85 times increase in 9 months, GameStop (GME) on the US stock market, retail investors vs. Wall Stre

At the beginning of 2021, the US stock market experienced an unprecedented storm, with GameStop (GME) at its center. GME, a traditional offline video game retailer, faced severe challenges due to the impact of e-commerce and the pandemic. However, GME’s stock price soared 85 times within just 9 months, rising from $2 to over $350, and even reaching a peak of $483. Behind this phenomenon was a fierce battle between retail investors and Wall Street giants.

The catalyst for this storm was a section on the Reddit forum called “WallStreetBets.” A large number of retail investors gathered there to share investment advice and views. They discovered that several Wall Street hedge funds held large short positions in GME. Consequently, the retail investors united and began frantically buying GME stock, creating a powerful buying force that caused GME’s stock price to soar.

As GME’s stock price skyrocketed, hedge funds suffered huge losses. One of the most notable cases was Melvin Capital, which reportedly lost over $5 billion shorting GME. The actions of the retail investors not only caught the Wall Street giants off guard but also drew widespread attention from global financial markets. This “retail investors vs. Wall Street” drama became one of the most talked-about topics in the financial market in 2021.

To analyze whether GME will see another surge, we need to delve into the current market environment and specific reasons. First, the 2021 surge in GME was the result of multiple factors, including the collective action of a large number of retail investors, the high-leverage short positions of hedge funds, and the amplification effect of social media.

The current market environment is quite different from 2021. First, regulatory authorities have noticed similar phenomena and begun to strengthen regulation of market manipulation behaviors. For example, the US Securities and Exchange Commission (SEC) introduced several new rules after 2021 to prevent market manipulation and excessive volatility. Secondly, the enthusiasm and funding sources of retail investors have also changed. In early 2021, the global pandemic led many people to stay at home with a lot of idle funds, whereas now, with the gradual economic recovery, retail investors’ funding sources are relatively dispersed.

Moreover, GME’s fundamentals have also changed. Although GME conducted several capital operations after the surge, including issuing new shares and introducing a new management team, its core business model still faces challenges. The gaming market is shifting towards digital and online trends, and GME needs to find new growth points in this trend.

Of course, we cannot completely rule out the possibility of another surge in GME. Market sentiment and investor psychology can still have significant short-term impacts. If new catalysts emerge, such as major policy changes or unexpected market events, GME could still attract significant attention from retail investors. However, compared to 2021, the changes in the market environment and the strengthening of regulations make another surge more challenging.

In the cryptocurrency circle, there are similar cases of retail investors battling project teams. For example, the Dogecoin (DOGE) surge in early 2021 shares many similarities with GME. Dogecoin was originally a joke cryptocurrency but attracted a lot of retail investor attention with the help of tweets from celebrities like Tesla CEO Elon Musk. The price of Dogecoin rose sharply in a short time, from less than one cent to over 70 cents, an astonishing increase. Although the surge in Dogecoin was more driven by social media, like the surge in GME, it demonstrated the tremendous influence of retail investors in financial markets.

For investors looking to participate in stock and cryptocurrency trading, choosing a reliable trading platform is crucial. Here are some reliable trading platforms:

Platforms supporting only stock trading:

- Charles Schwab: A financial company offering comprehensive investment services, including stock, ETF, options, and mutual fund trading. It has powerful research tools and customer support, suitable for all types of investors, especially those seeking broad investment choices and in-depth market analysis.

- Interactive Brokers: A globally renowned online brokerage platform offering stock, options, futures, and forex trading. Known for its low commissions and efficient trade execution, it is suitable for experienced traders and institutional investors and provides extensive market data and trading tools.

Platforms supporting only cryptocurrency trading

- Coinbase: One of the world’s largest cryptocurrency trading platforms, supporting multiple cryptocurrencies with high security, suitable for both beginners and professional investors.

- Binance: One of the world’s largest cryptocurrency exchanges, offering a wide range of trading products and services, suitable for experienced investors.

Platforms supporting both stock and cryptocurrency trading

- BiyaPay: A multifunctional trading platform offering a wide range of financial services. Users can exchange cryptocurrencies for USD and withdraw to bank accounts, trade US and Hong Kong stocks, and conduct forex trading. The platform supports trading in units as small as one USDT, making it very suitable for users with smaller capital and those investing in both bitcoin and US and Hong Kong stocks. BiyaPay aims to provide users with a convenient and secure trading experience.

- Tiger Brokers: An online brokerage platform offering stock, options, futures, and fund trading, now expanded to cryptocurrency trading. The cryptocurrency trading service of Tiger Brokers is currently limited to professional investors with Hong Kong residency who meet specific asset requirements, such as individuals with over HKD 8 million (approximately USD 1.37 million) in investable assets and companies with over HKD 40 million in assets. This restriction is to comply with the regulatory requirements of the Hong Kong Securities and Futures Commission (SFC) and ensure that investors have sufficient risk tolerance.

Finally, it must be emphasized that both stock and cryptocurrency markets are characterized by high risk and high reward. Investors should remain rational and avoid blindly following trends when trading. Whether it is GME or cryptocurrencies, market volatility is very high, and investors should invest according to their own risk tolerance to avoid unnecessary losses due to market fluctuations. Staying vigilant and managing risks well are the keys to successful investing.