>>8731355For anyone curious:
Melvin Capital (among others) is a billion dollar hedge fund. They’ve been making money by shorting GameStop stock, which means they “borrow” it at one price (say, $4) and sell it, then buy it back when it’s lower (say, $2). This is known as covering your short, and you make money by doing this. GameStop, being a failing company, was being massively shorted, to the point where there were more stocks being borrowed and sold than actually existed (more than double, which is nuts).
At any rate, some people on WallStreetBets, particularly one dude, assumed it would turn around and go way up in value, over a year ago. A few weeks ago, Ryan Cohen, who turned
Chewy.com into a billion dollar business, announced that he was joining GameStop’s board and was going to turn it into a PC workshop of sorts, on top of continuing to sell games. So the stars have aligned, sorta, to make GameStop have a brighter future. The guys on WSB who thought GameStop would turn around stopped getting called retarded and everyone started buying in.
This resulted in the stock price increasing. As it did, people shorting it started losing money, because they had to buy back the stock higher than they sold it, and they have to do so as quickly as possible before the stock goes up, to limit their net loss. Melvin and many others have held out, because they assume a bunch of redditors won’t continue to hold the stock. But they continued to buy more, because they’re dumb. This has resulted in a short squeeze, where so many shorts are outstanding that they’ll have to lose billions in order to get back the stock and cover their loss. This is causing the stock to spike. People who bought GME at $9 two months ago, $38 two weeks ago, even $70 two days ago, have seen massive gains as its currently at $240. So they’re doubling down and not selling. This stock could go anywhere, minimum $400, max who knows. Some say $1000, some say $5k.
