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
Why did the price of GameStop stocks jump so suddenly?
The result of this major market event was a sudden increase in stock prices for GameStop, which benefited from a short squeeze on various major hedge funds that …
Why did GameStop stock rise?
Jan 29, 2022 · 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. "The...
What really happened with GameStop?
Jan 30, 2021 · GameStop, which makes most of its money selling video games in stores across America, saw its stock price rise as much as 1,700% this week, backed by fans who believe it is unfairly undervalued by...
What exactly happened with GameStop?
Feb 17, 2022 · 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,...
What happened with GameStop stock 2021?
Why did the stock market crash GameStop?
What was the issue with GameStop stock?
How did GameStop break the stock market?
Did GameStop short squeeze happen?
What happened with GameStop stock in simple terms?
Why did everyone buy GameStop stock?
Was GameStop a pump and dump?
Why did Robinhood stop trading GameStop?
How long did GameStop take to squeeze?
Who owns GameStop stock?
| Stockholder | Stake | Shares owned |
|---|---|---|
| The Vanguard Group, Inc. | 7.65% | 5,837,633 |
| BlackRock Fund Advisors | 6.28% | 4,794,611 |
| SSgA Funds Management, Inc. | 2.17% | 1,653,929 |
| Geode Capital Management LLC | 1.01% | 773,880 |
What happened with WallStreetBets and GameStop?
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.
When will GameStop be released in 2021?
By David Drucker. February 2, 2021 at 5:00pm. For the last couple of weeks, GameStop—a struggling brick-and-mortar video game retailer—has been at the center of one of the financial world's biggest news stories. Activity by social media investors pushed GameStop's shares to major heights, forcing Wall Street hedge funds to pay up huge sums of money.
Did the hype fueled buying frenzies happen before?
Yes, similar hype-fueled buying frenzies have happened before. In the late 90s, early 2000s, during the dot-com era, many early staged firms in the tech industry had ridiculous valuations. You had many people throwing money at anything that was technology-related regardless of economic viability.
What does it mean to short a position in the stock market?
It starts with understanding the phrase, ‘shorting.’. You can ‘short’ a position in the stock market, which means selling something that you do not own. But then you must ‘close’ that position also, which means buying that same position back at a later time.
What was the dot com era like in the late 90s?
In the late 90s, early 2000s, during the dot-com era, many early staged firms in the tech industry had ridiculous valuations. You had many people throwing money at anything that was technology-related regardless of economic viability.
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.
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.
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.
Who was the owner of the Mets that bailed out Melvin?
Steve Cohen, the recent owner of the Mets, was called in to bail out Melvin to the tune of nearly $3 billion. Again, it’s the combination of the absurd Reddit-ese of stonks and the Schadenfreude of one rich man finally getting pinched that makes this story so weird and appealing. Y’all just be saying anything.
Is fundamentals more important than stock market surges?
No, not really . As any smart investor will tell you, a company’s fundamentals are a lot more important than any momentary stock-market surges or crazes. But then again, a lot of the short sellers weren’t necessarily looking at the company’s fundamentals either.
When does GameStop stock close?
Dec. 31, 2019: GameStop stock (GME) closes at $6.08. March 30 , 2020: GameStop says it will close more than 320 stores in 2020. GME closes at $3.65. Aug. 31, 2020: Ryan Cohen, a cofounder of Chewy.com, buys 9% stake in GameStop. GME closes at $6.59.
What is Gamestop story?
It is essentially the opposite of traditional investing aimed at profiting from a stock's rise. The GameStop story starts with short sellers who lost confidence in the company's future as the pandemic challenged companies without strong digital strategies.
How does short selling make money?
With short selling, investors make money if the price of a company's stock falls. If the price rises, investors need to cover their positions by buying the stock back at a higher price. The losses can be substantial.
Is GameStop going bankrupt?
Over the last decade, sales at GameStop locations have slowed in response to the growth of online gaming, but even so, it is unlikely that GameStop will go bankrupt any time soon.
What happens if you don't sell your stock?
By not selling one’s stock, the demand for a particular share of that stock increases, ultimately driving up its price.
What happened to Volkswagen in 2008?
In a single day, the company’s stock value shot up by 93 percent, one of the largest increases in financial history.
When did Volkswagen become the most valuable company?
This created what is known as a short squeeze. Although rare, this is not the first time a short squeeze has occurred. On Oct 28, 2008, Volkswagen temporarily became the world’s most valuable company as a result of a short squeeze.
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