- GameStop shares are up more than 1,500% this year, as retail investors have piled into the stock and forced short-sellers to unwind their positions.
- The Reddit forum r/WallStreetBets spawned much of the activity.
- Ben Kusin, an active follower of WallStreetBets, said this story hits a little too close to home.
Kusin has been on Reddit for over 13 years and is most active on r/WallStreetBets, the forum that spawned much of the historic spike in trading of GameStop shares this week.
There's a much more personal reason for his interest in GameStop: His dad co-founded the company.
"It was worlds colliding when this went down," said Kusin, 42, who lives in Los Angeles and is co-CEO of a video-streaming start-up called VENN.
Since the beginning of the year, GameStop shares are up more than 1,500%, lifting the company's market cap to $22.7 billion. Of late it's been among the most-actively traded stocks on the New York Stock Exchange. The rally, driven by social media, has turned anonymous Redditors into multimillionaires and wiped out multibillion-dollar investors who were betting on the the stock to drop.
It's a much different universe than Kusin remembers as a kid, when he would travel with his dad to malls across the U.S. for store openings. He even recorded gameplay so stores had demos they could display on TV for their curious customers.
Kusin said in an interview this week that he and his younger brother, Eric, have been texting back and forth, "slack-jawed in disbelief" as they watch a new generation of investors shake up Wall Street, combining their favorite online forum with the company their dad helped build.
"It's hilarious to me and my brother in particular to see this happen to GameStop," he said. "There's a sense of pride, like 'hell yeah!' It's so cool to watch."
Gary Kusin, their 69-year-old father, lives in the Dallas area. That's where, in 1984, he started a software retailer named Babbage's, with backing from the late Ross Perot. Babbage's soon turned to selling video games for Atari and Nintendo systems.
In 1999, Barnes & Noble acquired Babbage's. A year later, Barnes & Noble changed the name to GameStop, then took it public in 2002 under the ticker symbol "GME."
Kusin was gone by then, having exited the company in 1995. He joined the board of Electronic Arts, founded a cosmetics venture that was acquired by Neiman Marcus, and later became CEO of Kinkos, which he sold to FedEx. He most recently spent 13 years at private equity firm TPG.
'Grabbed some popcorn'
Now, Gary Kusin is mostly watching from the sidelines. He said in an interview that Ben is the one keeping him most up to speed on the latest craziness at GameStop, 26 years after he left the business.
"I'm much more a spectator than I am participant," said the elder Kusin. "I just grabbed some popcorn."
He applauds the WallStreetBets crowd and retail investors on apps like Robinhood for upending the status quo and called it "a little bit of an honor that they chose GameStop."
Ben Kusin said he started seeing the Reddit chatter around GameStop picking up last summer, when activist investor Ryan Cohen began buying shares in the company, ultimately building up a 13% stake. Cohen was known for building pet food company Chewy and selling it for over $3 billion in 2017 to PetSmart.
From there, discussion started percolating on WallStreetBets about whether Cohen could help turn around GameStop, a company with a sub-billion-dollar market cap that had been cast aside like the rest of physical retail.
"He seems like the kind of person that could shake things up and maybe something great could come out of this," Kusin said, recalling the tone of commentary from last year.
Kusin said that over time Redditors started posting on WallStreetBets about the short interest issue, noting that investors were betting on GameStop's failure at an impossibly high level. Roughly 140% of outstanding shares were being sold short, meaning investors were selling short borrowed shares that didn't exist.
According to Kusin, what started as enthusiasm about an old gaming retailer getting a fresh start morphed into indignation over the practice of shorting. The forum participants had a clear way to do something about it and make a bunch of money along the way. Individual investors piled into the stock, forcing short-sellers to buy back their stock at a loss to cover their positions.
Short-sellers have lost about $20 billion this month, including a nearly $8 billion loss on Friday as the stock jumped 68%, according to data from S3 Partners. Following GameStop, retail investors dove into other heavily-shorted stocks like BlackBerry, AMC Entertainment and Bed Bath & Beyond.
"It's a good vs. evil kind of battle," Kusin said. "There's a fundamental undercurrent at WallStreetBets that shorting is un-American."
Kusin said that while he supports the spirit of the movement, he hasn't participated in the GameStop rally.
"I've been so close to it for so long that it's almost sacrilegious," he said. "This is one where you just sit back." (His wife, Marina Monroe, bought one share. She's up $50 and said she isn't selling.)
Kusin isn't staying away altogether, though. He said he bought shares of space tourism company Virgin Galactic, another heavily-shorted name. He called it a "good company with good brand promise" and said Chairman Chamath Palihapitiya is "one of the smartest guys around." Virgin Galactic shares are up 87% this year.
Like his peers on WallStreetBets, Kusin was angry about Robinhood's decision on Thursday to halt purchases of GameStop shares. Robinhood CEO Vlad Tenev told CNBC that the company had to make the proactive move "to protect the firm and protect our customers" because of regulatory rules around capital requirements.
GameStop shares plunged 44% on Thursday and Robinhood users claimed the company was bowing to pressure from Wall Street.
"You're protecting your downside and not the retail upside," Kusin said, in a follow-up interview. "When people say the game is rigged, that's what they mean."
As much as Kusin enjoys his time on WallStreetBets, he said he preferred not to disclose his Reddit handle. He gave a well-crafted reason that only an insider could understand.
"There's beauty in anonymity with Reddit," he said. "And I'm happy to be just another Redditor in the never-ending quest for tendies."
In Reddit-speak, tendies roughly translates to mean profit.
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