The GameStop stock saga is a long, twisted affair with a "lotta ins, lotta outs, lotta what-have-yous," in the words of The Big Lebowski's The Dude, who might just have bought some $GME himself if the timing was right. 

After all, the meme-stock craze began years ago in a small corner of the internet called r/WallStreetBets, a Reddit community with a penchant for low-brow humor and a sometimes detective-like understanding of the stock market. 

Since then, however, GameStop has become a household name. Lawmakers, tech billionaires, and probably your grandma have something to say about the retail trading frenzy that in January pushed GameStop's stock, which had languished in recent years, into the stratosphere. 

On Thursday, the conversation around GameStop moved to a more formal setting: Capitol Hill, where the House Financial Services Committee held a hearing including testimony from the likes of Reddit, the hedge funds Citadel and Melvin Capital, the retail trading app Robinhood, and, for good measure, a day trader known as "Roaring Kitty" or another handle that can't be repeated in polite company.

Cheddar has pulled together a rough timeline of the GameStop tale, from its inauspicious beginnings to becoming one of the biggest stories out of Wall Street since the crash of the housing market. 

Prehistory

2012: Jaime Rogozinski, who at the time was working as a technology consultant for Inter-American Development Bank, created the Reddit community /WallStreetBets. With one foot in the world of finance and another in the free-wheeling world of internet posting, Rogozinski helped form the channel's culture of mixing expertise with amateur recklessness. The tagline, "Like 4chan found a Bloomberg terminal," became the modus operandi of the community, and over the years it attracted big names, such as "Pharma Bro" Martin Shkreli, and countless anonymous day traders proclaiming YOLO as they sank their money into long-shot investments. 

February 2020: Reddit user and /WallStreetBets member "delaneydi" makes the bull case for GameStop despite its low earnings, saying their confidence wasn't based on a short-term turnaround or business expansion but rather "a deep value play."

March 2020: The coronavirus pandemic hit the U.S., and brick-and-mortar retailers of all stripes hunkered down for a rough year. GameStop, which had already been struggling to keep up with online competitors, made headlines after sending a memo to employees stating that it would stay open despite state lockdown orders because it was an "essential" retail business. The memo sparked a backlash from both employees and lawmakers, however, and the embattled retailer eventually shut down all of its stores in late March. Earlier that month, Cheddar explored the future of the company amid industry headwinds. 

December 2020: GameStop reports in its third-quarter earnings that sales are down 30 percent from the prior year, even as e-commerce sales surged 257 percent year-over-year.

January 2021: The retailer appoints three new directors who were formerly head-honchos at Chewy, the online retailer for pet food that has seen explosive growth in recent years. The news inspires some Reddit investors to start buying $GME. On January 11, when the leadership changes were announced, the stock popped 12 percent. Two days later, the game was on, with short-sellers and Redditors driving up the stock another 27 percent.  

Day Traders vs. Short Sellers 

At this point, the narrative shifted into a day-to-day, week-to-week story, as retail investors duked it out with hedge funds possessing large short positions. Here are a handful of the highlights: 

Jan. 19: The battle between retail traders and short sellers got personal. Citron Research, headed by notorious short-seller Andrew Left, tweeted that $GME buyers are "the suckers at this poker game." The /WallStreetBets channel, meanwhile, featured a daily torrent of internet smack talk about the short-sellers — the highest-profile of which were Citron, Melvin Capital, and Citadel.  

Jan. 22-28: GameStop shares continue to surge, hitting a peak of $483 per share on Jan. 28. Two days earlier Melvin Capital closed out its position at a massive loss. 

Jan. 28: Robinhood and other retail trading platforms controversially curb trading of GameStop and other meme-stocks such as Nokia, AMC, and BlackBerry. The move sparks an outcry from online traders and a seriously mixed bag of high-profile supporters, such as Tesla CEO Elon Musk, Republican Sen. Ted Cruz, and Democratic Rep. Alexandria Ocasio-Cortez.

Jan. 29: Citron Research announces that it will no longer publish short reports and will instead focus on long positions after closing out its short position on GameStop at a 100 percent loss. 

Other short sellers, meanwhile, racked up nearly $20 billion in losses. 

Aftermath

Feb. 1-4: GameStop shares began to drop off, even as retail traders went after other shorted stocks, all of which failed to see the same meteoric rises as $GME. With the encouragement of Elon Musk, meanwhile, the Reddit-fueled frenzy turned its sights on the joke cryptocurrency dogecoin, another online investing fad that failed to launch — though not for lack of trying from Musk.  

Other high-profile supporters of retail traders, such as former Democratic presidential candidate Tom Steyer, chimed in, telling Cheddar the situation was about "economic justice."

On the flip side, some started to question if the Redditors' behaviors constitute market manipulation (a likely topic of discussion at this week's hearing) though one legal expert told Cheddar this might be hard to prove. 

"The core thing that they have to show is that the defendant intentionally committed a manipulative act, and the federal courts actually disagree a lot about what constitutes a manipulative act," said Gabriel Rauterberg, a professor and expert in securities law at the University of Michigan Law School. 

Feb. 5: Rep. Maxine Waters (D-Calif. 43rd District), chair of the House Committee on Financial Services, told Cheddar her goals for the hearing scheduled on Feb. 18 would be to delve into the GameStop frenzy and, in particular, the role of Robinhood in curbing trades. 

"I am not starting this hearing taking sides or believing that Robinhood is guilty of anything," she said. "As a matter of fact, this hearing is going to be educational. It's going to be a learning experience for everybody." 

Feb. 16:  While the various stakeholders prepare for a barrage of questions from Congress members, Cheddar provided a preview of what to expect from the hearing.  

For more insight, Stephen Mathai-Davis, co-founder and CEO of Q.ai and an active member of /WallStreetBets, explained to Cheddar how the GameStop saga is changing investing culture.

For real-time coverage of the hearing, check out Cheddar's live blog, which will begin with the hearing at noon on Thursday, February 18. 

Feb. 18:  The hearing on Thursday was a fitting wrap-up to a complex and contentious issue. Lawmakers questioned the high-profile line-up of attendees, including hedge fund managers, tech CEOs, and a lone retail trader, on topics such as high-frequency trading, financial transaction taxes, dark pools, deposit requirements, settlement periods, and customer service.

Most of the questions were addressed to Robinhood CEO Vlad Tenev, who throughout his testimony pushed back against accusations that the firm colluded with market maker Citadel Securities on its decision to restrict purchases of GameStop shares and other meme-stocks at the height of the retail trading frenzy. 

The tenor of the hearing was largely exploratory, with some lawmakers just using the time to break down and explain what is inarguably a complicated set of topics. 

Some Congress members went for the jugular, however, questioning the basis for Robinhood's entire business model, including the role of payment for order flow and its tight-knit relationship with market makers such as Citadel Securities.

As for Keith Gill, aka Roaring Kitty, who to sympathizers must have looked like the lone David in a room of Goliaths, doubled down on his commitment to GameStop itself, which was conspicuously absent from much of the conversation.  

"As for me, I like the stock. I am as bullish as I've ever been on a potential turnabout for GameStop, and I remain invested in the company," he said.

Updated on February 18, 2021, at 3:29 p.m. ET with updates.

Share:
More In
No more stories