The GameStop Frenzy Showed How Desperately We Need A Narrative Finance
Updated: Mar 12, 2021
In January 2021 GameStop, a brick-and-mortar games vendor, saw its stock rise 1,700 percent. Institutional investors like the hedge fund Melvin Capital had approximately shorted 140 percent of GameStop's public float, which some retail investors on Reddit took note of. Redditors also believed that the stock was undervalued and in January the situation reached its crescendo in one of the biggest short squeezes of all time. This article argues that the events in January were primarily caused by a constellation of contagious narratives and that economics must take the power of narratives into account.