What happened with GameStop is that their stock was way down – around $2.50/share. Short sellers benefit when the stock of a company is low, because then they can buy it back for less than it was sold for when they borrowed it. However, when the subreddit Wall Street Bets saw what was going on, they decided to squeeze the short sellers.
Full Answer
What really happened with GameStop?
Over the years, GameStop has changed hands a few times including being acquired by the bookstore chain, Barnes and Noble. GameStop became its own independent company in 2002 when it went public with Barnes and Noble retaining a majority stake. This continued until 2004 when Barnes and Noble distributed GameStop’s shares to its own shareholders.
Why did GameStop stock rise?
GameStop Corp. (NYSE:GME) shares, rose in value on Thursday, February 17, with the stock price down by -3.83% to the previous day’s close as strong demand from buyers drove the stock to $123.41. Actively observing the price movement in the last trading ...
Why is GameStop dropping?
- GameStop is the largest video game retailer in the world, with over 5,000 stores.
- The company had been in steady decline for years, but the bottom has dropped out of its stock price in 2019 — from $16 a share in January to just ...
- The company is "a melting ice cube," Wedbush analyst Michael Pachter told Business Insider earlier this year. ...
What exactly happened with GameStop?
If you need a quick tl;dr for all of this:
- Short sellers sell stocks they don’t own by borrowing them from a shareholder
- They sell them high and hope to buy them back lower so they can make a profit when they return the shares to the original owner
- The subreddit Wall Street Bets saw this activity and decided to dogpile onto Game Stop stock, driving the price up hundreds of dollars
What happened with GameStop stock scandal?
As a result, GameStop's stock price declined, leading many institutional investors to short sell the stock. On January 22, 2021, approximately 140 percent of GameStop's public float had been sold short, meaning some shorted shares had been re-lent and shorted again.
Why did GameStop stock went up?
Why is GameStop Stock Up? GameStop has the wind at its back thanks to a general market uptrend buoyed by a collective sigh of relief around the Fed's first interest rate hike since 2018.
What happened to GameStop stock in 2021?
Stocks of video game retailer GameStop exploded in January 2021, effectively doubling in value on a daily basis. At the close of trading on January 27, GameStop Corporation's stock price reaching 347.51 U.S. dollars per share - or +134 percent compared to the day before.
Did GameStop crash the stock market?
GameStop Crash Wipes Out $5 Billion In Market Value, But One Market Expert Says Shares Could Skyrocket Again. A problem occurred.
Is it smart to buy GameStop stock now?
Gamestop (GME) stock is likely to decline after the current overheated rally. The stock can still be profitable in the long term if revenue growth stays consistent. But investors should avoid buying GME stock due to the high short-term risk.
What happened with GameStop and AMC stock?
Both GameStop and AMC have fallen this year, along with the broader market. AMC shares are still down nearly 20% in 2022, despite a nearly 45% surge in the past five days. GameStop's stock has fallen about 3% this year, even after skyrocketing 65% in the past week.
What did GameStop do with the money?
The company erased its long-term debt, paying off everything "other than a $47.5 million low-interest loan associated with the French government's pandemic response." While not enough on its own to reverse GameStop's loss of sales over time, freedom from debt will likely be a meaningful benefit to the company going ...
What happened GameStop investors?
On Jan. 28, when GameStop was hitting its peak, Robinhood advised its users that it would halt the buying of shares of the retailer. It cited the volatility of GameStop stock and of other companies as the reason for this unusual move. The step elicited an immediate backlash from Reddit investors.
Why did GameStop go out of business?
At the end of 2020, GameStop announced that they planned to close 1,000 stores by March of 2021. GameStop's CFO Jim Bell explained the reasoning behind the closures, saying the move “will allow us to more efficiently and profitably service our customers.”
How much did short sellers lose on GameStop?
GameStop Short Sellers Lose $200 Million In August Extending Their Losses As Shorted Shares Continue To Drop.
What caused GameStop short squeeze?
People on the message board site Reddit took note of this, with users on r/WallStreetBets concluding the share price of Gamestop was lower than what was a reasonable value for the stock. They reasoned that this low price was due to shorting by hedge funds and planned what's known as a “short squeeze.”
How much did retail investors lose on GameStop?
Short sellers lost nearly $13 billion on GameStop alone so far this year, according to financial analytics company S3 Partners, which shared data through market close Monday. While that's certainly a lot, it's down from the $26 billion they were down last Wednesday, when the stock price closed at a record high of $347.
GameStop
Since January 2021, GameStop's stock price has seesawed. As of the close bell Friday, the share price was at $98.50, which is still more than what financial analysts say the company is worth.
Robinhood
When the GameStop stock frenzy exploded, trading app Robinhood was at the center of the chaos. It was used so much that the company had to stop trading shares of GameStop in order to meet regulatory requirements.
WallStreetBets
On its FAQ page, subreddit r/WallStreetBets describes itself as a "community for making money and being amused while doing it." Users regularly roast themselves over their big stock market losses and their lack of knowledge.
Meme stocks
Though GameStop was the star of Wall Street for that short, early stretch, the long-term result of this phenomenon was the birth of a concept known as meme stocks.
Why did Gamestop stock go up?
Shares in GameStop ticked up on Jan. 11 after it named three people to its board of directors as part of a deal with shareholders who had been agitating for change. That caused some short sellers to abandon their positions, helping to drive the stock up more in the following days.
What is short selling on GameStop?
