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The Congressional Research Service ("CRS") provided a timeline for the run-up to the GameStop stock "short squeeze."
In its Insight report, the CRS highlighted the speculated motivations for investor support of GameStop - such as the belief that the stock was undervalued and "getting back" at Wall Street for the 2008 stock market crash - as well as the relationship between volatile stocks and cash collateral.
Commentary Conor Almquist
The CRS notes a number of factors that contributed to the surge in GameStop's stock price, but is surprisingly silent on one potentially significant connection. The narrative of millennials "getting back at Wall Street" while supporting a company to which they have "nostalgic attachment" is compelling, but perhaps a stronger driving force behind these events was the large increase in retail investors who were bored at home during lockdowns and had easy access to smartphone trading applications. The widespread media coverage of the run-up, amplified by high-profile individuals with immense social media followings - e.g., Elon Musk's "Gamestonk!!" tweet seemed to correspond with GameStop's largest jump in stock price - collectively presented this as a major opportunity to make a quick buck even if it was quite risky. It would seem, based upon that combination, that a major factor in the GameStop run up was simply retail investors not wanting to miss the opportunity to profit (see "FOMO"). For more detailed consideration of the implications, see Cabinet Commentary, GameStop: Regulators Should Focus Less on "Solving the Problem"; More on "Improving the Situation."
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