Matt Levine (2021): Elon Musk Picks the Money Now: Dogecoin, Bitcoin, GameStop and short ladders. A classic on Weird Finance in the Age of the Attention Info-Bio Tech Society…
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Few have ever so deftly captured the surreal, self-referential theater of early 21st-century markets as Matt Levine here, being flabbergasted by not just what is going on on the front lines of speculative excess, but by the transformation of value itself in an era where there is a shift from “fundamentals” to the capricious dynamics of online social coordination, celebrity charisma, and what one might call the social-media algorithmic manufacture of belief. It is a world in which the mere proximity to Elon Musk, or indeed to any sufficiently charismatic digital avatar, can confer value upon the most improbable of assets.
Levine’s analysis is anthropological and ironic: new rituals of value creation, in which Musk’s tweets, imbued with a quasi-religious mana, have the power to animate assets as diverse as GameStop shares, obscure cryptocurrencies, or even penny stocks accidentally swept up in the slipstream of his digital utterances.
Revisiting Levine’s essay from the vantage point of 2025, one is struck by both its acuity and its lingering sense of disbelief. The piece stands as a testament to the bewilderment of an era in which the boundaries between finance, entertainment, and collective psychology have grown porous. This is a very strange world we are in. It is a world in which someone can become the richest man on earth without owning a major stake in any solidly and enduringly currently profitable business. And it is a world in which he can then leverage that status, so that he can then, with a single tweet, summon billions of dollars into at least temporary existence.
Dogecoin, Bitcoin, GameStop and short ladders.
February 8, 2021 at 9:14 AM PST
By Matt Levine
Matt Levine is a Bloomberg Opinion columnist. A former investment banker at Goldman Sachs, he was a mergers and acquisitions lawyer at Wachtell, Lipton, Rosen & Katz; a clerk for the U.S. Court of Appeals for the 3rd Circuit; and an editor of Dealbreaker.
My model of the GameStop Corp. trade is that it is mostly what I’ve been calling an “honest pump”: People got together on the internet and discussed it, and decided that if they all bought the stock of GameStop at the same time then it would go up and they’d like that. This was correct. There was no fraud or dishonesty involved; that is just a straightforward understanding of how supply and demand work. Nor was there all that much in the way of fundamental analysis of the underlying cash flows of GameStop’s business…. Once it hit, I don’t know, pick a number, $65.01 on Jan. 22, say, no one was in it for the cash flows. GameStop was worth $200 because more people would buy it and then it would be worth $400; it was a pure social coordination game with no connection to the business of an actual company.
One assumes that this has to end badly for somebody…. Still, you could push back on that assumption. Social coordination is actually a pretty big and robust source of value. Bitcoin has been valuable for years now because people on the internet got together and agreed to ascribe value to it; gold has been valuable for millennia for not-too-dissimilar reasons. Society could just evolve in weird ways, who knows, and perhaps GameStop stock will fill some social and monetary function and gain lasting value as a pure token. Last week I imagined a venture capitalist blogging about GameStop in 2027, writing:
The thing I like about GameStop is not its underlying cash flows, but the fact that it is a scarce digital store of value…
I was kidding, but one thing that I have learned in recent years is that everything is simultaneously a joke and serious.
Also Elon Musk tweeted about GameStop, and the way finance works now is that things are valuable not based on their cash flows but on their proximity to Elon Musk. A better anthropologist than me should probably take a look at this phenomenon. Musk is the richest person in the world, and in a dynamic, fun, traveling-to-Mars sort of way. It makes sense that his pronouncements have a certain religious character, that his tweets can endow arbitrary objects with mana. If the richest person in the world tweets “Gamestonk!” then I think that means that, if you buy GameStop stock, you will partake in his wealth and dynamism at a remove; you will get rich and have fun doing it. (Not! Investing! Advice!) Maybe that is not how it works on a conscious level—though I think that sometimes it is?—but surely at some subconscious level people want to order their lives in accordance with the cryptic instructions of a charismatic flying zillionaire.
So, “Gamestonk!” And red satin shorts blessed by Musk sell at a huge markup on Ebay. And I have written about Signal Advance Inc., a penny stock that soared 5,100% after Musk tweeted “Use Signal,” about an entirely unrelated app. That stock is still up 350% from where it was before Musk tweeted a month ago. It is an Elon Musk cargo cult; a coordination game—“if we all buy this it will go up, so let’s all buy it”—inspired by an arcane reading of apocryphal Musk scripture.
Also Tesla Inc. stock trades at 1,210 times trailing earnings, is another fact that might be relevant here.
Anyway Dogecoin is up:
Dogecoin, the tongue-in-cheek cryptocurrency featuring a Shiba Inu dog as a mascot, briefly touched a record Monday after billionaire Elon Musk, rapper Snoop Dogg and Kiss bassist Gene Simmons tweeted about it.
