Dumb Money: The crazy true story behind the GameStop movie

The real story of how Reddit users outfoxed Wall Street

Pete Davidson and Paul Dano in Dumb Money. (Black Bear)
Pete Davidson and Paul Dano in Dumb Money. (Black Bear)

Utilising a starry ensemble cast, Dumb Money dramatises the wild true story of how a group of Reddit users spotted an opportunity to outsmart Wall Street - and took it.

The film, directed by Cruella helmer Craig Gillespie, is based on the bestselling book The Antisocial Network which chronicled something which has since become known as ‘The GameStop Short Squeeze.’

Taking place in January 2021, the event saw a bunch of unlikely internet users turn the tables on hedgefund owners by betting against the fall of the American video game store chain.

Read more: Dumb Money trades in middling drama

Starring the likes of Paul Dano, Pete Davidson, Vincent D’Onofrio, Nick Offerman, Shailene Woodley and Seth Rogen, Dumb Money is an underdog story for the digital age.

Here’s the real story that inspired it...

Is Dumb Money based on a true story?

Paul Dano in Dumb Money. (Black Bear)
Paul Dano in Dumb Money. (Black Bear)

It may sound unlikely but a group of bedroom-based Reddit users really did attempt to outwit Wall Street professionals by playing their own game against them. This was the result of a number of different opportunities — some based in the real world, others based online.

Back in early 2021, the American video game retailer GameStop was struggling due to the rise of digital purchases and the aftermath of the pandemic which had impacted retail on many levels.

As a result, the company’s stocks began to fall, and investors in turn began selling these stocks via a method called short selling after comments from a stock market analyst suggested they may continue to fall even further.

What is Short Selling?

Seth Rogen in Dumb Money. (Black Bear)
Seth Rogen in Dumb Money. (Black Bear)

Short selling is where investors borrow a company or product’s shares and then sell them straight away with the goal of buying them back later at a lower price. They then return their borrowed shares and skim a profit off of the difference in price which has occurred as a result of the process.

This can be risky, as share prices can rise or fall considerably due to any number of circumstances which could then leave investors cornered when stock prices suddenly rise.

FILE - In this May 7, 2020 file photo, a GameStop store is seen in St. Louis. Two hedge funds are bowing out of their short positions on the money-losing video game retailer. Citron Research’s Andrew Left said in a video posted on YouTube that his company is going to become more judicious in shorting stocks. Melvin Capital is also exiting GameStop, with manager Gabe Plotkin telling CNBC that the hedge fund was taking a significant loss. (AP Photo/Jeff Roberson, File)
Video game store GameStop was at the centre of the story behind Dumb Money. (AP Photo/Jeff Roberson, File)

If this happens, they typically have to buy back their recently-sold borrowed stock as quickly as possible to avoid mounting losses — but this in turn can lead others to do the same, raising the overall value of the stock.

How did Reddit impact ‘The GameStop Short Squeeze’?

Nick Offerman and Seth Rogen in Dumb Money. (Black Bear)
Nick Offerman and Seth Rogen in Dumb Money. (Black Bear)

Meanwhile, in a stock-obsessed subreddit named r/WallStreetBets, a group of amateur stock market enthusiasts believed that GameStop’s stock was being undervalued and spotted an opportunity to initiate a short squeeze that would drive up their price and force sellers to yield their shares at big financial losses.

Due to this short selling, GameStop’s stock price rose by 1500% in the course of just two weeks, thanks to many Reddit ‘investors’ who were primarily teenagers. This was exasperated further when Elon Musk tweeted about the developing situation, raising the store’s stock price even higher.

Noticing that their plan was working, members of Reddit’s online community also triggered similar short-squeeze tactics on companies like the cinema chain AMC Theatres. A halt was eventually placed on stock price purchasing but by this point, industry traders were furious, with many left wanting to take legal action against Reddit users who had started the short squeeze and played them at their own game.

Shailene Woodley and Paul Dano in Dumb Money. (Black Bear)
Shailene Woodley and Paul Dano in Dumb Money. (Black Bear)

GameStop’s stock ultimately fluctuated in value and when all was said and done, the short sellers who had bet in favour of its decline ultimately found themselves suffering large financial losses.

It was later reported that short sellers may have lost around $6billion due to the Reddit-induced squeeze but Reddit users were also found to have made losses too amid the chaos, with some reportedly losing their entire savings.

UKRAINE - 2021/02/19: Keith Gill, known on Reddit under the pseudonym DeepFuckingValue and as Roaring Kitty, is seen on a fragment of a youtube video displayed on a smartphone screen in front of GameStop logo. (Photo Illustration by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images)
Keith Gill was instrumental in the GameStop saga. (Getty Images)

In Dumb Money, this story is told to us via Keith Gill (Dano), a financial advisor and investment commentator who was largely responsible for driving up GameStop’s stock prices through his posts on r/WallStreetBets and his YouTube channel.

His ability to spot this opportunity and quickly act on it is believed to have helped him turn a $53,000 investment into a $50 million return. Regulatory bodies later suggested Gill had manipulated GameStop’s stock price but this was later disproved by the Securities and Exchange Commission.

Dumb Money is out in cinemas now. Watch a trailer below.