#PI Grassroots vs. Wall Street tycoons: a financial battle for the ages, and a legendary victory in one shot!

He could only afford fifty-cent beer, but he invested all his belongings into a junk stock. In just six months, his assets skyrocketed to $47 million, because this stock became the battleground for retail investors, small traders, and the arrogant Wall Street funds—a century-defining war. This is the famous short squeeze event during the pandemic.

His name is Gill, a financial analyst at MassMutual and also a YouTube streamer. One day, he told his childhood friend that he bought a stock. His friend urged him to sell the junk stock quickly, since he had a wife and kids to support. Gill said not only did he buy the stock, but he put all his machines into GameStop. His friend thought Gill was joking, but when Gill showed his phone as proof, he realized Gill had gone completely crazy.

GameStop was then the world’s largest retailer of console games and entertainment software, but hit hard by online shopping and digital gaming, its stock had dropped 90% over the past three years. Wall Street wanted to cash in on the crisis, including the famous Citadel Securities and 72 Point Hedge Fund, with the biggest player being Melvin Capital. Melvin’s CEO was only 36, already running one of Wall Street’s most profitable hedge funds. He had made money shorting GameStop for six straight years, hammering the price from $28 per share down to $2. The store changed owners six times in two years. They planned to keep shorting GameStop, popping champagne at halftime to celebrate their expected victory.

So Gill’s purchase of GameStop stock was basically throwing money away. But to everyone’s shock, GameStop’s stock price suddenly saw a big pump of 130% overnight. This unprecedented surge scared Melvin’s CEO out of his wits. He never expected the reason for the big pump was a small influencer, Gill, saying he really liked the stock.

Gill’s wife was about to be laid off due to the pandemic, adding to his stress. His friend’s words made him doubt his choice, but his wife fully supported his GameStop investment. She told Gill to go Live—if he wasn’t sure, let him see what other investors were saying. Gill went to his study, turned on his computer, and put on his signature red headband. He had done a few Live sessions sharing his investment methods. Although not many watched, and the audience left all kinds of mocking Comments, Gill didn’t avoid them—he responded with humor.

Then he seriously Shared his views on investing in GameStop. Because Wall Street sharks were shorting GameStop, the stock price hit rock bottom, now at just $3.85 per share. Gill believed Wall Street made a wrong judgment this time, severely underestimating GameStop’s value. GameStop had been shorted 140%, meaning the more retail investors bought, the more the shorts lost. Even though most people now buy digital games online, a quarter of loyal customers still choose to buy physical discs at GameStop. So Wall Street was deliberately playing dirty. If retail investors united to pump the price and refused to sell, they could crush the big short positions and make a fortune.

But Wall Street always saw retail investors as a disorganized mob, only caring about short-term gains, and called their money “dumb money”—the easiest to earn. So when Melvin saw retail investors entering, he excitedly added 600,000 more shares to his short positions, waiting for the price to fall. These retail investors were the “chives” he planned to harvest. But he never expected his continued shorting would be seen as a declaration of war against GameStop, and retail investors decided to rise up—not for profit, but to take down the Wall Street big shots.

Netizens cheered each other on online, frantically buying the stock and calling everyone to join in. They had nothing to lose—if everyone put in a few hundred or thousand dollars to fight back, they could knock down those Wall Street elites who didn’t see them as people. This was no longer just about making money—it became a thrilling revolution.

Thus, a stock market butterfly effect began. A nurse with $50,000 in Liabilities saw Gill’s call and immediately invested half a month’s salary, blaming the greedy capitalists for her tough life. Mark, who worked at GameStop, lost his job because of Melvin’s shorting, and with the company unable to pay wages, he put his last $100 into GameStop. A female college student, deep in debt, invested all her savings because her father had worked hard at a big box store, only for Wall Street funds to buy it out, drain it, and declare bankruptcy—she hated these capitalists.

A spark can start a prairie fire. Thanks to everyone’s efforts, GameStop’s stock price soared to $10. In 2020, America saw its bleakest Christmas ever. Gill went Live at home to report results: GameStop had quintupled since last summer, rising from $4 in July to $21.7 now. Rarely do investment theories actually work out, and netizens left Comments in the Live Channel urging GameStop to “fly to the moon.” Gill earned everyone’s respect.

