An army of amateur traders loosely organizing on Reddit have shaken up all preconceived notions about the stock market as they fueled the meteoric rise of GameStop stock. Shares for GameStop, the electronics retailer that has largely struggled in recent years, have skyrocketed by nearly 2,000% since the beginning of the year.
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Should we lose faith in the stock market?
· Image by Scott Beale. reddit aliens. Many Reddit users, nearing the end of January, invested in and bought stock towards the company Gamestop, greatly affecting the stock market. According to Scholastic writer Jordan Goodman, “Stocks… are certificates that are sold to raise money for starting a new company or for expanding an existing company.
What is the purpose of the stock market blog?
· Instead, the Reddit-based investors drove the value of GameStop's stock sky-high in a turnaround called a "short squeeze." As a result, big hedge funds have lost nearly $6.7 billion and are facing bankruptcy (Melvin has already requested a $2.75 billion bailout). A truly Robin Hood-like group of small investors Spencer Platt/Getty Images
Which businesses have been involved in the stock market Tete a Tete?
I have been following the stock market for 30 years and I have never seen a company the size of Facebook (Meta) drop over 25% in price in one day. (It dropped 26.3% today) Facebook (Meta) was the seventh-largest company in the United States by …
Why did Interactive Brokers and Robinhood change their trading rules?
· If it trades to $30, you buy the stock for $15 each and sell at the market price. In recent years, options have exploded in popularity on …
How did Reddit mess with the stock market?
An army of traders on the Reddit forum r/WallStreetBets helped drive a meteoric rise in GameStop's stock price in recent days, forcing halts in trading and causing a major headache for the short sellers betting against it and banking on the stock falling.
What happened with GameStop stock and Reddit?
GameStop stock climbed by 104% until trading was halted for a second time - moments before markets closed. The rapid rise came as Reddit, the online home of activist investors that led the GameStop movement in January, went down temporarily. The stock gained nearly 90% in after-hours trading.
What happened with Reddit and GameStop and Robinhood?
Popular investing app Robinhood became the focus of the controversy after it decided to freeze trades for GameStop on Jan. 28. Shares of the video game retailer spiked after traders on Reddit began frantically buying the company's stock. GameStop shares have since came crashing down only to shoot up once again.
How did Reddit increase GameStop stock?
In late January, a band of Reddit-obsessed retail traders coordinated trades on heavily shorted stocks, created a massive short squeeze in GameStop, whose shares surged 400% at one point. The brick-and-mortar retailer traded at less than $20 a share at the start of 2021.
Why did Reddit users buy GameStop?
Motives behind this onslaught ranged from making personal profit to a desire to squeeze the short positions of hedge funds. Prompted by the information posted on social media retail investors began buying these so called “meme-stocks” including GameStop, AMC Entertainment, Blackberry, and Nokia.
What happened with WallStreetBets and GameStop?
The army of millions of investors from Reddit's WallStreetBets community pushed GameStop shares from US$20 to US$480 during the January “short squeeze”, in which they drove hedge funds like Melvin Capital into heavy losses, after forcing them to liquidate massive bets against the stock.
What is the Robinhood GameStop scandal?
The head of the Robinhood trading platform has apologised to customers at a US congressional hearing prompted by last month's GameStop trading frenzy. Vlad Tenev said the situation the firm faced in January - when financial strains led it to limit certain stock purchases - was "unacceptable to us".
Why did Robinhood remove GameStop?
Robinhood said in a blog post published at the end of January said that it, too, suspended trading in GME and other securities due to clearing firm costs.
Whats the Robinhood scandal?
Robinhood is fined $70 million over misleading customers and system outages. The fine was the largest ever imposed by the Financial Industry Regulatory Authority, which is known as FINRA.
What exactly happened with GameStop stock?
This is exactly what happened in the case of GameStop. As a result of the amateur traders not selling their shares of stock, short-selling investors began losing money, and the value of shares significantly increased. This created what is known as a short squeeze.
Why did everyone buy GameStop stock?
GameStop shares skyrocketed in January as retail investors, urged on by popular Reddit forum WallStreetBets, bought the stock as a way to punish hedge funds that had taken an outsized short bet against it.
What drove GameStop stock up?
Shares of GameStop jumped more than 30% to a high of $104.65 on Tuesday. The stock turned sharply higher after Social Capital's Chamath Palihapitiya said in a tweet that he bought GameStop call options betting the stock will go higher. Trading was halted multiple times due to volatility.
Why is short selling risky?
If it rises, they have to repurchase the shares they borrowed and then sold for a higher price, which will make them lose money. This squeeze happens often, which is why short-selling can be risky.
What is a stock investor?
Plain and simple, they are investors who bet against a stock, hoping the price will fall. To do this, they borrow shares from someone who plans to stay invested for a long time, and then they sell the shares. After the stock price falls, they repurchase the shares at a lower price and return them to the lender.
What is market integrity?
Market integrity, as it’s known, is something regulators have to take seriously. If too many people lose faith in the market, they could stop investing, and that would prevent companies from selling shares to fund their growth. But we’re far from that. So far, these are pockets of volatility.
Who bought GameStop?
Last summer, Ryan Cohen, who grew and then sold online pet-food retailer Chewy, bought 13 per cent of GameStop and hoped to help management pivot into e-commerce. The stock quadrupled in four months, and that attracted short-sellers.
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.
