Who Participated in the GameStop Frenzy? Evidence from Brokerage Accounts
Finance Research Letters, 102140; TAF Working Paper No. 58/February 2021
16 Pages Posted: 25 Feb 2021 Last revised: 8 Jun 2021
Date Written: February 15, 2021
Abstract
In January 2021, the GameStop stock was the epicenter of the first case of predatory trading initiated by retail investors. We use brokerage accounts to study who participated in this GameStop frenzy and how they performed. We investigate the extent to which investors’ personal and trading characteristics differ from the general population of retail investors. GameStop traders had a history of investing in speculative instruments, including stocks with lottery-like features. They were also more likely to close their positions before the peak of the bubble. At the onset of the frenzy, numerous retail investors also shorted GameStop. Overall, our results indicate that the GameStop frenzy was not a pure digital protest against Wall Street but speculative trading by a group of retail investors, in line with their prior high-risk trading behavior.
Keywords: Predatory Trading, Retail Investors, Trading Behavior.
JEL Classification: G11, G40, G41
Suggested Citation: Suggested Citation