‘Dumb Money’ movie thrusts GameStop saga into spotlight, but don’t expect a meme stock spike

The meme stock phenomenon that sent shares of GameStop Corp. skyrocketing to dizzying heights in 2021 is getting the Hollywood treatment in the new movie “Dumb Money,” which hits select theaters Friday, but don’t expect any repeat of the events of 2021, says Dan Raju, CEO of cloud-based financial services provider Tradier.

“[The movie is] expected to create quite a bit of conversation, but as far as impacting any security or stock, there has been a graduation in the market, so I don’t expect that,” he told MarketWatch.

 like fellow meme stock darling AMC Entertainment Holdings Inc. 
 was a major beneficiary of the meme-stock buying frenzy in January 2021. Boosted by the WallStreetBets crowd on Reddit, the struggling video game retailer’s shares were sent soaring. Between January and March 2021, GameStop’s stock price rose more than 1,200% and the company’s market cap surpassed $17 billion. GameStop’s market cap is now $5.6 billon.

Related: GameStop’s meme-stock saga will get Hollywood treatment in ‘Dumb Money’ movie

The meme stock buying frenzy of February 2021 had its roots in a fundamental reset of the market sparked by the Covid-19 pandemic, according to Raju. This phenomenon was fueled by people suddenly at home, spending less money, as well the influx of government stimulus checks. “There was an opportunity for them to engage – it created this echo chamber around WallStreetBets, Twitter, and Discord,” Raju added.

But the Tradier CEO notes that “the reality has changed,” citing a “graduation effect” on the part of retail investors. “People have learned to work the market better than before,” he said.

For Raju, the golden age of the meme stock rally is clearly over. “I had predicted that meme stock rallies will taper off,” Raju added. “It will never be zero, because of the emergence of the new social trader, but those ideal hype chambers don’t exist anymore.”

Related: Is the golden age of the meme stock rally over?

“Dumb Money” tells the story of fortunes won and lost overnight “in the David-vs.-Goliath short squeeze that might have ended up changing Wall Street forever,” says filmmaker Black Bear Pictures, on its website.

The Sony Pictures movie stars Nick Offerman as Citadel CEO Ken Griffin and Seth Rogen as Melvin Capital Founder Gabe Plotkin. Mets owner and CEO of Point72 Asset Management Steve Cohen is played by Vincent D’Onofrio. Meme-stock guru Keith Gill, aka Roaring Kitty, is played by Paul Dano. Shailene Woodley, America Ferrera, and Pete Davidson also star.

The movie is directed by Craig Gillespie, who also directed “I, Tonya,” and “Cruella.”

Related: GameStop and AMC fundamental financials ‘remain concerning,’ analyst says

Tradier’s Raju told MarketWatch that there are a number of misconceptions about the meme stocks phenomenon of early 2021. “There’s more to it than just institutions versus first-time investors,” he said. For example, many of the people buying were older investors with experience in the markets. “The volatility that these short squeezes generate also attract the more sophisticated investor … the fuel on the fire was not the early stage investor, but the late stage investors.”

He also notes that a lot of options were traded during the major meme stock rallies. “Options are typically more advanced instruments of trading,” Raju added.

“Dumb Money” is set for general release on Sept. 29.

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