CEO DailyCFO DailyBroadsheetData SheetTerm Sheet

Forget Bitcoin—GameStop just topped $300 in pre-market trading

January 27, 2021, 10:31 AM UTC

This is the web version of the Bull Sheet, Fortune’s no-BS daily newsletter on the markets. Sign up to receive it in your inbox here.

Good morning. Global stocks and U.S. futures are fairly quiet ahead of a busy day of corporate earnings from the likes of Apple, Tesla and Facebook.

The big action again this morning is in GameStop as retail investors pile into the loss-making retailer as if it were the second coming of Amazon. In today’s essay, I explain why the fallout from this bonkers bet won’t fade any time soon.

But first, let’s see what’s moving the markets.

Markets update


  • The major Asia indexes are mixed in afternoon trading with Japan’s Nikkei up 0.3%.
  • Bullish on vaccine uptake, the IMF has boosted its 2021 outlook for global growth to +4.2%, and revised upwards last year’s calculation.
  • Fallout from 1MDB continues with Goldman Sachs disclosing CEO David Solomon took home $10 million less in annual pay last year, a penalty for the bank’s involvement in the bribery scandal.


  • The European bourses were lower out of the gates with the Stoxx Europe 600 down 0.5% at the open.
  • Shares in LVMH were up 1.7% after the luxury goods brand reported on Tuesday impressive sales growth, helped by strong China demand.
  • AstraZeneca‘s bad week just got more fraught. The drugmaker is being sued by a U.S. pension fund for the results of the COVID-19 trial it disclosed last November. Never mind that AZ shares are up more than 6% in the past year. Meanwhile, it’s embroiled in an ugly dispute with the EU over supplies of said vaccine that Europe hasn’t even approved yet.


  • U.S. futures point to a lower open. Tech stocks continue to lead the way with big cap Nasdaq 100 rallying ahead of earnings today from Apple, Tesla and Facebook.
  • All the drama is again around GameStop, which is up more than 100% this morning in pre-market trading—that’s after climbing by more than 90% yesterday. GME is a trade for those of you who have a strong stomach for volatility and couldn’t care less about earning a dividend. Kinda like Bitcoin.
  • Here’s another 2021 stock rally story for you: Etsy popped more than 7% yesterday morning thanks to a four-word tweet from Elon Musk. That’s it. Free marketing is always nice to have, but a Jefferies analyst sees “upside risk” from the tweet. And on cue, Etsy closed down 2.1% yesterday.


  • Gold is down, trading below $1,850/ounce.
  • The dollar is up as equities falter.
  • Crude is up, with Brent trading around $56/barrel.
  • As of 10 a.m. Rome time, Bitcoin was down 2.6% at $31,300. Maybe Bitcoin bulls have found a shiny new coin in GME.


The hedgies vs. the retail army

To put it lightly, the hedge funds have a retail problem.

If this YOLO GameStop saga has taught us anything, it’s that we’re glimpsing an ascendant force in the markets with the power to exert incredible pain on the old guard.

The big question remains: will this mean collateral damage for the rest of us?

In an open letter posted on the Reddit forum r/WallStreetBets yesterday, the retail army delivered a warning shot to hedge funds like Melvin Capital, via CNBC, to stop underestimating them. That the day traders are going after activist hedge funds, the rebels of yesteryear who took aim at many a Wall Street high flier, is not lost on any Wall Street high fliers.

I’m old enough to remember when activist shorts were the Davids of the stock market. Now, we have a new group to contend with, an army of retail traders who pump their “stonk” picks on Twitter, Reddit and TikTok with rocket ship emojis and measure their returns in “tendies,” or chicken tenders, man-child treats for pulling off a big bet.

But underestimate them at your peril.

Exhibit A: GameStop—GameStop!—was the most traded stock in America yesterday, according to Bloomberg, with volumes that outpaced that of Apple, Tesla and Microsoft.

Exhibit B: According to Goldman Sachs, households are far and away the biggest force in the $57 trillion U.S. equities market. Goldman calculates retailer traders hold more than one-third (36%) of America’s stocks. And hedge funds? A mere 3%. (A big HT to the Market Ear blog for this data breakdown.)

Exhibit C: Retail traders are going all in on their favorite trades via highly speculative call options. (Fortune‘s Jeff John Roberts has a great explainer on what puts and calls mean.) Going back to 1992, five of the 10 most active single days for call options volumes occurred this month, Goldman notes. A recap: this epic GameStop rally is not even a month old.

For years, retail trading was a fairly unremarkable slice of the market. That changed last year. The rise of Robinhood and super-cheap, app-based trading during the pandemic has truly disrupted stock trading. I don’t see the genie going back in this bottle any time soon.

In fact, as I glance at the GameStop share price, it’s now above $325 in pre-market trading.

So if you’re thinking the hedge funds will easily squash these guys like bugs, think again.

There are plenty more stonks out there to bid up. And the retail army is hungry for more tendies.

Aren’t we all?


Have a nice day, everyone. I’ll see you here tomorrow… Until then, there’s more news below.

Bernhard Warner

As always, you can write to or reply to this email with suggestions and feedback.

Today's reads

Net zero, or else. In his annual letter to CEOs, BlackRock's Larry Fink warned that the world's largest asset manager will come down harder on companies that fail to clean up their operations. BlackRock has more than $8.7 trillion assets under management, so Fink's annual call to arms has become a must-read.

YOLO trading. The staggering rally in GameStop is hardly a one-off fluke. The Wall Street Journal analyzes six other darlings of the day traders, and how their shares have performed in recent weeks.

Apple earnings preview. Analysts are expecting nothing short of blockbuster results when AAPL reports later today. What should investors be looking for? Fortune's Aaron Pressman breaks down the big things to watch, including how to interpret the iPhone 12 sales numbers, and the company's post-pandemic prospects. 

Some of these stories require a subscription to access. There is a discount offer for our loyal readers if you use this link to sign up. Thank you for supporting our journalism.

Market candy

Quote of the day

There’s no tradeoff between saving lives and saving the economy, despite the opposite widespread belief among policymakers.

That's among the surprising findings from Nobel Prize-winning economist Angus Deaton who analyzed the economic fallout of the COVID-19 pandemic. He also found some startling data on inequality that will surely be examined in the years to come.