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The Story of the Gamestop Short Squeeze

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Have you ever wanted to win a massive fortune, perhaps the lottery or some wild inheritance? When many people think of winning massive fortunes it is typically through some crazy twist of fate and luck that things like this happen.  One of the largest events of this crazy luck happened this past year in a very unlikely place: the stock market in the case of the Gamestop short squeeze

This past year has shown us that there is truly power in numbers especially when it comes to fighting injustices.  One of the largest historical case studies has emerged with nothing more than a meme.  In the stock world buying stocks like AMC and Gamestop is a joke, there is literally no profit that those stocks could bring to a portfolio and they were slowly becoming obsolete. 

That was, until they were being used as a flashlight to showcase immoral marketplace activity. There is a practice that is known as shorting that was used throughout financial funds and stockbrokers.  In a very simplified way, shoriting is the act of selling stock that you do not own in hipes to buy it back later at a lower price therefore increasing your margins.  This was so commonly practiced but no one really paid attention to it due to the stigma of inaccessibility that flooded the stock market. 

When people got wind of this situation they were appalled and some key players began to spread the word on social media platforms such as reddit.  These platforms allowed people to remain anonymous and undetected long enough for them to subtly buy back enough of the stock for it to trend and buy all available shares.  This caused a panic for the stock profilers, now all the shares that they sold were either already bought. 

Now they really had a problem.  They couldn’t go back to their profile and tell them they lost money because technically the money was still there.  So they tried to buy it back and take the losses but all of a sudden the stock that they sold at 10 dollars was now valued at 500.  It meant that they were in a very bad situation.  They either had to eat crow and return back to their clients or devise a plan to buy it back.  Yet, there was one big problem: the average man was holding strong. 

Without people willing to sell, the stock price held and people were freaking out.  Suddenly, average people were sitting on fortunes and they had a decision to make: either cash out or hold on for more.  It was a stroke of luck that many had no choice but to cash out because it was life changing money.  But, this was exactly what the stock broker was counting on.  Many held onto their fortune for that reason but the stock market was fickle and that fortune began to dwindle. 

The moral of the story here is to always fight for what is right even, any small difference is a big one in the long run. 

CEO of Penske Media Group. Experienced Content Editor with a demonstrated history of working in the newspaper industry. Spoken on stages around the globe - NYU, US Embassy, P&G Toronto, and much more.

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