These retail traders lost big in the first meme stock episode. Here's why they won't stop betting on GameStop.

• GameStop stock is still the fascination of day traders, even after many saw big losses in 2021.
• The allure of striking it rich on the meme stock is too great to ignore, traders told BI.

GameStop stock has seen a resurgence this year, and traders who lost big time in the first round of meme-stock mania say they're still tempted by the possibility of striking it rich betting on the ailing video game retailer.

The stock is up about 43% year-to-date but was up as much as 178% in May when the 2024 rally kicked off.

Interest in the stock was revived overnight after the trader Keith Gill — known on social media as "Roaring Kitty" — began posting about it on X in early May and then later on Reddit, where he shared screenshots of his brokerage statement showing a $116 million stake.

Based on data at the end of March, Gill's 9 million shares of GameStop made him the fourth-largest holder of the stock.

His posts broke a years-long silence and reinvigorated the meme-stock faithful on Reddit and other forums.

Business Insider spoke with retail traders, who asked to use only their first name for privacy, about how past losses are impacting their decision to go long GameStop again.

'I drank the Kool-Aid'

Dan, a 29-year-old retail investor who jumped into the meme-stock world in 2021, estimates he put around $40,000 into GameStop during the pandemic after seeing several promising threads on the stock on the subreddit r/WallStreetBets.

His stake multiplied to around $200,000 in value before the stock tumbled again. He ultimately sold his shares for a loss, according to brokerage statements viewed by Business Insider.

"I found a lot of Reddit users, particularly on the Wall Street Bets community, come up with all this sort of diligence and research about GameStop. Then I kind of went down that rabbit hole," he said of his first foray into GameStop. "Then the initial dump happened, so to speak, from the $300 range back down to the $100 range, and I was needless to say very distraught. It was just a crushing blow to my spirit and everything."

Never did it occur to Dan to sell his shares when GameStop peaked. The prospect that the stock would soar even higher was too intoxicating, he says.

"I drank the Kool-Aid, so to speak, of the Reddit community and the GameStop zealots," he said. "The FOMO or the fear of missing out was so high that at the time there was no part of me that even considered selling. So obviously in retrospect, it would have been a good call."

Dan ended up speaking to therapists to help him come to terms with his losses. Still, he couldn't help himself from scooping up more GameStop shares when the stock rocketed higher this year.

"I dabbled a little bit with this current uptrend, certainly nowhere near the levels I was putting in before. I made a little bit on it, then I lost a little bit on it, so it's just been kind of a wash," he said, adding that he was mostly drawn to the latest rally out of "amusement."

Seeking financial freedom

Brian, another retail trader who invested in GameStop in 2020, says he was also drawn back in amid this year's RoaringKitty-fueled rally.

"When he posted, I kind of dabbled into it," he told BI. "You see all the hype around it, and then you see the price just shoot up. It's hard not to want to just jump in."

The allure of GameStop stock has been the potential for a big, quick payday, Brian added, and plowing cash into a meme stock is like buying a lotto ticket for a chance at financial independence.

"[They] could essentially just make you financially free. You never have to work," he said. "I live in the Bay area of California, so it's very hard out here if you don't have a very well-paid job or if you don't have a dual income … So I was looking for something that could gain me the freedom to not have to work and grind it out every day."

Others echoed that sentiment, noting that the chance to hit it big is too enticing to sit it out as the stock starts going parabolic.

"I've been unemployed since November and I've been struggling to find work," said Zaine, another retail trader.

He never traded meme stocks but has bet against risky assets during the pandemic. His portfolio ballooned to as much as $75,000 before plunging to near zero, screenshots of his brokerage account show.

"You go to these outlets thinking, I can just make a little bit of money on the side to kind of just survive," he said. "And it ends up being this snowball effect that, if you don't look at yourself in the mirror, you can really end up losing everything."