GAMESTOP: SARDINES AGAINST SHARKS?

Nicola Porro | Economia e Finanza by Leopoldo Gasbarro |February 2021

With the GameStop affair, the world witnessed the assault on the financial sector by social media: hundreds of thousands of Sardines – members of an Italian political movement known as Sardines movement – joined forces on Reddit and, through Wallstreetbets, formed an enormous shoal which defeated the sharks of hedge funding (such as Melvin Capital), known to bet and profit from companies’ and countries’ defaults. 

The GameStop affair required the involvement of regulators and shocked the members of the establishment, including Janet Yellen, the United States secretary of the treasury.

However, the very same members of the establishment tend to overlook the Tesla affair: the stock value of Elon Musk’s company is over 800 billion, more than all car manufacturers combined (Toyota, Volkswagen, Audi, Bugatti, Porsche, Mercedes, Ferrari, GM, Renault, Nissan etc.). In other words, each Tesla car capitalizes 1,25 million dollars. Luckily, the monopoly is coming to an end: today, people do not hesitate in choosing a Porsche Taycan over a Tesla Model S.

In a Tweet, Elon Musk, the new King Midas, baptized the operation GameStop: this is no coincidence, since the Melvin Capital fund dared to bet against Tesla in the past. 

Elon Musk promises to fly us to Mars. In the meantime, we remain in our beloved, beautiful Country with our master craftsmen, such as Brunello Cucinelli – even if he is worth “only” 2,4 billion euros, he is one of our many excellences. 

There are two risks connected to the GameStop affair: the first is that finance could come to be seen as gambling, distancing even further Italian families and companies from the possibility of investing their 1.700 billion euros. The second risk is that it may attract some of the most naïve people, who think they might easily become millionaires. 

In Italy, the risk is limited. However, the phenomenon of online trading is not new: it began in 1999 and established itself over the years. Today the market looks very condensed and 5 brokers – Fineco, IW Bank, Webank.it Banco BPM, Sella and Directa Sim – control 80% of the market. 

20 million Italians have a current account with online access. 3,6 million of them have a securities account, but only 2,2 million of them manage their securities portfolio online. 

Active traders (at least one executed order a week) are about two hundred thousand, while heavy traders (more than one executed order a week and intraday activity) are fifteen thousand. 

A survey conducted by FINER Finance Explorer on a sample of 1.000 traders reveals that traders are very satisfied with platforms (85%) and costs (72%); half of them (51%) feels gratified, even though one third (34%) has lost money.

In an age of uncertainty, it is important not to underestimate the DIY trend. Financial advisors and bank managers should take up the challenge and, through the value of their advice, overturn the old saying “if you want something done right, do it yourself”. 

Nicola Ronchetti