The GameStop hearing certainly drew a lot of attention.
Key players involved in the GameStop saga were in the hot seat on Thursday as lawmakers grilled the CEOs of hedge fund Melvin Capital Management, financial firm Citadel, and trading app Robinhood, as well as the retail trader that started it all, Keith Gill (a.k.a, “Roaring Kitty”) about their respective roles in the market frenzy.
To sum up: In a matter of days, GameStop, a beleaguered physical video game retailer, saw its stock soar triple digits to top at $483 per share on Jan. 28, before plunging from its highs, closing on Thursday at around $40. That rollercoaster run was largely fueled by retail traders chatting up the stock on online forums like Reddit (more specifically, the page r/WallStreetBets), creating a big short squeeze. Hedge funds like Melvin Capital Management, whose CEO, Gabe Plotkin, faced Congress on Thursday, took huge losses on short bets they’d made on GameStop, betting the stock would fall.
Many of those traders used trading app Robinhood to make their orders. The millennial-favorite trading app faced backlash from social media, users, and lawmakers over its decision to restrict trading on certain stocks like GameStop and AMC in the midst of the frenzy. Robinhood later explained it made the decision because it had to maintain its “clearinghouse-mandated deposit requirements.”
The whole debacle prompted a Congressional hearing on Thursday. And as expected, Robinhood and one of its market makers, Citadel Securities, were especially grilled by lawmakers over their relationship, how Robinhood and Citadel make money from trades (hint: it’s a wonky acronym PFOF, or payment for order flow), and why Robinhood cut off the buying of stocks like GameStop temporarily.
Throughout the hearing, onlookers had plenty to say on social media. Despite the over five hours lawmakers spent questioning those summoned, however, one predominant take on Twitter was perhaps unsurprising for a Congressional hearing: Nothing really much came out of it.
Indeed, observers like Anthony Pompliano, co-founder and partner at Morgan Creek Digital Assets, said on CNBC following the hearing that “I don’t know if we got so many answers,” he said, but “it was definitely entertaining.” Meanwhile, on the same CNBC program Thursday evening, Democratic Rep. Ro Khanna said, “They should have asked more questions of the one retail investor there, and there wasn’t sufficient attention on the disadvantages to the retail investors.”
Others like Bradley Tusk, co-founder and CEO of Tusk Ventures, said on Bloomberg that, “To me the key takeaway is that the world has changed a lot and the regulatory system has not kept up with it. Clearly Congress is going to do its thing, which is just trying to get attention and headlines, … [and] Robinhood and Reddit and everyone else are trying to stay out of trouble as much as they can, and there is blame to go around.”
Some market watchers bemoaned that Congress members spent much of the hearing asking Robinhood CEO Vlad Tenev and Citadel CEO Ken Griffin about their businesses and how markets work behind the scenes, and the CEOs didn’t exactly always answer satisfactorily.
Indeed, Jacob Frenkel, a former SEC attorney and current chair of government investigations and securities enforcement for law firm Dickinson Wright, told Fortune “All eyes were on Capitol Hill, and probably every objective observer likely walked away shaking their heads thinking … they learned nothing.”
Other watchers remarked on how Gill, or Roaring Kitty, got to make his bull case for GameStop stock in front of lawmakers.
In testimony during the hearing, Gill argued his original investment thesis was that “the market was underestimating the prospects of GameStop’s legacy business and overestimating the likelihood of bankruptcy,” and even told lawmakers he thought the stock was an “attractive investment at this price point” on Thursday, at around $40 per share.
But on Reddit, users didn’t hold back. Users on the r/WallStreetBets forum piled on hedge funds and Robinhood, and expressed frustrations with the hearing. One user under the name “mcarrsa” wrote “They’re not even addressing the problem. Educating platform users isn’t the problem. Payment for order flow isn’t the problem. Restriction of buying shares to prevent the price from going up is the [f******] problem.”
Another Reddit user under the name “Seaworthiness-Calm” summed up for fellow Redditors: “I wouldn’t say people missed much, talking in circles and none of the important questions were answered. A lot of the important questions were not even asked, and some of the committee seemed extremely out of touch.”
On a lighter note, the hearing was ripe for memes, and the internet needed no encouragement.
And Gill, who started out the hearing by saying “I am not a cat,” seemingly in reference to both his online monicker (“Roaring Kitty”) and a recent viral story about a lawyer who got stuck with a cat filter on Zoom, gave those on Twitter more fodder.