The reason these netizens could buy stocks for just a few dozen dollars was an app called Robinhood—a mobile app for stock trading. As long as you Sign Up, you can Trade stocks. Unlike traditional financial apps, Robinhood had no Trading Fee and almost no barrier for most users. Just search the ticker, swipe, and Place Order—the Trade is done.

Robinhood’s user base once surged to 20 million. Its free model was profitable because it passed orders to market makers, who executed them and paid Robinhood a small rebate per Trade. The small amounts added up, and the huge volume made Robinhood highly profitable. Most of Robinhood’s business was with Citadel Securities. But this business model gave Wall Street leverage over Robinhood.

On January 19, 2021, GameStop’s stock price rose to $43 per share. While Wall Street bet on its collapse and a big dump, retail investors started buying like crazy, delivering a heavy blow to the Wall Street big shots. GameStop’s stock saw a big pump of 70%, and just a day later, another big pump of 90%. Gill posted that Wall Street was about to get short squeezed, and retail investors would rise from the bottom to the top.

A short squeeze is the opposite of shorting. If a shorted stock keeps rising, shorts must buy back shares at higher prices to return the borrowed stock within a set time, causing them to lose money. When shorts buy back in large amounts to Stop-Loss (SL), this buying itself pushes the price up further, prompting other shorts to buy in to Stop-Loss (SL) too, driving the price even higher. That’s a short squeeze.

At this point, Gill had made $11 million. If he sold now, he’d have a huge Profit. Retail investors were hesitant, watching to see if Gill would sell. GameStop’s stock faced an extreme situation: Wall Street held 140% short positions. Even if they bought all available shares, it wouldn’t be enough to cover their borrowed stock—they’d have to buy multiple times, so the price could rise infinitely.

Even scarier, those holding large amounts of stock were the “dumb money” in Wall Street’s eyes. These hedge fund guys had no idea what it felt like to work hard every day and still have nothing. Born with silver spoons, living at the top of the pyramid, eating prime steak, partying at exclusive clubs and yacht parties. When asked how they got so rich, they’d say, “Dumb money is just too easy to earn.”

This post resonated with all retail investors. The GameStop event instantly became a class war. So what if you’re a small fry? If there are enough of us, we can flip the big whales. Gill urged everyone to hold and not sell—this was about more than money.

But Melvin’s CEO didn’t see it coming. He told his wife that the price would crash next week, that retail investors would take profits and the price would collapse, because no short squeeze had ever succeeded. But the next morning, the price saw a big pump of 103%, and retail investors bought in like crazy and refused to sell, with a 220% surge. The scene exploded across news outlets and Live Channels. The dying GameStop instantly became the world’s most actively traded company, with the price rising nearly 4% per min, and by night it had risen 581%. Experts said the GameStop short squeeze could bankrupt several companies, especially the hedge funds foolish enough to short.

Gill’s wife asked, “How much did we make today?” Gill replied, “$5 million.” She asked, “How much yesterday?” Gill said, “$4 million.” She couldn’t believe it: “Are we really rich now?” In contrast, Melvin’s wife asked, “How much did we lose today?” Melvin answered, “A billion.” “And yesterday?” “Also a billion.” News broke that Melvin Capital was about to go bankrupt. Facing interviews, Melvin tried to keep his composure, but when he was about to go Live, he bailed and shut down his computer—he was finished. In just a few days, he lost $6.8 billion. But he had to keep investing, because if he quit now, he’d lose everything, even his next meal. He had to ask two other funds for help. The rich are generous—$3 billion was casually invested into Melvin Capital, because all capitalists believe losing money to the poor is impossible.

After the bailout, GameStop’s price saw Fluctuation. The $8 million retail investors pooled together was nothing compared to a single word from the rich. Gill had made $23 million, and his family urged him to sell, but his wife fully supported him, knowing how much effort he put into this stock. Netizens waited for Gill’s next post to see if he’d sell, but Gill refused to sell. GameStop’s price kept pumping, reaching nearly $350 per share. Even the White House started paying attention, with the Treasury Secretary and experts getting involved. As the retail investor frenzy grew, the capitalists couldn’t take it anymore. Wall Street finally fought back against the “chives.”

