Investing can be a wild ride, especially when the stakes are heightened by a potentially life-changing gamble. When the Gamestop frenzy hit the media, traders were faceless users on a social media app. Now three ordinary people, with everyday jobs, debt and family obligations are giving Robinhood Traders a face and a relatable story. Rachel Louise Ensign of The Wall Street Journal writes about their investments, gains and breathtaking losses, which were so much more than numbers on a spreadsheet. Chris Garcia equated the rush of trading to video gaming but the trio’s real-world experience held valuable lessons which changed their perspectives on the game of chance. – Melani Nathan
Use Spotify? Access BizNews podcasts here.
Use Apple Podcasts? Access BizNews podcasts here.
Robinhood, Three Friends and the Fortune That Got Away
A trio of school photographers in California fell into the online trading frenzy last year, emboldened by dreams, early wins and a circle of online cohorts
 By Mike Norkin, Alex Ela and Chris Garcia of The Wall Street Journal
Chris Garcia set up a second monitor at his desk in mid-January to display his Robinhood Markets Inc. brokerage account. He turned to it often, watching his balance grow to $23,400, more than four times his initial investment.
Mr. Garcia, a 32-year-old school photographer, made more money in a few days from the market than a monthâs work at his day job.
âWhat color lambo you buying?â he texted his friends Mike Norkin and Alex Ela, also photographers, joking about market riches delivering six-figure Lamborghini sports cars. âIâm buying three,â said Mr. Norkin, 41. His Robinhood account had ballooned to $52,500.
After the pandemic disrupted their livelihood taking school photos, the three California friends discovered the thrill of online tradingâfor a time, making more money than they ever thought possible. They looked ahead to building their savings and paying off debt.
On a typical day, the three men exchanged at least 50 group texts and held several video meetings to discuss investments. They logged their account balances on a shared spreadsheet. In the evening, they played online videogames together, swapping out usernames to reflect various stocks they liked. They saw other gamers doing the same.
âWhen youâre in âCall of Duty,â thereâs a rush when you win your match, and youâre doing well,â Mr. Garcia said. âWith Robinhood, youâre seeing your account go up, and itâs that same euphoric feeling.â
Small investors have long been part of the market ecosystem, trading tips at barbershops, in mailed newsletters and through old-school online message boards like Yahoo! Finance.
The current frenzy, whether in stocks like GameStop Corp. or cryptocurrencies like Dogecoin, is different. Social media and investing-made-easy apps like Robinhood have given new investors a chance to operate in concert with millions of others world-wide. They connect online, much like multiplayer videogames, and drive manias in individual stocks. The Robinhood app logged more than 2.6 million downloads just in March 2020, according to JMP Securities. Robinhood declined to comment for this article.
Many rookie traders, accustomed to sharing birthday photos and daily online musings, showed few qualms about making investments based on what friends shared in group texts or what strangers posted on Facebook. As much as anything, their investing is a social activity.
Messrs. Garcia, Norkin and Ela were among the retail traders who, emboldened by early wins and a community of online cheerleaders, took greater risks in a roller-coaster market.
âDo u have more than 1k on RH,â Mr. Ela texted Mr. Garcia, asking about the balance of his Robinhood account. âIf so I recommend using margin.â
âYeah, and no idea wth that is,â Mr. Garcia responded, using an acronym for âwhat the hell.â
Chris Garcia and his baby daughter at home in Lemoore, Calif.
By the beginning of the year, all three friends were amplifying their bets using margin loans, money they borrowed from Robinhood to buy more securities. These loans are typically used by hedge funds and the wealthy. Access to borrowed funds for anyone with $2,000ânot the $1,000 Mr. Ela mentionedâis a central feature of the Robinhood Gold account.
Over eight months, Mr. Ela, 30, poured his savings and big chunks of his pay into the market, about $30,000 in all. Mr. Norkin, who has three young children, invested a similar amount. Mr. Garcia, a new father, funded his account with $4,500 in savings and pandemic stimulus checks.
It seemed like they couldnât lose.
Chance meeting
Mr. Garcia, who runs a photography studio in Lemoore, Calif., met Messrs. Ela and Norkin in Las Vegas during the School and Sports Photographers Association of California conference in January last year. The pandemic was still weeks off, and the three men played craps and blackjack. The annual conference is known as SPAC, an acronym the men later learned also referred to an investment vehicle. Afterward, they promised to keep in touch.
Messrs. Ela and Norkin have a photo studio in Lake Elsinore, Calif., about an hourâs drive from downtown Los Angeles. They met through the local Rotary Club when Mr. Ela was a teenager. Back then, Mr. Norkin would call Mr. Ela for help with computer problems. Mr. Ela was invited to join Mr. Norkin and his family for restaurant dinners. Meals out were a luxury Mr. Elaâs single mother could rarely afford on a paycheck earned working nights at 7-Eleven.
Mr. Ela joined Mr. Norkinâs photography studio after graduating from the University of California, Merced. His business degree left him with about $85,000 owed for student loans and credit-card debt, he said.
While in his 20s, Mr. Ela visited his father, a pig farmer in the Philippines, for the first time since he was a small child. âHe doesnât worry about credit-card debt or anything like that,â Mr. Ela said. âIt kind of made me jealous because I knew when I got home I had to pay this bill and that bill.
When the pandemic reached California, schools closed and the photography business dried up. Over text, the men exchanged tips about applying for federal Paycheck Protection Program loans.
Over the summer, the friends got together, and while they were catching up in Mr. Norkinâs living room, they discovered each had downloaded the Robinhood app.
Mike Norkin and his three children at home in Lake Elsinore, Calif.
Mr. Norkin was initially wary of investing after losing money on technology stocks and gold many years earlier, he said. At first, Mr. Garcia said he also counted himself a conservative investor. Trading was something his parents, immigrants from Mexico, had never done.
