Business sophomore Jeremy Stevenson made his first stock investment in September 2020. Stevenson said the experience had him hooked immediately.
"I first bought some Apple Calls, and in one day I made $500," Stevenson said. "And I lost it all the next. And I was definitely hooked, it was a roller-coaster."
Stevenson recalled Reddit user DeepF***ingValue calling GameStop a "meme stock" for the first time in the summer of 2020 and buying $50,000 worth of stocks in the game retailer.
Before the GameStop stock rally, Stevenson said the Wall Street Bets subreddit had been buzzing with the idea of a short squeeze for roughly two months.
"When it was first written about two months ago I thought to myself 'Geez, fighting institutional shorts? That sounds pretty stupid,' so I didn't touch it at all," Stevenson said.
The stock began tanking shortly after investors began hopping in, and it seemed to Stevenson that he had made the right call.
"It first started to drop, and I felt pretty smart when people were losing money, but I wasn't," he said. "Then last week, the first day that it shot up from $16 to $35 I believe, about 80% in a day, I thought about hopping in, but I thought to myself 'I'm not touching that, that is way too volatile of a stock.'"
Had Stevenson thrown caution out the window and bought in at the $30 point, he said he could've seen a 1000% return. However, Stevenson typically does options trading rather than buying stocks outright, which he said could've made him a millionaire from the GameStop squeeze.
"If I had bought into options trading, I would be worth about $3-$4 million dollars right now," he said.
While he missed out on the opportunity, Stevenson said his strategy following Robinhood and other platforms suspending retail of GameStop stock would be holding.
"My strategy is definitely (to) hold," Stevenson said. "If he's (DeepF***ingValue) holding, you're holding."
With the controversy surrounding the ethics of short squeezes and the response to the stock rally by exchange platforms and hedge fund companies, Stevenson believes now is a good time to talk about the purpose and importance of investing and financial literacy.
"Gambling like this is completely, completely justifiable, and I'm surprised more people don't do it," Stevenson said. "Consider the life, the average person investing in GameStop leads. You literally start off in the red, your family's in debt because of an insane fiasco in 2008 that you didn't understand because you were like seven. And now you're being told to take on debt for college— tens of thousands of dollars for a chance to get ahead in life. Blue-collar workers can just barely carve a living out of this world by spending their entire life in debt. And now there's this app that could bring you out in just a few days. Of course, it's something that's being hopped on."
"And let's say the average twenty-something-year-old has $10,000 in their savings account, this could be a down payment for like a house or a car or whatever. Instead, take that $10,000 and throw it into this speculative conspiracy that GameStop will enter a short squeeze ... and potentially multiplying it to millions, their entire family has been rescued from a life of wage slavery. I think it's no surprise that the ingredients are there to happen."
According to Stevenson, the GameStop frenzy occurred naturally and would have happened even without a pandemic.
Following the extreme rise in GameStop, Robinhood and other exchange platforms restricted retail investing. Stevenson said he's interested in seeing how the legal battles over the suspension of stock purchases will play out for the company.
As of Feb. 2, Robinhood faces 34 class-action suits. Robinhood has since started allowing investors to add GameStop to their portfolio again.
"It's completely illegal," Stevenson said. "It is market manipulation. And as I understand it, they are currently facing a class-action lawsuit."
According to Stevenson, the GameStop squeeze was bound to happen since the reasons were all there before the economic recession brought about by the COVID-19 pandemic.
"What happened here is relatively natural, albeit once in a lifetime," Stevenson said via text message. "Stocks go up and shorts cover their positions, causing a mini 'squeeze' all the time. this one particular time however, this natural market event went viral and was set against the backdrop of class struggle."
On the influence of the subreddit and the idea that events like this can set investors up for life, Stevenson said the Wall Street Bets users are willing to tank a billionaire if it helps redistribute wealth.
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"... The wallstreetbets community is mostly only interested in getting filthy rich as fast as possible," he said via text. "Who cares what billionaire goes under, as long as me and 4.5 million of my closest friends come out on top. we are glad to add millions of new people into our fold."
Although the opportunity to become a millionaire from the GameStop squeeze slipped through his fingers, Stevenson plans to continue investing in options trading, and so far he said it's done well for him.
"i'm going to keep the amount of money i've made off of this obscure for posterity, but it's nearing five figures," Stevenson said via text. "i could take it out and pay my apartment lease twice, but then i would miss out on going to the moon."
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