Meme Stocks: How a 20-year old made $110 million

I recently watched "Dumb Money" on Netflix. For those of you who aren’t aware of the film, it follows the journey of a basement retail trader who single-handedly sparked a movement that turned GameStop (GME) into one of the hottest companies of the year.

Picture this: You are 65 years old. For your whole life, you have been a conservative investor. Every year, you put 10% of your income into an index fund that follows the S&P 500, and maybe, just maybe, every now and then, you will put a few dollars into a blue-chip stock.

… Then you watch this movie. A nerd in a headband creates a cult movement on a social media platform that backs a dated stock and generates upwards of $50 million.

You think, this is just a one-time occurrence, these idiots will lose in the long term. Inherently, you are probably right.

But…

Let me introduce you to the story of Jake Freeman.

A 20-year-old college student took a $25 million position in Bed Bath & Beyond and later exited the position with a fruitful $130 million.

Now, there are two parts of this story to dissect:

• Where did a 20-year-old get $25 million from?
• How did this kid walk away with $105 million?

Well, unfortunately, there isn’t much information other than he had raised the capital through an investment fund in Wyoming.

By the prime and wise age of 20 years old, the kid held an internship at Volaris Capital Management and even ran for president! Yes. You read that correctly. At 18 years old, Freeman registered a federal bid with the election committee as he wanted to be the youngest person on the ballot.

You could say he sets his sights high.

Which is exactly what he did with Bed Bath & Beyond, but I don’t even think he knew how high it would go.

Purchasing shares below $5.50 and just a few short weeks later, sold at $27 per share.

What fueled the rise? Chalk this one up to perfect timing. With the trend of meme stocks at an all-time high, coupled with the degeneracy of retail traders on the popular trading forum Wall Street Bets, Freeman was able to discuss his position to the masses online, and people backed it.

It is undeniable that these stories are exceptions to the rule and remain, to me, nothing more than a piece of entertainment.