They brought in a bunch of business media to question the big pump, but this only made Gill a stock god. When that didn’t work, they cut retail investors’ internet, shut down Gill’s forum, and stopped people from discussing. Then, Gill lost his job at MassMutual. With his child still needing care, many retail investors, unable to see Gill’s posts, sold their stocks.

That night, the Robinhood app used by retail investors also had issues. The National Securities Clearing Corporation demanded $3 billion in Margin to settle all Trades, but Robinhood’s CEO said they only raised $2 billion. Without enough Margin, they couldn’t Trade in the Marketplace, and their IPO plans would be ruined. The next morning, millions of retail investors opened Robinhood and found GameStop could only be sold, not bought. This caused instant panic.

Turns out, Citadel Securities’ CEO told Robinhood’s CEO that if he set GameStop on Robinhood to “sell only,” the Margin would drop to $700 million. Robinhood’s CEO agreed, pausing buys for “insufficient Margin.” After cutting the internet, GameStop’s stock faced panic dumping. The media hyped it up on TV and online, fueling retail investor anxiety. If they didn’t sell now, they could lose everything.

Shutting down forums, controlling banks, manipulating media, restricting buys, and creating anxiety—this perfect combo broke retail investors’ psychological defenses. Robinhood betrayed its users, helping capitalists short the stock, causing widespread outrage. Someone was pulling strings, but Robinhood couldn’t give a reasonable explanation.

The next day, Gill received a subpoena, suspected of being a scammer helping the shorts. Once worshipped by millions as a stock god, he instantly fell from grace. At this moment, his usually unreliable brother comforted him. He always called Gill a loser, but Gill had managed to scare the rich out of their wits. He told Gill to be brave and face it head-on.

Robinhood, Citadel Securities, Melvin Capital, and Gill were all summoned to testify before Congress. The rich could call in a team of lawyers to help them edit every word, even choose backgrounds to downplay their privilege. Gill, on the other hand, only had his family and friends, who didn’t know much.

The next day, heavyweight members of the House Financial Services Committee attended the hearing. Citadel Securities’ CEO brought a lineup of lawyers, afraid to say anything wrong. Melvin Capital, nervous from its shorting failure, even forgot to turn on his microphone, drawing ridicule from netizens. Robinhood kept dodging questions, rambling about useless points. Only Gill, unprepared, faced the questions calmly and expressed his views with composure. He said he came from an ordinary family, didn’t know any big bosses, and spent a lot of time unemployed after college due to the market. He self-taught investing and found that securities firms had all kinds of violations, including manipulative shorting tactics. The stock market should be a fair competition—if you’re smart and lucky, you can make big money. But now, big companies have absolute advantages in tech and information, leaving little hope for the little guy. He simply liked GameStop’s stock, and his sincerity moved countless viewers.

Gill said he wouldn’t sell his stock, and netizens, seeing his attitude, also insisted on holding. On the second day of the hearing, GameStop’s stock was suppressed from $500 to $40 per share. But three days later, Gill turned on his computer and bought more stock. GameStop’s stock surged again, and his holdings doubled to 100,000 shares. GameStop’s stock tripled in a week. The GameStop worker who invested $100 made $180,000 and never had to take crap from his manager again. Two female college students each made $270,000, and the nurse’s Liabilities dropped to just $10,000. They all refused to sell.

Later, Gill gave his brother a red sports car. Melvin Capital shut down in 2022. Robinhood went public in July 2021, but its first day was disappointing, and two years later, its volume was only 10% of its peak. The two founders were no longer billionaires. Six months later, texts were revealed in court showing Robinhood and Citadel’s managers had discussed the buy pause the day before. The lawsuit was dismissed, and a month later, the SEC finished its investigation without any charges. The event basically faded away.

Gill made his last post online on April 16, 2021. His assets were $34 million. 85% of hedge funds started actively monitoring online to see what retail investors were buying, afraid of another short squeeze. Hedge funds also sharply reduced shorting. Wall Street could no longer ignore the “dumb money” effect.

That’s the whole story.