The token climbed to a peak of about 8.2 U.S. cents and a market capitalization of $10.5 billion during Asian trading hours Monday before pulling back, according to pricing data from CoinGecko. The coin was ranked among the top 10 cryptocurrencies by market value, the figures showed…
And:
The reckless abandon of the investing world has a new fixation: a cryptocurrency that began in 2013 as a joke, was mostly forgotten, and thanks to a flurry of tweets from Tesla Inc. Chief Executive Elon Musk, is suddenly worth a total of more than $6 billion…
And here is Billy Markus, who built Dogecoin in 2013:
Mr. Markus, who no longer works on dogecoin, couldn’t believe code he wrote in three hours on a Sunday gave rise to a cryptocurrency worth billions of dollars in total market value.
“The idea of dogecoin being worth 8 cents is the same as GameStop being worth $325,” said Mr. Markus, 38 years old. “It doesn’t make sense. It’s super absurd. The coin design was absurd”…
That same article notes: “A vocal group of buyers on Reddit have made it their mantra to push dogecoin to $1.”
Dogecoin is GameStop stripped of all the distracting reality. No one on Reddit is going to publish a due diligence post about how the market undervalues Dogecoin’s cash hoard and customer loyalty. There are no Dogecoin shorts to squeeze, no Dogecoin options market makers to get caught in a gamma trap. The serious arguments for Bitcoin—its algorithmically enforced scarcity, its technological sophistication, its widespread adoption—are also conveniently missing. Dogecoin is just “if we buy this thing it will go up, so let’s buy it; also it will be fun and Elon Musk tweeted about it.”
Look, I understand that I have gotten stupider by typing all of that, and you have gotten stupider by reading it, but it’s gonna get worse. I do think it is pretty obvious that the internet is rewiring social relationships in profound ways, and that we are still in the early stages of that rewiring and the even earlier stages of trying to understand it. Money and value are artifacts of social relationships; why shouldn’t their meaning change as social media warps our brains and our society? Money and value are coordination games; what we use for money depends on the channels that we use to coordinate social activity. Once society was mediated by governments, and we used fiat currency. Now society is mediated by Twitter and Reddit and Elon Musk, so, sure, Dogecoin.
The way finance works now is that things are valuable not based on their cash flows but on their proximity to Elon Musk, so:
Bitcoin surged to an all-time high after Tesla Inc. said it’s invested $1.5 billion, becoming the biggest company yet to back the controversial cryptocurrency.
Bitcoin jumped as much as 15% after Tesla made the disclosure in a regulatory filing, with prices exceeding $44,000 for the first time. Tesla also said it would begin accepting the digital token as a form of payment for its electric cars. …
“The world’s richest man allocating $1.5 billion of his company’s treasury to Bitcoin speaks volumes about the magnitude at which crypto gains institutional adoption,” said Antoni Trenchev, managing partner and co-founder of Nexo in London. “Tesla has now paved the way”…
Here’s Tesla’s 10-K announcing the move. No, uh … no mention of Dogecoin, huh.
Why would you invest (a portion of) your corporate treasury in Bitcoin?… You want attention, and pivoting from being a boring operating company to an exciting also-holding-some-Bitcoins company will get you media attention and a higher stock price. Obviously this one is true of Tesla, in the sense that Musk requires constant attention to live, and the stock was up this morning. But it is not that true of Tesla, which has a high and volatile stock price already, and doesn’t really need to put money into Bitcoin to attract crypto enthusiasts. As of about 10 a.m. today, Tesla’s stock was up 1.65% on the day; Bitcoin was up more than 13%. Clearly Tesla did more for Bitcoin than Bitcoin did for Tesla….
Another answer is that you think Bitcoin will go up, and you like to invest your corporate treasury in stuff that goes up. This one seems fine? In general, one thinks of corporate treasury funds as being invested conservatively in cash equivalents so that they’re always there for a rainy day, but if you have a lot of money, or even just a lot of ability to raise money cheaply, I suppose you can be aggressive. Instead of earning roughly nothing in a bank account, your money can earn… well, Bitcoin is up about 50% year-to-date.
Also some of that is probably because Musk has gone around talking and tweeting about it, and because of this announcement today: Musk is in the nice position of being able to spend billions of dollars buying assets in liquid anonymous markets, and then make those assets go up just by tweeting about them. If you can do that, you should! If you can buy a thing secretly, announce “I own the thing,” reliably cause the thing’s price to go up a lot, and then—if you want—sell the thing secretly, then that’s a great business right there. Talk about clean energy; that’s a perpetual motion machine….
Ordinarily Elon Musk does not do too much of this, possibly because he can also make the price of Tesla stock go up or down by tweeting about it, so if he needs money, telling people “buy Tesla” and then selling some shares is more straightforward than putting his stamp of approval on things he doesn’t control. Still it would be funny if he did more of it…
