| The digital frontier is starting to feel decidedly like 2021 all over again, fueled by crypto’s big comeback — and the return of one of our surreal, meme-powered digital landscape’s biggest characters. Keith Gill, better known as “RoaringKitty,” announced his comeback on Sunday after more than two years of inactivity with a Reddit post showing nothing but a multimillion-dollar position in the video game retailer GameStop. It instantly breathed life back into the “meme stock” phenomenon that set Wall Street and regulators alike on their back feet in the early days of the Biden administration, creating a fiasco for the market. Gill’s story doesn’t revolve around cutting-edge generative AI, or a sophisticated messaging campaign, or hopes for a crypto-fueled financial revolution. But if you want to know how technology can really disrupt how things work, it might just be the headline example. He’s the figurehead of a retail stock trading movement that challenged not just institutional power on Wall Street, but the market’s shared, fundamental understanding of whether or not a company is valuable. Back in the first few days of the Biden administration, GameStop, a decades-old firm that is largely dependent on the retail sale of a product that can now be purchased easily from one’s couch (and, full disclosure, your newsletter author’s first employer), was seen as a totally moribund stock before Gill’s movement rallied around it. (The same phenomenon occurred with movie theater chain AMC.) Through chatter on subreddits, Discord channels and Twitter posts featuring lengthy and often indecipherable strings of emoji, traders created a baseless hype cycle around the stock — and pumped in real money. They boosted GameStop until its share price had no relation to the company’s “true” value, leaping from $4.42 on Jan. 8, 2021 to more than $80 by the end of that month. It fell back to Earth the following month, but has remained consistently higher than one would expect ever since. Whether Gill did anything wrong per se is still up for debate, much less how it can be fixed if he did. It’s hard to accuse, let alone convict, someone of stock manipulation when they couch all their statements with warnings not to take them too seriously. Gill’s Reddit, Twitter and YouTube pronouncements were set off by the perfunctory and quasi-ironic assertions that characterize meme stock culture (“this is not financial advice”; simply “I like the stock”). So, the bigger question: Will traditional finance survive? Gill’s movement challenged the very norms that private firms and regulators use to track markets. His return, and the resilience of the subcultural, internet-addicted retail investors that hang on his every word, point to a new financial future where institutions as old as America itself are tested by a hyper-modern form of digital social organization and caustic irony bordering on nihilism. It is an almost existential challenge for an industry whose whole premise is that “value” is real and durable, rather than just… made up. And in some ways, it’s a perfect manifestation of the cultural differences between the online and offline worlds, to the extent that they can now be meaningfully separated. “Reddit and Twitter have their own language and norms, which are just much different than the old school communications for investments. So, it's not easy to distinguish between what is serious and what isn't,” said Sean Tuffy, a former head of market and regulatory intelligence at Citi (described to me by POLITICO’s Sam Sutton as the “meme king of FinReg”). “The main issue is that US securities laws were not designed for mass retail trading, let alone social media, because how could they be?” The first incarnation of the meme stock saga in 2021 led to a lengthy round of recrimination in Washington, mostly around the role of retail trading platforms like Robinhood whose representatives got hauled in front of the House Financial Services Committee and asked to account for their role in making it easier for many of the meme stock investors to wipe out financially. That’s led to retail platforms being more proactive this time around, with E*Trade reportedly considering a ban on Gill, something Tuffy said was a no-brainer due to his high-profile social media presence. But even in 2021 some lawmakers saw a different story unfolding, and not necessarily one of financial malfeasance: “My general view here is that you’re not going to put technology back in the box, no matter how you try to regulate. You’re not going to curb investor interest, no matter how much you want to curb it,” Rep. Patrick McHenry (R-N.C.) told the committee. “The population is there, and no matter how dumb Washington politicians think the average investor is, they’re a lot sharper than they appear.” McHenry — who, not coincidentally, is one of the leading pro-crypto voices in Congress as he plans his retirement this year — touched on the key, fundamental truth of the meme stock phenomenon. For most of the meme stock traders, or “apes” as many call themselves, making money is beside the point. To gather on the WallStreetBets subreddit and encourage your compatriots to “HODL” (not sell) is to affirm your group identity and shared dignity in opposition to faceless institutions, not to take a prudent financial position. So how are institutions supposed to deal with investors who are undeniably shaking the market, but not acting according to established economic principles? Bloomberg’s Matt Levine described Gill and Elon Musk as the rare digital celebrities with “magic lamps,” able to effortlessly move markets with mere pronouncements. As digital loyalties increasingly trump real-world concerns in both finance and politics, could such figures gain influence to put them beyond the reach of regulators? The meme stock guru Tuffy expressed skepticism — but warned that they’ve opened up a chaotic landscape in which it’ll likely be easier for smaller players to wreak their own havoc. “I think a truly market-moving level of celebrity will still remain a relatively rare commodity … if you look at traditional finance, there are probably a handful of guys who can really move markets because of their clout,” Tuffy said. “That said, the worry for regulators is that there will be more small-time meme-driven fraud in the future.”
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