My model of the GameStop Corp. trade is that it is mostly what I’ve been calling an “honest pump”: People got together on the internet and discussed it, and decided that if they all bought the stock of GameStop at the same time then it would go up and they’d like that. This was correct. There was no fraud or dishonesty involved; that is just a straightforward understanding of how supply and demand work.
Nor was there all that much in the way of fundamental analysis of the underlying cash flows of GameStop’s business. I mean, there was, at some point; lots of Reddit and non-Reddit traders looked at GameStop when it was at $4 or $10 or $20 and said “this should be worth $30.” But once it hit, I don’t know, pick a number, $65.01 on Jan. 22, say, no one was in it for the cash flows. GameStop was worth $200 because more people would buy it and then it would be worth $400; it was a pure social coordination game with no connection to the business of an actual company.