They shared stock tips in group texts, and, by fall, the friends had a daily routine: At 5:30 a.m., they logged onto Robinhood and discussed potential investments before the market opened.
The friends were enthusiastic about the electric-vehicle industry and bought shares of auto makers Tesla Inc. and Lordstown Motors Corp. as well as graphite miner Westwater Resources Inc., which produces a mineral for batteries used in electric vehicles. They tried to game the topsy-turvy pandemic economy, buying an oil exchange-traded fund with the ticker GUSH, a bet on rising gas consumption. They dabbled in such volatile stocks as Canadian cannabis firm Sundial Growers Inc.
Mr. Ela used his Robinhood-issued debit card to tap money from his brokerage account for a vacation to Mexico with his girlfriend. Mr. Norkin and his wife took a road trip to Yellowstone. He introduced her to the trading app, and they picked stocks together.
With their portfolios rising, the friends egged each other on to take bigger risks as 2020 drew to a close.
Mr. Ela, the most daring, made 1,600 trades last year, far more than his friends. He joined an investing group on chat app Discord and discussed stocks with strangers, including an X-ray technician in Texas and a journalist in India, almost all bulls. He often made as much as $700 in a morning buying and selling shares during December and January.
Mr. Norkin dreamed about stocks and woke up in the night to check his portfolio. He joined different Facebook groups that focused on investing tips. In January, he sold his Tesla stake for a $14,000 profit.
The friends bought GameStop that month, when it was below $80 a share. They traded in and out of the stock as it began to climb to improbably high levels. The stock of GameStop and other buzzy companies lifted the trading accounts of Messrs. Norkin and Garcia to personal highs.

On the morning of Jan. 28, the app didnât allow Mr. Ela to buy GameStop. He could only sell and trade options. âDudes some shady sâ is happening,â he texted his two friends.
During trading that day, the stock climbed to a high of nearly $500 a share. Then it nosedived after the buying restrictions kicked in. The friends wanted to buy after the price drop. âWe need to sue. This is rigging at its finest,â Mr. Norkin texted. âThis is worth a civil war.â
Robinhood said it never intended to harm customers; it limited the option to buy certain stocks to meet demands from its clearinghouse.
Mr. Garcia texted a link to a Reddit post describing how to file a complaint with the Securities and Exchange Commission. âHold the line boys!!!âŠThe whole world is starting to step in and buy GME.â GameStop shares tumbled to below $100 within a few days.
The friends remained optimistic and continued to muse about spending their gains. Mr. Norkin wanted to buy a house and build his retirement fund after years of pouring money into his business. Mr. Garcia was expecting his first child and considered opening a Roth IRA for her. Mr. Ela planned to pay off his student loans and credit-card debt he accumulated while in college.
âTo the moonâ
Mr. Ela read that a SPAC, or special-purpose acquisition company, planned to buy electric-vehicle firm Lucid Motors Inc. SPACs are essentially large pools of cash listed on an exchange. Their purpose is to find a private company, buy it and take it public.
Starting in January, the friends bought shares of the SPAC, Churchill Capital Corp. IV, or CCIV. Mr. Ela used margin to bet 80% of his portfolio.
On Feb. 22, CCIV shares spiked in the morning, and Mr. Elaâs portfolio rose to a high of $89,000, about triple what he put in. The deal was announced after the market closed. The SPAC nosedived. Robinhood prevents users from trading after 3 p.m. Pacific Standard Time, leaving the friends powerless to get out.
Mr. Elaâs 30th birthday was the next day. He checked his account when he woke up and saw CCIV opened down 39% from the prior closeâleaving him, on paper, about $50,000 poorer. The plunge prompted Robinhood to ask him for money to pay down the margin loan, a demand known as a margin call. He had to sell stock to make the payment.
Messrs. Norkin and Garcia also took losses on CCIV and other electric-vehicle stocks over the next two weeks. Facing their own margin calls, they realized they hadnât fully understood the debt they took on. The app prominently features a metric called âbuying powerâ that includes margin. But they had a hard time finding any similar disclosure of what they might owe if their bets on stocks soured and triggered margin calls.
Later that day, Mr. Ela said he cried thinking about his massive loss. He cheered up after a dinner of Korean barbecue with a group that included Mr. Norkin. His friends brought him bottles of tequila, whiskey, beer and cans of mixed drinks as gifts.
In the friendsâ group text the next morning, Mr. Ela was silent for the first time in months. âHow were the celebrations last night Alex? Make you forget about our amazing investments?â Mr. Garcia texted.
âWe gave him enough alcohol to go to the moon,â Mr. Norkin wrote, borrowing internet jargon for a hot stock. Mr. Ela wasnât hung over, just discouraged. All of them were.
âTime for us to not quit our day jobs,â Mr. Garcia texted his friends after their late February bust.
In the weeks since, they have stopped updating their spreadsheet. Their studios have rebounded as more students return to school. And when they text, it is usually about photography or their personal lives.
Mr. Ela, the biggest risk taker, has pulled all of his money from the market and plans to start paying off debt. Mr. Garcia, once the most cautious, put all his money into Tesla, Coinbase Global Inc. and a SPAC run by hedge-fund billionaire William Ackman. Mr. Norkin is hanging onto his positions in hopes they will rebound.
Mr. Garcia is up close to $700 from his initial investment. Messrs. Norkin and Ela each lost about a third of what they put in.
âWe all joked about having matching Lamborghinis,â Mr. Norkin said. âBut at the end of the day, the three of us are grounded and rooted enough to just want to provide for our families.â
Write to Rachel Louise Ensign at [email protected]
Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Appeared in the April 23, 2021, print edition as ‘Friends Dreamed Of Fortune On Robinhood