GameStop co-founder Gary Kusin likened the company's fanbase to the "global legions of Swifties," attributing their influence as a driving force behind the stock's Reddit rally in 2021 and its most recent boost of over 134% in just two days.
"When something jeopardizes the company so intertwined with their life memories, they will quickly bow their backs and fight. Emotion wins over analytics every time the topic is the fabric of their lives," Kusin – who co-founded the video game retailer Babbage's in the 1980s, which now operates as GameStop – told FOX Business.
He stepped down in 1995 but bore witness to the frenzy of retail investors that pumped up the stock a few years ago, hammering short sellers and torpedoing hedge fund Melvin Capital.
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"It is never a surprise to me when a high IQ analytically wired person misses the EQ of a population for whom everything is very personal," Kusin said.
GameStop shares have soared Monday and Tuesday after Keith Gill, otherwise known as "Roaring Kitty" – the key figure behind the stock's surge – reemerged on X. It was the first time Gill was back on social media after an apparent three-year hiatus.
The post from Gill, which appeared to be a drawing of two gamer, sparked a buying frenzy in the stock favored by Reddit users and other retail investors despite no concrete news. It brought back memories of the 2021 surge when the stock rose 103.94% at one point, causing significant financial consequences for short sellers.
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Wall Street is now "making a perfectly rational argument that the GameStop stock price is over-valued", Kusin said. In fact, it's "extraordinarily hard to argue that analysis isn’t true." But GameStop fans are "clearly saying that they will not be intimidated by the facts," he added.
Even with the recent rally, shares are below the all-time high of $86.88 per share reached in January 2021, as tracked by Dow Jones Market Data Group.
Kusin argued that GameStop has an exceptionally loyal fan base and if customers become fans, "the relationship between the company and its fans becomes much stickier as these fans will advocate for the company in the face of any adversity."
He compared the situation to how "Swifties" would react if Taylor Swift took her company public. He is referring to the company that holds all her new recordings and re-recordings as well as her concert tours.
"Imagine if her loyal fans bought her stock the way they buy her music. Now imagine a Wall Street hedge fund analyst doing the work and concluding that the Taylor Swift stock is very overpriced and a real short opportunity for a hedge fund doing short investing," he explained.
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It's easy to value each song based on its historical sales and future value. It's also easy to value her next album based on history, Kusin said.
If word got out that a firm was going to try to drive the Taylor Swift stock down, "I don’t think it is much of a leap to believe that the Taylor Swift stock would quickly become a meme stock and the legions of Swifties would once again win."
FOX Business' Breck Dumas and Suzanne O'Halloran contributed to this report.
