Who Participated in the GameStop Frenzy? Evidence from Brokerage Accounts

Finance Research Letters, 102140; TAF Working Paper No. 58/February 2021

16 Pages Posted: 25 Feb 2021 Last revised: 8 Jun 2021

See all articles by Tim Hasso

Tim Hasso

Bond University - Bond Business School

Daniel Müller

Paderborn University

Matthias Pelster

Paderborn University

Sonja Warkulat

Paderborn University

Date Written: February 15, 2021

Abstract

In January 2021, the GameStop stock was the epicenter of the first case of predatory trading initiated by retail investors. We use brokerage accounts to study who participated in this GameStop frenzy and how they performed. We investigate the extent to which investors’ personal and trading characteristics differ from the general population of retail investors. GameStop traders had a history of investing in speculative instruments, including stocks with lottery-like features. They were also more likely to close their positions before the peak of the bubble. At the onset of the frenzy, numerous retail investors also shorted GameStop. Overall, our results indicate that the GameStop frenzy was not a pure digital protest against Wall Street but speculative trading by a group of retail investors, in line with their prior high-risk trading behavior.

Keywords: Predatory Trading, Retail Investors, Trading Behavior.

JEL Classification: G11, G40, G41

Suggested Citation

Hasso, Tim and Müller, Daniel and Pelster, Matthias and Warkulat, Sonja, Who Participated in the GameStop Frenzy? Evidence from Brokerage Accounts (February 15, 2021). Finance Research Letters, 102140; TAF Working Paper No. 58/February 2021, Available at SSRN: https://ssrn.com/abstract=3792095 or http://dx.doi.org/10.2139/ssrn.3792095

Tim Hasso

Bond University - Bond Business School ( email )

Gold Coast
Australia

Daniel Müller

Paderborn University ( email )

Warburger Str. 100
Paderborn, 33098
Germany

Matthias Pelster (Contact Author)

Paderborn University

Warburger Str. 100
Paderborn, 33098
Germany

Sonja Warkulat

Paderborn University ( email )

Warburger Str. 100
Paderborn, 33098
Germany

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