The Fort Worth Report evaluated GameStop’s financial resurgence as demonstrated in “Dumb Money,” a movie based on true events. The news publication explored the future of meme stocks and interviewed TCU Neeley Professor Paul Irvine for his expertise on the topic.
September 29, 2023
By Jessica Tran
The Fort Worth Report provided insight into the story behind “Dumb Money”, a movie about members of a finance-focused Reddit community that helped organize individual investors to focus their time and money on GameStop. In the film, their efforts drove up the company’s stock price, prompting professional investors who expected GameStop to fail to take counter actions. Albeit dramatized, “Dumb Money” is a portrayal of a true story.
In 2021,GameStop was on the verge of collapse. Big investors were shorting the stock, an action taken when a stock’s value is expected to decrease, but in a twist, the worth of GameStop’s shares increased tenfold—from $40 to $400—in only a few days. The reason for the company’s growth was due to the company becoming a meme stock, a phenomenon that involves shares of a business gaining social media popularity and individual investors putting money into a stock rather than large-scale traders.
When asked about this phenomenon, Paul Irvine, the Kleinheinz Endowed Chair in International Finance and Investments and a Neeley finance professor, said the GameStop episode was unique.
“It was the first time that anyone found a way to coordinate what I call ‘noise’ traders and convinced them to all do the same thing,” Irvine said.
Moreover, Irvine explained what made the company the ideal meme stock does not frequently apply to other businesses, namely the investors’ personal connection with the corporation and timing.
“I think a lot of these 20-somethings who invested probably grew up in GameStop stores, playing games there, and they had a lot of fondness for it… That’s not quite the case with a lot of other stocks. GameStop turned out to be technically a perfect stock to try something like this on.”
