“He provided a very clear thesis,” Mr. Gogna said, explaining that Mr. Gill’s work was an accessible contrast to other information — “charts, all these dizzying things” — out there. “It can be overwhelming,” he said, “and I think that’s designed to keep the normal people away.”
Jan. 28, 2022, 8:29 p.m. ET
By January 2021, Mr. Gogna was “all in” on GameStop shares because he believed that the company would eventually pivot to a digital business. “Every pay period I literally buy as many shares as I can,” he said, speaking from a hospital in San Diego where his wife, a nurse, was in labor with their first child. Mr. Gogna said he had persuaded her to move her savings into GameStop as well. (She delivered a healthy baby.)
As he dug deeper, spending hours reading what other traders had posted about GameStop, Mr. Gogna became convinced that something far darker was going on. Several posts detailed what users were calling a plot by Wall Street, the Securities and Exchange Commission and a trade clearinghouse to create fake or “synthetic” GameStop shares.
The goal of the plot, according to the posts, was to help hedge funds pull off the short trade they couldn’t last year. Shorting a stock involves an investor’s borrowing shares from another and immediately selling them, hoping that their price will fall and that the investor can buy them back cheaply, return them and pocket the difference. The theories were circulating on a Reddit forum called Superstonk, which had been created in March, after GameStop had receded from the headlines, by die-hard fans of the company. There are detailed research papers called “due diligences” — DDs for short — laying out far-fetched theories about how various Wall Street actors were secretly manipulating GameStop and other meme stocks.
A core premise of the plot’s existence is that the short interest in GameStop — or the amount of shares held short — is higher than 100 percent. The only way to counter the plot is for individual traders to buy GameStop shares at any price to keep them from falling — the “mother of all short squeezes,” or MOASS. Mr. Gogna is among the traders who have pledged to “hold on for dear life,” or HODL, as the acronym goes.
Frank Partnoy, a law professor at the University of California, Berkeley, said synthetic shares can exist because the same shares are often lent out to multiple short sellers at once, creating the impression that there are more shares than there really are. But, he added, “it’s not true that the S.E.C. would be involved, and it’s not easy to do something like this. And it also would be manipulative, so it would be illegal.”
The Superstonk discourse shows how the gospel of meme stocks has taken hold among a wide range of investors — from those who no longer buy into it, like Mr. Fritz, to others who accept it without question.
More Stories
Ronny J and Branden Condy were recently spotted together in front of LIV club in Miami Beach, FL
Abu Dhabi Sustainability Week to host first Green Hydrogen Summit
IDEX, NAVDEX to showcase fast-changing defence sector