It should be emphasized how low the stakes of the GME circus are. Only a tiny fraction of stocks and hedge funds are impacted. There is zero reason to think that reddit memes are going to become an important factor driving stock prices in general.
Josh is right that a lot of the retail investors who get involved in this are going to lose money. That's bad. But most investors aren't going to buy GME and they are unlikely to be affected at all.
https://twitter.com/jbarro/status/1354575381802708993
A good rejoinder that some folks (notably @arpitrage) made to this is that the GME episode proves there's a reliable way for an online mob to blow up over-subscribed short positions. This might make traders more gun-shy about shorting stocks.
https://twitter.com/bespokeinvest/status/1354547060444377088
That does seem like a non-trivial impact but not a huge one. I think a lot of people over-estimate the importance of shorting in general. It pushes down the value of a stock at the margin but fundamentally a company's success depends on whether people want to invest in it or not.
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