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.