Like many companies that are in rough shape, GameStop was the subject of what's called short selling, in which professional investors borrow shares of stock to sell and then buy back later so they can return them, which lets them pocket the profit if the stock price goes down. They're basically bets that the company will fail.
Why are short sellers risky?
If that doesn't happen and the stock price rises, short sellers are forced to cover their positions or buy more stocks — to minimize their losses. Because short sellers — frequently hedge funds — in essence are betting against a company's success, it can be a risky position.
What is a gametop?
What is GameStop? GameStop is a video game retailer. Like most stores that still sell products in person, it has had a hard time lately as video game sales have moved online and as the Covid-19 pandemic keeps people away from stores. It's still in business, but few people expect it to grow again.
Can Volkswagen stock go up forever?
History suggests that no stock can go up forever, and over time, stock prices generally reflect the expected future earnings of corporations. But long shots can go on for extended ...
Is GameStop publicly traded?
They're basically bets that the company will fail. GameStop was one of the most shorted of all publicly traded companies. Other companies on the list include AMC Theatres, Bed Bath & Beyond and even the mostly defunct Blockbuster. Remember those names. And then GameStop became the source of a short squeeze.
What Happened with GameStop Stock?
The story gripped global markets in January 2021 and left Wall Street reeling. Looking back on the events, it’s difficult to believe what happened. A small group of retail investors on Reddit incited a direct attack on hedge funds using their own tactics.
The GameStop Stock Short Squeeze
What happened with Gamestop Stock? On January 11th, shares of GameStop saw their first real push as the stock gained 12.72% in a single session. A significant move for a stock like GameStop but nothing that really caught the market’s attention.
Other Stocks Affected
The GameStop short squeeze led to the emergence of the meme stock movement and social media trading. Subreddits like r/WallStreetBets began targeting beaten-down stocks with high short positions against them. This led to another short squeeze in June of 2021 for AMC, when it hit an all-time high price of $72.62.
GameStop Stock Now
What happened with GameStop Stock?? The stock has erased most of its gains from the short squeeze and is currently trading at just above $100 per share. Ask any fundamental analyst out there and they’ll tell you how overpriced GameStop still is. After all, before any short squeeze occurred, the stock was trading for below $5.
The GameStop short squeeze was a David versus Goliath battle
Many touted the tussle between Wall Street firms and retail investors as the David versus Goliath battle and a “democratization” of stock markets. Indeed, acting as a cohort, WallStreetBets members almost led to the demise of Melvin Capital.
What happened to GameStop stock in 2021?
GameStop stock entered 2021 on a strong note after almost tripling in 2020 amid optimism over its restructuring and the pivot towards e-commerce. However, Wall Street funds weren't too convinced about the rally and went overboard shorting the stock.
GME stock was an epic short squeeze
WallStreetBets members pounced on the opportunity and went on a buying spree. The “diamond hands” or the “HODLers” wouldn’t simply sell their shares and as a result, the short borrow fees on GameStop exploded. Left with no option, shorts had to cover their positions at a massive loss.
GameStop stock continued to plunge
GameStop stock remained volatile with a downwards bias and by the middle of February, it was trading near $40—a fall of over 90 percent from its peaks. However, the stock soared again in March and traded above $200 that month.
GameStop continues to fall in 2022
Fast forward to 2022, meme stocks aren't as popular as they were in 2021. A lot of retail investors, especially those who made huge losses on meme stocks, have been getting disillusioned with WallStreetBets.
What is a GameStop?
GameStop is an American brick-and-mortar retailer that specialises in video games, consumer electronics and gaming merchandise. It was widely deemed a company in declining health—indeed, its mere existence as a physical shop was viewed on Wall Street as being decidedly outdated, and its business model was hurtling towards failure.
When will GameStop be released in 2021?
by internationalbanker March 29, 2021. March 29, 2021. By Alexander Jones, International Banker. Unless you’ve been completely cut off from the outside world, there’s a good chance you’ve heard the word GameStop circulating around social media and in news headlines over the last couple of months. And along with GameStop, it’s also likely ...
What happens when you buy an ETF?
When buying into an ETF, an investor effectively gains exposure to all of the company constituents of that ETF, irrespective of their individual prices. And when selling, the investor similarly sells all the constituents at the same time.
What is short selling in Gamestop?
The essence of the GameStop fiasco is that there are stock market players who do something called short selling. Basically, short selling is paying to borrow stocks – usually from a pension or something similar – and then selling those stocks. Later on, when the price of the stock goes even lower, they buy back the stocks they “borrowed” and give them to the pension they borrowed from. The difference in price is what they earn.
Is Wall Street Bets a meme?
When the larger media outlets take a peek at the internet, strange things happen. Wall Street Bets is a subreddit full of its own meme culture and there’s a lot of lingo that gets used there that has leaked into the mainstream. In addition to the memes, the interest in investing has started to reach people who would otherwise probably not consider it.
GameStop
Since January 2021, GameStop's stock price has seesawed. As of the close bell Friday, the share price was at $98.50, which is still more than what financial analysts say the company is worth.
Robinhood
When the GameStop stock frenzy exploded, trading app Robinhood was at the center of the chaos. It was used so much that the company had to stop trading shares of GameStop in order to meet regulatory requirements.
WallStreetBets
On its FAQ page, subreddit r/WallStreetBets describes itself as a "community for making money and being amused while doing it." Users regularly roast themselves over their big stock market losses and their lack of knowledge.
Meme stocks
Though GameStop was the star of Wall Street for that short, early stretch, the long-term result of this phenomenon was the birth of a concept known as meme stocks.
