Dumb Money, currently playing in theaters across the country, is based on the book The Anti-Social Network by renowned chronicler of capitalism Ben Mezrich, who also wrote the book about Facebook that was adapted into the movie The Social Network. This newest movie tells the story of the 2021 financial event known as “the GameStop short squeeze.” It’s possible to remember the GameStop short squeeze from when it was happening and people were talking about it, without knowing much about what it was. That’s because it’s a story about two subjects — complicated financial instruments and message board drama — that aren’t most people’s favorites. You can absolutely watch Dumb Money without knowing anything about what happened, and have a good time. However, though it is similar in tone to The Big Short, another finance comedy, that movie supplied some baseline knowledge in brazen scenes of exposition, where celebrities like Margot Robbie and Anthony Bourdain explain to the camera how financial markets work. Dumb Money doesn’t have anything like that. But don’t worry, I will be your Margot Robbie. Below is a quick primer on short squeezes, meme stocks, and the Reddit of it all.


What Is ‘Dumb Money’ About?

Paul Dano as Keith Gill in 'Dumb Money'
Image via Sony Pictures

The protagonist of Dumb Money is Keith Gill, played by Paul Dano. When the story starts, Gill was a middle class financial analyst with a YouTube channel, where, under the nom de plume “Roaring Kitty,” he gave out friendly investing advice. On camera, Gill reminds you of Fred Rogers or Bob Ross — there’s an aura of soothing togetherness, (which Dano captures well). Gill also posted on the Reddit board r/WallStreetBets, where posters, with varying levels of expertise, discuss stock trading, often using an insular jargon, and in a profane and frequently offensive style; his username there was DeepFuckingValue.

Gill became known as the frontman and unifying force behind a mass movement of individual, or “retail” investors (known pejoratively in the business as “dumb money”), all of whom were suddenly purchasing stocks in the brick-and-mortar video game retailer GameStop. Enough individual investors bought enough shares of GameStop that it tilted the market and ended up costing some institutional investors serious money. In the film, the biggest loser is Gabe Plotkin, played by Seth Rogen. In real life, Plotkin was the founder and manager of Melvin Capital, a multi-billion dollar hedge fund that was forced to close its doors by the losses it took during the GameStop short squeeze. But how? And what is a short squeeze?

Short Selling Is a Way To Bet That a Business Will Fail

Nick Offerman and Seth Rogen as Kenneth C. Griffin and Gabe Plotkin in Dumb Money
Image via Sony Pictures

Betting that something will increase in value is pretty natural. We invest in our own futures, and in the future of our families, all the time, without even thinking of it as particularly financial. But betting that something will decrease in value, that someone will fail, requires more complex instruments. You may think that your friend’s younger cousin will eventually get fired from their paper route. But it’s not so easy to make money off of your prediction. Short selling is a way to make money betting against a company. A stock is selling at one dollar a share. You think it will drop to a quarter. You borrow one thousand shares, sell them immediately at their current price of a dollar each. If they go down in value, you buy a thousand shares at the lower price, and return them to the entity you borrowed them from. However, there’s a clear risk. If the stock price goes up, you will lose money when you buy it back for more than you sold it for. And you have to buy it back, that’s the deal. Worse, there’s the dilemma of, if the stock doubles in price, should you buy it back and accept the loss? Or wait, and hope it goes back down. But what if it goes up even more? Experts like to say that, in short selling, the potential losses are infinite, which is a line that gets spoken in the film.

Investors had short sold amounts of GameStop stock at historic levels. Well over 100% of GameStop’s publicly available shares had been shorted, which means that some of its shares had been shorted more than once. This unbelievable amount of pessimism in GameStop’s future as a business was motivated in part by the fact that the COVID-19 pandemic was keeping people away from brick-and-mortar stores, and that long term, the business model would be fall by the wayside as consumers became more likely to purchase and download video games online. However, this overconfidence left some major financial players vulnerable to the short squeeze.

