buying digital copies directly on their consoles. The coronavirus pandemic, which has kept most people out of the malls where many GameStops operate, exacerbated the company’s decline, reporting sales declining 30% in the quarter ended Oct. 31.
The r / WallStreetBets campaign shows that most investors pushing up stocks are motivated by a populist desire to take down hedge funds with large short positions. But the whole piece has also been fueled by internet jokes or memes. And for gamers, there are few memes bigger than GameStop.
“If this was just Google or something, nobody would care that much,” said Allen, a poster from Ar / WallStreetBets, who asked in a phone interview to be identified by his first name alone. But the fact that it’s GameStop, that we’re going to close a hedge fund because they shorted GameStop, is funny. There are great memes to make. “
Allen said he now has more than 1,000 shares in the store, which he bought for less than $ 20 a few months ago. He said he sees this as an opportunity for GameStop to become a better company without the pressure of short sellers from Wall Street. “If this company goes out of business, they deserve to go bankrupt on their own terms,” Allen said.