Why the GameStop story is far from over

Analysts, on the other hand, have the funds to get channel checks, etc., which provide far better insight into the current state of affairs. When the GameStop story broke, some compared it to the legacy of Trumpism or even a smaller but still dangerous movement known as Gamergate. Both, broadly speaking, exploited online groups who saw themselves as the victims of perceived wrongs. Reddit didn’t answer questions Wednesday about whether it’s in touch with regulators, but it said it prohibits posting illegal content or facilitating illegal transactions.

Business operations

Left was first targeted by the Justice Department in an investigation into short-sellers in early 2022. Agents showed up at Left’s home and seized his computers and trading records, Bloomberg reported at the time. A year earlier, Left and Citron—which Left founded in 2001 as the blog website StockLemon.com—bet against GameStop’s stock, claiming the video game retailer’s shares would drop significantly. Left difference between assistant professor and associate professor closed his position at a 100% loss after a social media-led effort to beat short-selling efforts against GameStop and, at the time, Left indicated he would stop publishing short-selling reports. Earlier this year, Left reportedly announced a new short position in GameStop, a month before Keith Gill, a meme stock investor behind GameStop’s surge in 2021, announced a stake of 5 million shares in the company.

Dumb Money and what actually happened with GameStop, explained

GameStop shares plunged nearly 20% the next day, closing on Dec. 9 at $13.66 a share. “They seem hell-bent on taking on Wall Street, they seem to hate hedge funds and threads are peppered with insults about ‘boomer’ money. But huge numbers of people in the wallstreetbets Reddit forum swapped tips and bought shares in GameStop.

GameStop shares jump after investor claims stake

Later, if the stock price does as they expect, they can buy the stock at a lower price and keep the difference. GameStop is one of the most heavily shorted stocks on Wall Street. There is some belief that WSB signals the arrival of a powerful new force as large numbers of retail investors find influence by acting in concert or following one another into a big trade. That may serve as a check or balance on other large forces, such as hedge funds, which are used to throwing their weight around without ordinary investors affecting a price. He added that in many ways “there’s really no difference” between what this Reddit army did and what hedge funds or institutional investors do when they see a stock that is mispriced in some way. The now-legendary r/wallstreetbets page was started in 2012, according to a Wall Street Journal interview with one of the founders.

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As the tug-of-war between the everyday investors and hedge funds heated up and support grew for GameStop on r/wallstreetbets, the stock skyrocketed more than 50% in the trading session on Jan. 22. During after hours and pre-market trading that weekend, the GameStop continued to climb. No one could have anticipated that a struggling video game retailer would be at the center of a next-level frenzy in the stock market that captivated the world, brought hedge funds to their knees and upended the conventions about small investors.

It hits a very real sentiment that the rich and powerful have endless advantages that make it impossible for ordinary people to get ahead. As a retail investor, you’ve got better odds staying informed about Nvidia than you do GameStop, yet a major swath of people believe they’re somehow dialed into the inner workings of the company and its CEO/largest investor, Ryan Cohen. The Securities and Exchange Commission has said it’s noticed all the volatility in the market and is taking a closer look.

But when everything is a game, everything is a joke and vice versa. So, smile when you pose with that stolen lectern from the Capitol and laugh when you make thousands off a failing company. Different people, different causes, but it’s all rooted in the same internet-fueled principles. No wonder, then, Republicans and Democrats have appeared aligned on the GameStop saga. It’s one thing to think the revolution will not be be televised, but it’s a whole other challenge when it’s memed and gamified.

There’s a reason much of it ends with a shrug or a point that can’t actually be proven. It was a surprising flash in the pan, but at this moment in time, it feels more like a paragraph in a history book than a full chapter. The company’s annual shareholder meeting in June was 30 minutes. “And with respect to an outlook, we’re not delivering guidance at this time. We want stockholders to judge us on our results instead of our words,” Former CEO Matt Furlong stated on March 24, 2023, the last time GameStop held a conference call.

1. Not to mention that this all happened as the country entered into year two of the Covid-19 pandemic, when the existential question of each day was when will everything stop sucking, if ever.
2. Attal was the former chief marketing officer at Chewy, and oversaw its rapid expansion from three people to more than 10,000 employees.
3. “The second part of the driver was the observation that there were a number of hedge funds who basically had a bet that GameStop would go to zero.”
4. “We will review and cooperate with valid law enforcement investigations or actions as needed,” Reddit said in a statement.

GameStop shares would go from trading at around $43 (already significantly more than it traded at at the beginning of the year) to as much as $380, becoming one of the most traded stocks on the market along the way. And many of these retail investors are looking at “meme” stocks such as GameStop. “We expect that eventually GameStop stock price will come down and some people will lose money when that happens for sure,” he said. “And my fear is that they’ll view the stock market as being rigged and not being fair, and that they won’t invest in the stock market.” “It was not because we wanted to stop people from buying these stocks,” Robinhood wrote in a company blogpost. “That was part of the driver,” Moallemi said of GameStop’s stock’s meteoric rise.

The company’s performance declined during the mid-to-late 2010s due to the shift of video game sales to online shopping and failed investments by GameStop in smartphone retail. In 2021, after retail investors on Reddit noticed that the short interest exceeded 100%, the company’s stock price skyrocketed from $17.25 to over US$500 per share. According to the SEC report, this volatility was only in part due to the massive buying power of retail investors. https://www.1investing.in/ The company received significant media attention during January and February 2021 due to the volatility of its stock price in the GameStop short squeeze. The company is now ranked 577th on the Fortune 500.[3] GameStop also owns and publishes the video game magazine Game Informer. GameStop is in the headlines this week given the immense surge (and subsequent ebb and flow) in its stock price and the crowdsourced, Reddit-inspired effort to make it so.

Instead, teenage me was just paranoid that I’d have to write a bunch of essays, which was the punishment for failing in my simulated, eighth-grade life. I needed a way to, if not break the rules, find a way to make them work in my favor, to come up with some sort of video game-like “cheat code” that would allow me to win. GameStop was one of the most shorted of all publicly traded companies.

Back then, there was no Reddit forum such as r/WallStreetBets using comic book memes to rile me up, foul language to make me feel I was in some forbidden, grown-up masculine world, and clever, highly visual slang crafted to celebrate a move well played. From how Animal Crossing taught gamers how to pick stocks to the beach bum who made millions betting on the short squeeze happening to what a short squeeze is, The Ringer has the GameStop stock saga covered from all angles. Often, a short squeeze ends in a price’s falling back to where it was before the drama started. In 2008, when Volkswagen was in the middle of a trader tug-of-war, it briefly became the stock market’s most valued company, but its price settled down eventually. Massachusetts regulator William Galvin compared the situation Wednesday to the 1999 tech stock bubble. “The current pandemic has created a unique situation where many people who have gotten into day-trading really have no idea exactly what they’re doing,” he told CNBC.