You might have heard the words like ‘GameStop’, ‘Reddit’, and ‘Large hedge funds’ a lot in the past couple of days. And it’s okay to be confused. We were too.
So, what’s been happening?
Up until a month ago, GameStop was a struggling chain of video game retail stores in the states. But suddenly, the shares of GameStop surged from $19 on December 31st, 2020, to $197.84 on January 27th.
Yup, a difference of $178.84 in 27 days. That’s crazy!
As GameStop was not doing well and their stock was super low, they hired some new board members. And the stock prices went up. That’s when well-known hedge funds like Melvin Capital and Citron Research got interested in GameStock shares.
They decided to “short” GameStop stocks to make a lot of money. But people of Reddit decided to have some fun. They bought a lot of stocks and inflated the price of GameStop shares. The large hedge fund lost so much money that they filed for bankruptcy.
Here’s a longer, detailed explanation if you really want to know the whole deal.
Netizens obviously had to react –
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Oh, you’re laughing at the hedge fund that got juked by reddit? Well, they’re bankrupt now. Are you laughing now? Is it funny now that a bunch of MBAs are out of a job? Can you laugh knowing they’re explaining to their investors that they were out maneuvered by POTATO_IN_MY_ASS?
— John Field, “comedian” (@AmericasComic) January 27, 2021
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What are your thoughts?
Also read: Man Threw Away Hard Drive Worth $280 Million In Bitcoins, Now Offers $70 Million To Retrieve It