Nearly a year ago, a bunch of day traders from the fringes of the internet figured out how to beat Wall Street at its own game. Or so they thought. Around mid-January, shares of GameStop — a brick-and-mortar retailer that most analysts expected to go the way of Blockbuster — began surging, fueled by a pile-on of day traders from the WallStreetBets forum on Reddit. They were doubling, tripling, their positions by the day, chanting "diamond hands," and "to the moon," rally cries to hold onto their shares rather than cash out. The term "meme stock" sauntered into the mainstream.
Better still, these amateur traders, who winkingly referred to themselves as "Apes," were sticking it to the fat cats on Wall Street who'd heavily shorted GameStop. The more people tried to dismiss the Reddit crowd — Citron Research called them "the suckers at this poker game" — the more they drove up the stock, squeezing the short sellers. In the end, the GameStop rally sent the stock up 1,600% before coming back down to Earth. Citron, meanwhile, shut down its short-selling business after the episode. Melvin Capital, one of Wall Street's elite hedge funds, was so financially gutted it had to be bailed out by two other firms. The Apes rejoiced. Who's the sucker now?