Dumb Money really does show how the little guys won against Wall Street – a ‘meme stock mania’ expert explains

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Drawing inspiration from the real-life 1,800% spike in the value of GameStop shares in 2021, Dumb Money deftly explains the drivers of “meme stock mania” – when groups of investors on social media herd together to cause certain stocks to rocket.

The “dumb money” of the film’s title is a reference to these amateur or retail investors. At the height of the meme stock craze, these “little guys” worked together to upend the tactics of global hedge fund giants, which were using their billions to short-sell stocks. This is when investors try to drive down the value of a company’s shares because they’ve essentially bet against it rising in price.

Retail investors, by purchasing and holding shares of US computer game shop GameStop, drove the price up from approximately $19 (£15.50) at the beginning of January 2021 to $325 (£265) per share by the end of the month. While the little guys profited, this contributed to losses nearing $25bn for the hedge funds and other “big guys” who had been shorting these stocks.


Read more: GameStop: I’m one of the WallStreetBets ‘degenerates’ – here’s why retail trading craze is just getting started


For any viewers worried about having little knowledge or interest in retail investing, this comedy manages to explain the rise of GameStop shares – and meme stock mania – without overwhelming or complex financial jargon. And you don’t have to watch Margot Robbie explain everything from a bubble bath either, a tactic The Big Short (2015) previously employed.

Yet Dumb Money still captures the intricacies of the investment chatter or “sentiment” that drove GameStop shares “to the Moon” (as Reddit users said at the time). It does this by telling multiple parallel stories of members of the army of retail investors who held GameStop stock at the time. This helps show how their interactions on investment forums like the WallStreetBets subreddit were behind the stock’s rally.

Throughout, Dumb Money uses realistic language of meme stock investors. I know this because my colleagues and I analysed 10.8m Reddit comments to confirm the platform’s influence over meme stock share prices. In particular, we looked at the language that real-life Reddit investors use. Dumb Money effectively captures their distinctive, often offensive tone.

Frequently used words by retail investors on Reddit forums:

Rooting for the little guys

In the movie, Gabe Plotkin (played by Seth Rogen) – the real-life founder of hedge fund Melvin Capital Management, which has $3.5 billion under management – says retail investors always lose. But GameStop was an exception. It shows “dumb money” is worth analysing.

And it’s hard not to root for the little guys when watching Dumb Money. These amateur investors included single mothers juggling work and parenting responsibilities, and university students graduating with massive debts and struggling to find employment. The wealth disparity of the retail investors compared with the rich hedge fund managers is made clear.

Dumb Money also argues that the frustration of being trapped in debt and poverty played a significant role in the GameStop rally. Having the COVID-19 pandemic in the background adds to this frustration and makes all the stories even more relatable, while also trying to explain why the rally happened when it did.

The evidence from existing studies about the impact of the pandemic on retail investors is highly inconsistent, however. For example, in cryptocurrency markets, which are in many ways similar to meme stocks as they attract amateur investors via social media, my research shows the pandemic did not cause “herding” behaviour (when small investors copy each other).

And while the money might be considered “dumb”, main character Keith Gill (known online as Roaring Kitty, where he posts “educational livestreams” about investing) is clearly anything but.

Gill was an amateur investor and a leading figure online during the meme stock craze. The film portrays his human side beautifully, contrasting the support he gets from his wife with the initial scepticism about his investing by family members. It also highlights his unwavering belief in the power of community and social networks in driving financial markets, and how this could be overtaking the role of tracking “fundamentals” – such as company profitability, growth potential and liabilities.

In one scene based on real life, Gill has to testify to the US House of Representatives Committee on Financial Services. While practising his speech in advance, he forgets one of the reasons he has come up with for explaining the GameStop investment rationale.

This is a nod to the real driving force behind social media sentiment, summed up by Gill during the hearing when he gives his reason for investing in GameStop: “I just like the stock.”

As GameStop and other meme stocks show, this kind of gut feeling can sometimes carry more weight than the most complex financial analysis conducted by hedge funds.

A similar pattern of emotional investment can be seen among crypto investors. There is research to suggest that amateur investors purchase shares of companies with the terms “crypto” or “blockchain” in their names without even verifying whether these companies are using these emerging technologies.

The movie villains at the opposite end of the wealth spectrum – the titans of Wall Street brought low by the redditors – are, strikingly, portrayed with the same sense of humour and humanity as Gill. Ultimately, all of the characters share a love and appreciation for money – although they are dealing with different amounts and concerns, of course.

And while the big guys still tend to win on Wall Street, anyone who is sceptical about the growing significance of social media sentiment in driving financial markets should give Dumb Money a watch. It may open their minds to ideas that initially appear dumb, but can ultimately prove to be powerful.

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Larisa Yarovaya does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.