Starting on Friday, redditors on the subreddit r/WallStreetBets began to target Wall Street short sellers — market makers and hedge funds that bet on the price of a stock falling. It began with GameStop, the go-to store for GameCube games in middle school. Now that gamers frequent online stores, and thousands of GameStop stores have closed, hedge funds were sure the retailer’s stock would continue to decrease. Therefore, they bet boatloads of money to make a profit.
For those of you who are unfamiliar with short selling, according to Refinery29 Work & Money writer Whizy Kim, it works like this: “Step one, borrow shares from someone else. Step two, sell them right away. Step three, wait for the stock price to drop and buy the same number of shares you borrowed. Step four, return the borrowed shares and make a profit from the difference in price.” So when redditors decided to pour their money into GameStop, thus increasing the company’s stock price from $18.84 on New Year’s Eve to over $250 at the time of writing, all of the hedge funds involved were forced to sell their stock at a loss. GameStock’s valuation skyrocketed — on Tuesday, its value exceeded $10 billion.
Quick update on today’s trading:
Express Inc: +245%
AMC Theatres: +230%
Blockbuster Video: +181%
GameStop: +125%
Nokia: +50%
Build-A-Bear: +45%
BlackBerry: +24%
Bed Bath & Beyond: +23%
Tootsie Roll: +14%— Jon Erlichman (@JonErlichman) January 27, 2021
The same is happening to other ‘00s forgotten brands like Build-A-Bear, Blockbuster, and BlackBerry, that have been stored away in the back of our brains, only to be brought up in conversations about childhood birthday parties and Brick Breaker. Fashion may also have gotten hit. According to a tweet by Bloomberg anchor Jon Erlichman, clothing store Express’ stock spiked 245% yesterday. Despite the fact that Wedbush analyst Jennifer Redding told Bloomberg that the Ohio-based retailer is “hemorrhaging cash” as a result of the pandemic, more than 350 million Express shares were traded on Monday — a record high for the clothing chain — and their shares nearly doubled.
According to Business of Fashion, Express isn’t the only fashion brand that may be on Reddit’s radar. The publication speculates that WallStreetBets’ next conquest could be mom brands. Analysts who spoke to BOF shared that the same small investors from WallStreetBets that bought stock in GameStop, Blockbuster, and more, are now readying to do the same with stock for mall brands like J.Jill and Chico’s, especially since restrictions have been put in place to slow the trading of GameStop and AMC shares.
Despite the surge in demand for beige, boxy button-downs layered over turtlenecks and cuffed, wide-leg trousers in fashion — comfortable, neutral clothing that appealed to moms of the ’90s and ’00s, the stores that were known for them have been struggling over the years. The pandemic has made it worse. According to WWD, the parent company to retailers like Chico’s, White House Black Market, and Soma, lost $178 million during the first wave of the pandemic; in December, Retail Dive reported that J.Jill remained in a $24.1 million loss, with sales down 30% in Q3.
According to Susan Anderson, a B. Riley FBR analyst who was quoted in BOF, because some fashion retailers have such low market capitalizations, meaning that it’s cheaper to infiltrate their stock, they are perfect targets for Reddit’s next round of, “What brand can we tear down Wall Street with next?”
Of course, even if WallStreetBets members do throng to J.Jill and Chico’s stock, thus increasing the price and value, that doesn’t necessarily mean that either will survive in the long run. As we’ve learned from the J.Crews and Lord & Taylors of the world, mall mainstays have been failing to capture the interests of the internet-savvy consumer even pre-pandemic. And despite the fact that the Diane Keaton-in-Something’s Gotta Give aesthetic is on the up-and-up in fashion — as shown by the clogs and billowy shirts trending right — from where we’re sitting, it doesn’t look like the brands who flaunted them in the past will be invited along for the ride.
Refinery29 reached out to Express for a comment but had not yet heard back at the time of publishing.
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