In every earlier boom the CEO had to talk the stock up. In 2021 the crowd did it for free, in public, and the companies only had to decide what to do with the money. Some sold the crowd new shares. One tried to sell shares from inside bankruptcy. Hundreds sold it a blank check. Here is how it worked, and where it ended.
The crowd bought the short interest
By the end of 2020 GameStop, a mall video-game retailer, traded for a little under $20 a share. Short sellers had bet against it so heavily that in January 2021 its short interest reached 122.97% of the float: more shares had been sold short than were available to trade. A crowd on social media read that as a reason to buy. On 27 January the stock closed at $347.51, and the next day it touched $483.00 [1].
The SEC's staff later found that a short squeeze "did not appear to be the main driver". Buying to cover was a small part of the buying; "it was the positive sentiment, not the buying-to-cover, that sustained" the rise. On 28 January several brokerages restricted trading in the stock, some citing the margin calls their clearing house had sent them. By 19 February it was as low as $40.59 [1].
Selling into the frenzy
A cinema chain, AMC, finished 2020 at $2.12 a share. By 2 June 2021 it was up 2,850%. The next day it sold 11.55 million new shares straight into the market at an average of about $50.85, raising $587.4 million in a single day [2]. Its filing, as reported at the time, warned buyers that they could "lose their entire investment" [3].
The day before, it had launched a program for its retail shareholders: special screenings, a direct line to the CEO, and a free large popcorn on their first visit that summer [4]. Popcorn turned out to be a financing tool.
Bankrupt, and still selling stock
Hertz, the car-rental company, filed for bankruptcy on 22 May 2020, after pandemic travel restrictions cut demand for rental cars. Its stock fell to 40 cents, then the crowd found it and bid it back above $6. So the company asked to sell up to $500 million of new shares, while telling buyers in the same breath that the stock was "almost certain" to become worthless. The SEC said it would review the sale, and on 17 June Hertz suspended it [5].
Then the crowd turned out to be right, for once. In May 2021 the winning bankruptcy plan promised shareholders about $8 a share [6].
A blank check and a famous name
The other way into the market was a special purpose acquisition company, or SPAC: a shell that lists first, with nothing inside but cash, and finds a business to buy later. In 2021, 613 of them went public in the US, raising about $162 billion [7]. Many had a celebrity on the label. In March the SEC felt it had to say it plainly: "Never invest in a SPAC based solely on a celebrity's involvement" [8].
A truck rolling downhill
Nikola, a maker of electric and hydrogen trucks, came to the market through a SPAC in 2020 before it had sold a truck. In September 2020 a short-selling research firm reported that a 2018 promotional video of its truck "in motion" showed the truck rolling down a long, gentle slope, not driving under its own power [9].
In December 2021 the company agreed to pay $125 million to settle SEC charges that it had misled investors about its products, technical advancements and commercial prospects, starting "before Nikola had produced a single commercial product" [10]. In February 2025 it filed for bankruptcy and began to wind down [11].
The game on top
Synthetic Demand is a satire of exactly this. You are the CEO of an invented company and you have one job: make the stock go up before you sell. A market like 2021 is one of the ones you can be dealt, though nobody tells you the year until it is over. You can tease, pivot, or sell the crowd more stock while it is cheering, and the tape answers. So, sometimes, do the short sellers.
Every call you make, and every one you don't, is graded A to F. The good grades go to CEOs who read the room. In 2021 the room was reading you back.