6/15/2023 0 Comments Gamestop hold the lineSo it shouldn’t surprise anyone that once WallStreetBets seized control, another party tried to seize it back. Stealing from the rich, giving to the poor?īut power is a currency now, and the more one group asserts it, the more another wants it. Messages on reddit abounded with cheers of “sticking it to the man.” One investor posted a passionate letter calling certain hedge funds “everything that I hated” during the financial crisis in 2008 and gushed, “We have a once in a lifetime opportunity to punish the sort of people who caused so much pain.”Īll this through GameStop? You almost expected to look out the window and see a mob waving PlayStations and screaming “Viva la revolution!” Online, they urged one another not to sell, “to hold the line,” like French revolutionaries on the barricades in “Les Misérables.” Many just wanted to show they could upend the institutional giants. But interviews with some of the WallStreetBets folks revealed a David and Goliath narrative. You might think this was all about profit. They had to buy back the stock to keep their losses from escalating, which only made the stock price go higher and cause even greater damage to other short-sellers. This not only made them quick profits (if they got in low enough) but it cost the short-selling hedge funds dearly. The Wall Street Journal likened them to “an immense school of fish flashing in unison.” Because there were so many of them all pulling together, no single one had to invest too much money. They used the power of their group’s population, millions of them, to drive the price of GameStop up, up, and away - as much as a 1,700% jump in less than a week. And short-selling, which is betting that the price will go down, want the number heading south.Įnter the gang of traders who called themselves WallStreetBets. But there’s this shadow world of betting on stock futures - done largely by hedge funds - who only care about a number. Average people invest in a stock hoping it will go up. This is a lot like short-selling in the stock market. These bets have nothing to do with the purpose of the football game, which is to win. Bet the under, you’re hoping they’ll score fewer. Bet the over, you bet the teams will score more than 50 points combined. That makes sense.īut others bet on something called the “over-under.” This is how many total points will be scored in the game. To understand last week’s mayhem, think of the way people bet on football games. Red and white letters? Lots of video games? Recently, GameStop had over 5,000 outlets.Īll of that is normal growth for a successful company. You see them everywhere at shopping malls. It set up retail stores all over the globe. It merged with another company, then was purchased by Barnes & Noble, then was renamed and morphed into another company and eventually became GameStop, an independently traded entity. Babbage's grew and expanded and went public a few years later. Back in the 1980s it was called Babbage's, a single store in Dallas selling mostly Atari video games. So before we vent our righteous anger at one side or another - and there was plenty of venting last week, even by people who had no idea what was going on - let’s understand what happened.įirst of all, the company. None of what happened last week had anything to do with the real value of GameStop as a company. Power to be on equal footing with those they perceived to have rigged the game.Īnd it is a game. Power to stick it to short-selling hedge funds. SUSAN TOMPOR: GameStop gamers battle risk in fight against Wall Street But mostly, for a moment, they held the power. The internet gang of traders who drove the price of GameStop into the stratosphere - with no underlying reason - certainly got rich. And now we want power.Īll of that was on display in last week’s GameStop stock market drama. Watch Video: Robinhood blocks purchases of GameStop, AMC and others
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