The answer to that question is a lot; it can bring some clarity amongst all the hype.
For those of you not familiar with John Otway, and there will be many, he is a musician who first appeared on the music scene in the punk rock era and has continued to be active to the current day, with a range of interesting projects. One was to write a rock opera with John Baine, who’s stage name is Attila the Stockbroker, apposite for this article. It’s fair to say that Otway has not enjoyed massive commercial success. However, he does have a very loyal following of fans and he is very aware of their power and sometimes uses them to pull off publicity stunts. The lyrics from the ‘B’ side of one of his lesser-known singles was voted to be one of the top ten greatest lyrics of all time in a BBC poll. How did that happen?
Market manipulation and the power of a small group of people is not restricted to shenanigans on the financial markets or indeed social media platforms.
One of the stunts pulled off by John Otway fans puts the GameStop/Reddit/Robinhood thing into perspective. In 2002, when some fans asked Otway what he wanted for his birthday, his response was ‘another top ten hit’, and a plan was hatched. He recorded a single ‘Bunsen Burner’ with three different ‘B’ sides so fans would buy three records, not one, and the purchases were all made in one week. It worked, the record made number nine and John Otway was therefore invited to appear on the Top of the Pops TV programme.
What lessons can be learnt from this?
You only need to sell relatively few records in a week to get in the top ten, some say 10,000 or less, so easy to manipulate. Otway’s wheeze of having three different ‘B’ sides enhanced the chance of success. There was little chance of the record staying in the charts, if you have heard the lyrics you would know why. They contain truly cringe worthy lines like ‘let me be your Bunsen burner baby, let me be your naked flame … You’re my little pipette, the favourite piece of apparatus in my chemistry set … you’re the kind of carbon I can date’.
The fans were able to get one record in the top ten for one week, had they tried to get two in there in the same week they would have failed; had they tried to get in all ten spots their efforts would probably not have even registered.
And that is how it is with the Robinhood band and GameStop, a manufactured one-hit-wonder, rather than anything enduring, and I doubt that it would be endearing if we looked deep into the motives behind it. The market capitalisation of GameStop (at the inflated price) is about $22 Billion, now that might seem a big figure, but not in the context of the NASDAQ. Netflix has a market capitalisation over ten times more at $235 Billion, but even that is small compared to the big boys, Alphabet A and Alphabet C (ex Google), both about $1,200 Billion, which is again small compared to Apple, $2,200 Billion.
The day traders collaborating via Reddit might think they are disrupters, but they are just using a pipette to put drops in the ocean and their Bunsen burner is not going to make the big companies feel the heat.