A Short Squeeze Turns the Tables on Short Sellers

A still from the film Dumb Money featuring Kevin Gill, portrayed by Pete Davidson
Image via Sony Pictures

When the price goes up on short sellers this is known as a short squeeze, and a disciplined group of investors can cause it to happen by buying up a stock and resisting the temptation to sell it, even as the price goes up. The origins of the mass support for GameStop are murky. But it’s easy to see how the amounts that investors were betting against GameStop, a place that there are some fond memories of, could be interpreted as Wall Street betting against people — against the idea of people. (Readers will be upset to know that the other well known short from this time was for movie theater chain AMC. They didn’t believe in the future of the cinema either!) Gill was among those who began promoting the idea of investing in GameStop, and he himself invested in it heavily while the stock was still very cheap.

Then, suddenly, the idea of investing in GameStop took on a life of its own. Buying the stock became seen as a way to get revenge on the capitalists who were hoarding all the resources, and who thought they knew better than the rest of us. It was a whole mishmash of emotions. But solidarity among investors in the stock, on WallStreetBets and other social media platforms, created the discipline needed to execute the squeeze. And Reddit jargon was useful in maintaining this solidarity. Dumb Money, which depicts numerous fictional working class investors who get caught up in the movement, gets a lot of mileage out of phrases like “diamond hands,” which means “hold on, don’t sell.” The term “meme stock” was invented to describe stocks whose spike in demand was socially organized in this way.

RELATED: ‘Dumb Money’ Review: Craig Gillespie Makes ‘The Big Short’ For the Reddit Generation | TIFF 2023

‘Dumb Money’ Plays With the Idea That Institutional Power Was Leveraged To Thwart the GameStop Uprising

A still from the film Dumb Money featuring Vlad Tenev, portrayed by Sebastian Stan
Image via Sony Pictures

When lots of people buy up a stock, its price goes up. However, they all need to be aligned to have a powerful effect. Numerous films, from It’s a Wonderful Life, to Trading Places, have shown how quickly the mood of a mass of people can swing. In Dumb Money, working class investors are hoping to bleed some money off of the billionaires who every day do most of the buying and selling of the world. They coordinate and calibrate this emotion over the internet. But they also use a technical innovation to buy and sell stocks; in this case, most of the investors use the Robinhood app, which made fee-free trading available to just about everybody, leading to an increase in the number of retail traders. As the name of the company implies, the app is marketed on the idea that it allows the poor to steal from the rich.

The developers of Robinhood are played in Dumb Money by Sebastian Stan and Rushi Kota, and the last act is driven by their seeming betrayal of their user base and their company ethos. This was a major scandal in real life. Just as the value of GameStop shares were soaring, and short sellers were losing billions of dollars, Robinhood shut down the ability for its users to buy GameStop stock on their app. The film makes it clear that this is because Vlad Tenev, played by Stan, is doing the bidding of the managers of the hedge funds that wield enormous power over his business. This was never definitively proven in real life, but the decision to shut down trading reeked of unfairness. The stock never quite recovered from this, and there were eventual congressional hearings at which all the players were interrogated, including Gill. Gill’s testimony before congress, which has become legendary, makes up the climax of the film.

The heart of Dumb Money is the pressure that the various investors start to feel as their stock goes up in value. Should they sell, and make a life-changing profit? But for many, the community of investors they found along the way was more important than the money, and selling felt like a betrayal. The movie dramatizes this well. Not every GameStop investor did become rich; it depended on the timing of when they sold. It’s not even known how well Gill did, because soon after the congressional hearings, he disappeared from public life. He did not participate in the making of the film or the writing of the book. He may have once been the leader of a financial-populist uprising, but now, he no longer posts.

The Big Picture

  • Dumb Money is a movie based on the true story of the GameStop short squeeze, led by Keith Gill, aka Roaring Kitty, an ordinary investor with a YouTube channel and a presence on Reddit’s r/WallStreetBets.
  • The film explores the concept of short selling, where investors bet against a company’s success. In the case of GameStop, a community of retail investors bought up its stock, causing a short squeeze and costing institutional investors significant losses.
  • Dumb Money also delves into the idea of institutional power and the role of platforms like Robinhood. The film suggests that Robinhood, a fee-free trading app, betrayed its users by restricting their ability to buy GameStop stock, potentially under pressure from hedge funds.

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