It’s a fable for our times: Small-time investors band together to take down greedy Wall Street hedge funds using the stock of a troubled video-game store.
But the revolt of online stock-traders suggests much more. The internet is shifting society’s balance of power in unanticipated ways. And the same tools that empower the little guy — allowing people to organize quickly and seemingly out of nowhere, troll powerful institutions and unleash chaos — can also give rise to extremist mobs waging harassment campaigns or the Jan. 6 riot at the Capitol.
In the world of pseudonymous internet message boards, pranks-gone-wild and logic turned upside down amid a global pandemic, revolts come in all shapes, sizes and aims. Last week they gave us the Great GameStop Stock Uprising. Who knows what this week will bring.
One thing for sure: we’ll be seeing more of it. More and more of us have learned to game the system, whether for a noble cause or, as they say, “for the lulz.” If a meme of Bernie Sanders in mittens can distract us amid a presidential inauguration and a Reddit message board can send Wall Street big shots running in panic, perhaps some good can come out of this, too. Right?
“The internet can democratize access, upsetting power dynamics between the people and traditional institutions,” tweeted Tiffany C. Li, a law professor and tech attorney focusing on privacy and technology platform governance.
With GameStop, she added in an interview Friday, the goal was to upset the interests of a few large hedge funds.
“But in other places the goal can be more nefarious. Online spaces are being used to radicalize people toward extremism, to plan hate crimes and attacks,” she said. “The internet isn’t really the villain or the hero.”
Jason Wilkinson had dabbled in stocks but took a deeper dive into the Reddit forum WallStreetBets after losing his job at a tech company in the pandemic. The 30-year-old New York City resident started trading between other part-time jobs doing motorcycle delivery and sharpening knives, and started buying shares in GameStop back in November.
“I went from a $9,000 position up to about $30,000 as of last night. Today I lost 10 grand,” he said Thursday. “I didn’t sell. I’m going to hold. It’s been an emotional week, let’s say that.”
As with many crowd movements, it was hard to trace where it all started, though there were at least a few high-profile instigators. Among them was Roaring Kitty, a YouTube personality from a Boston suburb who became a legendary fixture on the Reddit forum, expressing an early interest in buying GameStop shares and inspiring a growing legion of followers to pore through its financials.
The Reddit-based investors used the chat platform Discord to fire each other up and the trading app Robinhood to buy shares with a few clicks on their smartphones. They soon found a shared enemy in hedge fund managers who tried to short the stock, encouraging each other to keep buying GameStop and push it ever higher –“to the moon.”
Wilkinson said the forums this week probably struck newcomers as “really, really childish and crazy,” full of rocketship emojis, calls to pump stocks written to the tune of sea shanties and a flood of newcomers trying to jump on the bandwagon, but he said that’s not been his usual experience there.
“Some of the people who are on that thread are probably on par with the stock pickers of these hedge funds,” he said. “It’s knowing how to know who to listen to and who to ignore. It’s really just a bunch of people sharing ideas. It’s the same thing as when Jim Cramer gets on CNBC smashing buttons.”
In 2017, the hashtag “MeToo” began going viral as women — and some men — shared their experiences of sexual assault on social media. Though the term was coined in 2006 by activist Tarana Burke, a confluence of the political climate, the case against Harvey Weinstein and the rise of social media allowed the movement to take off 11 years later. Social media also helped Black Lives Matter activists organize rallies, record police violence and communicate during the marches sweeping the U.S. and other countries following the death of George Floyd last summer.
But the mass movement that emerged from online communities designed to let amateur stock traders share tips came as a shock to Wall Street.
“What these communities are doing is a gray area,” said Allen Tran, 23, the administrator of a popular Robinhood trading group on Facebook that was temporarily shut down amid the frenzy. “The group mindset is where things can get iffy and get co-ordinated.”
Sinal Aral, director of the Massachusetts Institute of Technology’s Initiative on the Digital Economy, said the social media frenzy disrupting the stock market this week has parallels with the disinformation campaigns affecting national elections and the movement that led up to the Capitol riot — all situations where it can be hard to assign blame.
“There’s an important distinction between an actor who is co-ordinating manipulation, and a retail investor who gets caught up in the movement,” he said. “We witnessed those two types of people in the Capitol riot as well.”
One thing distinguishing the GameStop rally from more nefarious crowdsourced actions is that it’s less about misinformation than about co-ordination. It’s not clear whether or how the actions of those who instigated might have crossed the line into market manipulation.
Tran said some forums have a problem with “front loaders” who purchase a large stock position, drum up enthusiasm for it and profit off “the hype that follows.”
The involvement of platforms like Robinhood also called to mind broader concerns about how many phone apps are designed in a way that reinforces people’s compulsivity. Buy shares on the app and you get a celebratory notification with digital confetti.
“They’re essentially activating the dopamine reward systems of our brains,” Aral said.
So if the internet isn’t the villain or the hero, how do we mitigate the harms while keeping it open for positive forces?
“There are ways to do this but it is a difficult balance,” Li said. “You don’t want to take down everything or censor everything so much that people can’t use it for good.”
TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.
No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.
About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.
Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.
Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.
A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”
This report by The Canadian Press was first published Sept. 12, 2024.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
