Why Reddit Loves Elon Musk, Cathie Wood and Chamath Palihapitiya

The GameStop Corp. saga that has gripped the investing world this week was fueled in part by anti-establishment rage, as my colleague John Authers has written. On one side were retail investors who see themselves as crusaders for a democratized stock market, where even the shares of an ailing brick-and-mortar retailer must only go up. On the other were wealthy hedge fund managers who wagered that the price of equities should have something to do with financial fundamentals. The latter were crushed.

Most of the financial elite is either running for cover or baffled as to why amateur day traders might exhort each other on the r/wallstreetbets forum to sink their college savings or pandemic stimulus checks into such a company. A year ago GameStop’s market value was about $250 million, now it’s $13.5 billion.

Three people from the world of business and finance might be able to offer some insight. Tesla Inc. boss Elon Musk, serial SPAC promotor Chamath Palihapitiya and fund manager Cathie Wood of Ark Investment Management have all succeeded in coopting the retail investing public, rather than be run over by it. This may become a less happy position when the stock market bubble eventually bursts.

For now the trio are adored by Reddit, Stocktwits and other online investing communities — there’s even a line of Cathie Wood merchandise — and they’re proof that it’s possible to be both part of the establishment and against it, something we’ve seen a lot of recently with populist politicians. Palihapitiya is angling to become California governor.

Though Wood hasn’t commented, Musk and Palihapitiya were quick to associate themselves with the Redditors. Palihapitiya told his 1 million twitter followers that he’d purchased GameStop derivatives (he’s since closed out the position and donated the profits). Defending himself against accusations of being an irresponsible Pied Piper leading neophytes toward inevitable ruin, Palihapitiya insisted “this retail phenomenon is here to stay. There are 2.7 million 1 people inside of wallstreetbets, I think they’re as important as any hedge fund or collection of hedge funds.”