War for GameStop between Reddit and Wall Street

War for GameStop between Reddit and Wall Street

What happened?

If you didn’t know about GameStop before all this fuss over it, we’ll tell you. GameStop is an ordinary American high street shop that sells games, consoles, and other electronic devices. Obviously, the Covid-19 pandemic hit hard such kinds of shops and GameStop was no exception. And who would go buying games in a street shop when everything is sold online? 

As you can see, GameStop was having a tough time. Therefore, a lot of hedge funds made bets on GameStop to lose its value and started selling the stock. And GameStop would have really fallen, but, all of a sudden, people in Reddit began discussing this topic, made it trending, and started massively buying GameStop shares. 

As a result, the demand raised its stock price enormously, and all the investors, who bet on its dropping, lost billions of dollars. This activity has created a so-called "short squeeze". The short sellers betting against GameStop were forced to buy more GameStop stock to cover their losses. That in turn drove the price even higher, which then again forces more short sellers to cover their losses, which pushes the price up even more. 

What was the real purpose?

Some people started buying GameStop just for fun. Others wanted to test what the internet community is capable of. There is even an opinion that it was kind of revenge against the big financial companies accused of the market crash in 2008. Even Elon Musk entered the game with a tweet, which sent GameStop further upwards. 

1.png

Result

The total cost of all the bets against GameStop reached $5 billion, according to Investopedia. "We're seeing a phenomenon that I have never seen," Jim Cramer, a Wall Street commentator.

GameStop stock jumped more than 822%, from $17.25 at the beginning of the year to a high of $159.18 on Monday. On Thursday, it jumped to $483.00, before halving again. Today it’s trading near $380.00. 

All this GameStop chaos made a huge impact on the large-cap indexes. The S&P 500 and Dow Jones both dropped significantly on Wednesday, down 2.6% and 2.1% respectively. Some analysts consider that the index selloff happened because of the investors who took their money out of these indexes to cover short bets made on stocks like GameStop.

Let us finish on a positive note. This situation gave rise to a lot of memes that you can see below.

3.png2.png

Watch our video!

Similar

What to Trade on August 22–26?
What to Trade on August 22–26?

How Energy Crisis Affects German PMI August 23, 2022, 10:30 GMT+3­­ Germany will publish Flash Manufacturing PMI data on Tuesday, August 23, at 10:30 MT time (GMT+3)…

What will move the market on November 22-26?
What will move the market on November 22-26?

Last week was not full of events, but we still saw decent moves in the charts of majors, S&P500, NASDAQ, oil, and crypto. The upcoming week will bring even more volatility to your favorite assets!

Latest news

FED and BOE Make Another Attempt to Beat Inflation
FED and BOE Make Another Attempt to Beat Inflation

The Federal Reserve (Fed) will announce its Interest Rate Decision and make a statement about the future monetary policy on Wednesday, September 21, GMT+3. After the higher-than-expected inflation numbers published on September 13, there’s almost no doubt the Federal Reserve will come up with another 75-basis-point rate hike. However, surprised by the CPI numbers, several Fed members announced the possibility of a 100-basis-point rate hike on Wednesday.

Deposit with your local payment systems

Feel the Team Spirit

Data collection notice

FBS maintains a record of your data to run this website. By pressing the “Accept” button, you agree to our Privacy policy.

Callback

A manager will call you shortly.

Change number

Your request is accepted.

A manager will call you shortly.

Next callback request for this phone number
will be available in

If you have an urgent issue please contact us via
Live chat

Internal error. Please try again later

Don’t waste your time – keep track of how NFP affects the US dollar and profit!

Beginner Forex book

Beginner Forex book will guide you through the world of trading.

Beginner Forex book

The most important things to start trading
Enter your e-mail, and we will send you a free Beginner Forex book

Thank you!

We've emailed a special link to your e-mail.
Click the link to confirm your address and get Beginner Forex book for free.

You are using an older version of your browser.

Update it to the latest version or try another one for a safer, more comfortable and productive trading experience.

Safari Chrome Firefox Opera