three bags of cash, each with a different emblem on them: gamestop, diamond hands, and dogecoin

The amateur NZ traders riding the GameStop and cryptocurrency waves

Last week Reddit users, including plenty in Aotearoa, took on Wall Street hedge funds. Here’s how they’re feeling now.

Aucklander Zoe* is 24, a student, and she refuses to sell her GameStop shares. Her hands are so strong from holding them that, in Reddit lingo, they are made of diamonds. But she’s not holding them in expectation of making a killing on the sharemarket, she says. “I don’t actually expect GameStop to skyrocket,” she told The Spinoff. “I decided to jump on it and stick it to Wall Street.”

Last week, shares in GameStop, an American brick-and-mortar video and computer game retailer, rocketed from US$76 to $347 after WallStreetBets (WSB) – a stockmarket subreddit known for its YOLO attitude to investing – whipped up hundreds of thousands of its members into a share-buying frenzy to try to force a short squeeze.

You can read a full explainer here, but briefly: Wall Street hedge funds were selling shares of GameStop they did not have in an attempt to drive the price down; they would then buy those lower-priced shares to fill those sales. This is called a short. WSB members (and others caught up in the frenzy) bought as many shares as possible in order to drive the price up, so the hedge funds would need to pay more to fill their sales. This is a short squeeze.

Hedge funds like Melvin Capital Investment have lost billions on the short. Meanwhile, in a single week, WSB’s membership has doubled to more than eight million users, most of them drawn in by the GameStop drama. Some who invested early have already sold up, for massive profits, but Zoe and others like her are adamant that they won’t – they have “diamond hands”.

So how did we get here? It started with the promise of easy money, developed into a revolt against the financial system, and then the WSB memes kept the movement going. Now, with GameStop shares back down to US$90, many New Zealanders are left holding shares that may soon be near-worthless.

the outside of a gamestop store going into liquidation

American retailer GameStop is the parent company of EB Games here in New Zealand (Photo: Wikimedia Commons)

I’ll be honest, the quality of the memes kind of whipped me up into a mood where I was ready to chuck some money down,” said another New Zealand investor, Richard*. “Sticking it to the man was a fun byproduct, but I’m not really sure that this will have any ramifications for Wall Street in the long term.” 

He put $3,000 into GameStop last week after the WSB movement leaked into other parts of Reddit. “I was working nights so I got in at market open and jumped in just before the stock jumped initially. I made $2,000 in a day.”

Except that he didn’t sell and get that $2,000. He hasn’t sold yet – he’ll sell when a share is exactly US$700, no lower. That may not happen any time soon, but he can wait. “GameStop has recently appointed a new CEO and management team who intend to turn the company into an e-commerce and e-sports hosting company, so there’s a chance GameStop may become profitable again in the future based on its own merits.” 

When asked if he’d take part in a WSB short squeeze ever again, the answer was a firm “no”. “Absolutely not, I have slept about four hours a night for the last week.”

Zoe isn’t a trader, but felt the WSB movement was a good opportunity to learn more about the financial system. “It’s less about the clout of being in on it, and more that when I was researching I found it was quite inaccessible as a topic,” she said. “Historically, it’s a man’s game.”

She feels that, as a young woman, subreddits like WSB are an easier place to learn about the stock market. “I, someone who doesn’t usually engage with finance, am finding it more accessible with more people who are happy to explain things to me through WSB,” she said. “Despite not being in it for the money at all, I have found that the media attention and WSB has encouraged me to take a more active role in this, since it does have an impact on my future, rather than watching it happen from the sidelines.”

big bird from sesame st sits at a table with businessmen. caption says "GME sitting with Tesla and Amazon after reddit makes it a Fortune 500 company"

Some people are in it for the memes.

GameStop wasn’t the only stock to get the WSB treatment in the past week – WSB also spotted shorts on AMC Entertainment and Nokia, and users have been buying these so-called “meme stocks” up in large amounts. And that whole stock-buying frenzy in turn inspired another group of everyman investors: cryptocurrency traders. 

The cryptocurrencies Dogecoin and XRP are now being “pumped” – aggressively, frantically promoted – by thousands of people, in much the same way GameStop was pumped. There’s even a WSB-inspired subreddit for cryptocurrencies: SatoshiStreetBets. But unlike the GameStop play, these pumps had very little revolutionary energy behind them. Users were in it for the gains and the memes.

Terry* bought 42,069 Dogecoins for around $300. At the peak of the pump last week they would have been worth just over $4,500. That’s when he sold them.

“I love memes,” he said. He also loves Elon Musk, whose tweets about Dogecoin have resulted in small price jumps. As with a number of share-trading platforms, cryptocurrency exchange platforms have been subject to slowdowns and outages over the past week due to increased demand. New Zealand-based EasyCrypto was unable to sell Dogecoin for a short period of time, and XRP is hard to come by on many exchanges because it is currently the subject of a lawsuit by the Securities and Exchange Commission (SEC).

“There’s been a big retail influx over the past month,” said Terry, who regularly trades cryptocurrency as part of his income. “But over the past year it’s probably been more institutional investments.” Whether this month marks a permanent change in the cryptocurrency demographic is yet to be seen.

“I hope some [of the newbies] stick around,” he said. “I think it’s a bit of a baptism by fire. If you buy a meme coin that drops in value heaps, it’s not a very encouraging way to get into cryptocurrency or investing.”

Calum* entered the cryptocurrency market less than two weeks ago and despite losing money on Dogecoin almost immediately, he’s still a convert. “I always thought you had to understand crypto and the blockchain to invest in it,” he said. But when he realised a friend had been trading Bitcoin for years and still didn’t fully grasp blockchain technology, he decided to go for it.

“I just don’t want anyone I know to become a crypto millionaire without me.”

Calum says owning cryptocurrency is like playing fantasy basketball. “I never knew that much about basketball, but I still beat all the basketball experts in the league. I feel like crypto is the same thing. It’s mostly just vibes.”

He thinks stocks, which he also recently got into thanks to WSB, are a similar game. “It’s having your ear to the ground. I attribute my fantasy basketball success to taking risks on rookies and players who were having a hot streak, and I guess stocks are the same. If you see something skyrocketing, you get on that train and ride it until it collapses.”

He’s not afraid of the collapse. He’s not a hedge fund investing billions in a GameStop short, he’s one man on an average income with no dependents. “I think even if it all collapses and I’m left with nothing, it would have been worth it for the ride.”

The ride is the exhilaration of watching numbers go up, of using the terminology, and of being part of a meme. “I bought a suite of alt coins, and watching XRP go to the moon the other night was exciting,” he said.

“I don’t know about stocks. I’ve only got so much money, and I’ve only got so much money I can stand to lose. I think crypto is a better proposition. It’s more fun and it’s more funny, and it has a higher ceiling.”

On top of that, he thinks GameStop and Dogecoin are part of a healthy, diversified portfolio. “You want some stable assets, but then it’s probably good to have some meme stocks and meme coins as well. You’ve got to hedge your bets,” he said.

“So I think I’ll hold my Dogecoin for now.” Diamond hands.

*Surnames removed in case they become millionaires and need to keep a low profile.




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