Online market participants have come up with a plan to keep GameStop’s shares high despite their low value, and it worked, even Elon Musk tweeted about it

On Monday morning, some Reddit users decided to play in the market and add the value of its shares for video game retailer GameStop – to almost three times its average in recent months, then spread their strategy to struggling film chain AMC And as well it worked so well, in fact, that they turned Wall Street upside down and created a drama full of memes and weird internet jargon as big investors can lose billions of dollars

It’s a crazy story with cameos of Elon Musk, CEO of Tesla, and CNBC financial commentator and former hedge fund manager Jim Cramer There’s even Michael Burry, one of the subjects of the book and movie The Big Short, who happens to be a celebrity Investor in GameStop is It’s Wild

Although the move has been labeled “insane” and a “Ponzi scheme,” GameStop stock has become the battleground of an epic war between Wall Street and internet retailers that almost everyone expects to fail Questions are when and who will be in the end

“We’re seeing a phenomenon I’ve never seen before,” said Jim Cramer, Wall Street commentator at CNBC and former hedge fund manager, during a segment Monday and GameStop might just be the beginning. “It’s insane”

It all started last week when posters on the Reddit stock trading chat community r / WallStreetBets spiked the struggling game retailer’s stocks with much of Wall Street betting against the success of GameStop, believed the WallStreetBets – Investors, they could force a market rally by creating demand that had previously given little

As a result, GameStop stock surged more than 822% per share from $ 17 at the start of the year to a high of $ 15918 on Monday, then fell nearly in half, only to climb back to $ 14798 on Tuesday And then Musk tweeted about it to his 43 million followers (using that weird internet vocabulary, of course), and the price soared 40% in off-hours trading on Wednesday, closing at $ 347 per share before falling again after close of trading
The Reddit community has also been keeping an eye on BlackBerry and trying to use the same trick so far, they have more than doubled shares from $ 658 per share where they started the year on Tuesday, the stock closed at $ 1892 on Wednesday it closed regular trading at USD10

There’s also AMC Reddit aimed and also spawned the hashtag #SaveAMC on Twitter, the stock rose from $ 2 per share last week to $ 1990 on Wednesday It also fell in off-hours trades

GameStop is one of the largest video game retailers in the world but is struggling to stay relevant in the age of online sales

In fact, the WallStreetBets crowd realized that Wall Street had made a big mistake The folks known as short sellers who had bet GameStop stock would fall had been too aggressive

WallStreetBets fans realized they could force Wall Street to recalibrate their bets if they could use their own money to create artificial demand for GameStop stock, driving prices up even further, and some investors Those who couldn’t even secure their bets against GameStop would have to pay even more

As of Wednesday, the WallStreetBets community had 38 million members, although it’s nearly impossible to determine how many people are involved in the GameStop, AMC, and BlackBerry programs

What we do know is that all of this activity created a “short squeeze” in which the short sellers betting against GameStop are forced to buy more GameStop stock to cover their losses and that still has the price further up, forcing more short sellers to cover their losses, pushing the price up even more.Some of the Reddit fans believe that GameStop stock could reach thousands of dollars because of this mechanism alone

See also: GameStop’s stock spike through slang from Reddit’s WallStreetBets community this is what it means:

When people buy a stock normally, they are betting that it will go up or share enough profits to make more money than they invest

Short sellers or “shorts” do the opposite. Shorts trade in borrowed stocks and sell them in the hopes that they can make money if the stock falls in the future

Imagine Ian Corp. vor is a public company and their shares are worth $ 10 A short would borrow Ian Corp stocks and sell them for $ 10 Your bet is that Ian Corp. The stock will actually fall below that – maybe to $ 4 if it does, they can buy the stock for $ 4 and pocket the other $ 6

If Ian Corp The stock jumps to $ 25, then the lender who made that bet possible can push the short to cover their bet, which would mean that the short would effectively have to buy the stock at the new, higher price

If a short is right and bets against a company, they can make a lot of money. But if they are wrong, they can also lose a lot more money

There are other options and tools to bet against a company’s future

Losses Seem To Be Huge As of Monday, Shorts Seemed To Have Lost $ 3, According To MarketsInsider To Put 3 Billion On GameStop This Year Over $ 1.6 Billion, Or About Half Of Those Losses, Occurred On Friday When The Stock Soak 51%

It’s also worth noting that GameStop started the year as one of the most shortened companies in the market

It is, but what is perhaps an even bigger clue as to how dramatic these moves have been, GameStop stock sales halted during Monday’s trading because they moved too quickly

One reason for this behavior is the popularity of retail investing, or when traders who are not Wall Street pros buy and sell stocks, often with no fees, have made it easy for people to get into the market and social Media has helped people band together and encourage each other to buy more and more stocks

“GameStop’s rally is part of a series of noticeable market moves that are of concern to fund managers Some of them say that trading individual investors throws stock prices off balance with fundamentals, “the Wall Street Journal wrote on Monday
Major trading trading apps like Robinhood, ETrade and others reportedly struggling to stay online despite all the hysteria TD Ameritrade acted Wednesday to contain sudden spikes in demand, “out of caution in the face of unprecedented market conditions”

Nasdaq said it will cease trading a stock if it finds a link to unusual social media activity, the company sees its role as a “self-regulatory organization” in ensuring that its markets are “trading legitimately,” according to regulators need to keep up with the technology now available, “Adena Friedman, CEO of Nasdaq, told CNBC on Wednesday

GameStop failed to respond to a request for comment. BlackBerry executives told MarketWatch there was “no reason” known for the recent trading activity. BlackBerry reached an agreement with Facebook on a patent dispute earlier this month, although the terms were not known were given

There’s the seemingly simple money aspect that is compelling in and of itself when you’re so familiar with risk, but some of them also frame this as a crusade on Wall Street, “We’re at a war,” one Redditor wrote on Wednesday “A war for the redistribution of wealth”

In addition to being a prolific Twitter user, Musk recently learned that he can lead people into stocks of various companies, and he tweeted about how much he enjoyed buying something for his dog from Etsy, and the stock Now he’s tweeted about GameStop and sparked more madness

And just watching is enough to turn your head, for example, on Wednesday night, popular chat app Discord banned the WallStreetBets community from their service for violating their rules on hate speech and glorifying violence, apparently some of the had Mean elements of the community repeatedly break Discord’s rules

At around the same time, the group in charge of the WallStreetBets Reddit community blocked everyone else from joining, making everything private

That seemed to scare investors, who suddenly saw GameStop and AMC stocks dip more than 30% each after the close of trading

Just over an hour later, the Reddit community was back to the public, the citizens had set up a new Discord chat group, and GameStop and AMC stocks recovered from their sudden slumps when you hung up your phone watching a movie before it happened, you may never have noticed it by the time it was done

Michael Burry is an interesting subject himself. He became famous for betting against the real estate market before the great recession hit in 2007 and 2008. He had invested in GameStop but also said that all of this behavior was “unnatural, crazy and dangerous” “

Of course, some of the Reddit members say they see this battle for GameStop as their Michael Burry moment, which makes it all the more interesting

Correction Jan 25 at 5:52 pm PT: Corrected the short selling explanation to make it clearer how the process works and that there are several ways to bet against a company’s stock price rising

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World News – USA – Reddit sends AMC, GameStop shares to the moon Here’s what’s next

Source: https://www.cnet.com/personal-finance/reddit-is-sending-gamestop-amc-stock-to-the-moon-heres-whats-next/