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2021 GameStop Short Squeeze

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girder:
Background:

GameStop is an American video game retail chain that has been struggling for years now. The shift towards online marketplaces and digital distribution has severely affected their business model in the same way that online streaming platforms such as Netflix has caused the decline of brick and mortar stores like Blockbuster. The COVID pandemic hit them even harder due to the massive loss of business during the past year. Though as of late last year, investor Ryan Cohen, formerly of the online pet supply retailer Chewy, bought majority shares in GameStop and is attempting to turn the company around.

Due to its track record, the company's stock has been the target of Wall Street hedge funds which have done what they usually do and bet against the company by shortselling their stock.

This behavior caught the attention of the r/WallStreetBets community, whose members realized that GameStop stock [GME] was tremendously undervalued. And that there was an opportunity to make mony , but engaging in what is known as a "short squeeze", which could potentially earn them a profit, but also cause the hedge funds to lose significant amounts of money as they are forced to buy shares at inflated prices to cover their positions. As a result, that community and other like-minded investors have bought shares of GME stock, causing its value to go through the roof.

As of 29 January 2021, GME stock is trading at $325.00 up from $17.25 from the start of the month. Wall Street hedge funds are reported to have losses in the billions of dollars, some owe amounts that cost more than their company's total worth.

These event have occurred as a result of the convergence of several factors: the emergence of certain technologies (online retail trading apps), the formation of online communities (WallStreetBets), the increase in retail investing in the wake of the global pandemic and persistence of underlying resentment against financial institutions ever since the Global Financial Crisis of the previous decade and the subsequent recession.


Links:

GameStop short squeeze @ Wikipedia
GameStop Stock Surge
WallStreetBets
Gamestonk: How WallStreetBets Used Memes to Shoot GameStop Stocks to the Moon @ Know Your Meme (YouTube)
Institutional Traders vs. Retail Traders: What's the difference? @ Investopedia

girder:
Explanation + interviews with retail investors:
GameStop share trading explained - BBC News @ YouTube

girder:
College student uses GameStop stock earnings to buy video games for children's hospital


--- Quote ---MINNEAPOLIS -- After making thousands off GameStop stock last week, a 20-year-old college student used his newfound riches to pay it forward to a local children's hospital.

Hunter Kahn, a mechanical engineering student at Cornell University, donated multiple Nintendo Switch consoles and games to Children's Minnesota Hospital in Minneapolis after cashing out almost $30,000 in GameStop stock last Wednesday, he told CNN.

GameStop shares have jumped 1,625% in the past month. The soaring percentages are mostly due to a group of investors on Reddit, who are buying the stock in a movement to hurt short sellers and hedge funds that bet on the stock to go down.

Kahn, who lives in Stillwater, Minnesota, said he participated in purchasing GameStop stock to join the movement to prove "the big boys on Wall Street" wrong. But, he said, donating a portion of his new fortune toward helping kids at the hospital felt better than waking up to any monetary gain.

"As a beneficiary of the recent events on Wall Street I think it is important that myself and others pay forward our good fortune," Kahn wrote in an Instagram post. "These events have highlighted a lot of corruption and with this transfer of power it is important that we don't become men in suits ourselves."

Kahn's donations are valued at more than $2,000, Children's Minnesota Hospital said.
--- End quote ---


The GameStop/Reddit Stock Saga Is Already Being Made Into a Movie


--- Quote ---Despite the GameStop/Reddit stock situation not being over, the rights to a movie based on these events is already in the works.

As reported by Deadline, MGM has acquired the book proposal The Antisocial Network from New York Times best-selling author Ben Mezrich. This book will look to tell the story of "a ragtag group of amateur investors, gamers, and internet trolls who brought Wall Street to its knees."

Insiders have said that Mezrich and his reps too the book proposal to market last week, and by Friday night MGM had acquired the rights to a film adaptation.
--- End quote ---

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