The True Story Behind Wall Street Scandal Movie ‘Dumb Money’

The GameStop stockbroking scandal that rocked Wall Street is getting the Hollywood treatment in a new movie Stupid money.

A timely drama based on the 2021 book by executive producer Ben Mezrich Asocial network, tells the true story of an amateur stock trader who turned the Wall Street system into a democratized money factory. Starring Paul Dano, Pete Davidson, Vincent D’Onofrio, America Ferrera, Nick Offerman, Anthony Ramos, Sebastian Stan, Shailene Woodley and Seth Rogen, the film was directed by I, Tonyais Craig Gillespie.

Dano plays the real-life Keith Gill, a financial analyst and amateur investor known as the creator of the “Roaring Kitty” video on Twitter and YouTube. Beginning in 2019 on a subreddit dedicated to day trading stocks, Gill urged followers to invest in video game retailer GameStop Corp. (NYSE: GME ), driving up its price by 1,700 percent and forcing short sellers — including hedge fund billionaires — into what’s known as shorting the stock.

“A lot of people feel the system is broken,” Dano as Gill says in the film’s trailer, which offers a glimpse into the shocking consequences of the online campaign. “The whole idea of ​​the stock market is if you’re smart and maybe with a bit of luck you can get rich – certainly not anymore. There’s no hope for the little man… Maybe there is now.”

Events from Antisocial network and Stupid money they’re rooted in the concept of short selling, “the practice of borrowing stocks for a fee and selling them at an (ideally) high price, then buying them back at an (ideally) lower price to get them back,” according to The Verge’s Elizabeth Lopatto.

It is a risky investment strategy because the short seller is speculating that the company’s stock prices will fall; if they go up instead, they will not only lose money, but will be forced to cover themselves or buy shares, further pushing up the price. “The losses are unlimited,” it says GuardRob Davies, “because there is no defined upper limit to how much a stock can go up.”

That phenomenon, the short squeeze, is what professional investors like hedge fund managers try to avoid when betting against a drop in the stock price of the company being bet on. GameStop, which has been selling video games in brick-and-mortar stores since 1984, has become a prime example of such a company by 2020.

Pete Davidson and Paul Dano in ‘Dumb Money’.

Claire Folger

Trevor Noah (as Margot Robbie!) tries to explain how the internet mob drove up GameStop stock

Around that time, as COVID-19 began confining people to their homes, amateur stock trading made available through social media and investing apps like Robinhood grew in popularity. On Reddit threads like r/WallStreetBets, everyday investors looking to make a quick buck began to notice that hedge funds like Melvin Capital had taken large short positions in companies whose stock prices were expected to fall.

GameStop’s champion as a company worth investing in as of 2019 was Gill, whose videos offering financial analysis garnered enough of a following that they began to drive the company’s stock price up dramatically in January 2021 — up 1,700 percent overall, per The New York Times.

Internet “chat room usurpers” who rallied around the idea began to see it as a legitimate cause, a way to hold short sellers like hedge fund managers accountable and expose the flaws in the Wall Street system, as he reported at the time Bloomberg’s Brandon Kochkodin.

As Gill himself later told The Wall Street Journal he “wasn’t a rebel looking to take on the establishment, just someone who believed investors could find value in unloved stocks,” yet he was called to testify before the US House Financial Services Committee for his role in the GameStop brief .

America Ferrera in ‘Stupid Money’.

Claire Folger

“If they were going to the moon, I wanted to go too,” said single mother and nurse Kim Campbell TIME buying 100 shares of GameStop when prices were still low. She is the real inspiration for the film Stupid moneyJennifer Campbell, played by Ferrera.

TIME reports that Campbell sold only five of her shares, making a hefty profit, but kept the rest to keep the hedge funds in the loop — a move echoed by Gill’s other followers and other everyday investors. “I thought, ‘I want money,’ but then it turned into representing a lot more,” she said.

10-year GameStop investor sees huge return on shares he got on Kwanzaa: ‘I felt shocked’

Nick Offerman and Seth Rogan in the movie ‘Dumb Money’.

Lacey Terrell

The amateur investor community was then outraged when trading app Robinhood froze trading on GameStop and similar companies (such as AMC cinemas, Blackberry and Build-A-Bear Workshop) “to protect their customers” at the end of January 2021, limiting the phenomenon of short-term pressure . Accused by the Securities and Exchange Commission of misleading customers about trading revenue, Robinhood has agreed to pay $65 million in a settlement. Hedge funds such as Melvin Capital also suffered significant losses.

Never miss a story — sign up for PEOPLE’s free daily newsletter to stay up-to-date on the best PEOPLE has to offer, from juicy celebrity news to compelling human interest stories.

The controversy attracted mainstream media attention, including from billionaire Elon Musk. Just two years later, Gillespie brought the story to celluloid with an all-star cast. The director told PEOPLE that he was inspired to do it Stupid money because his son was one of GameStop’s investors at the height of the short-lived crisis.

“Robinhood froze the call option, the shares were created and then [came] anger, anger and frustration at feeling that the system is inherently rigged against them,” he said. “I got to feel it all and see it and the memes, all through it, and just that incredible frustration. So it was this incredibly emotional journey.”

Stupid money now playing in cinemas.

Categories: Trends
Source: HIS Education