The air is literally burning at the stock exchange. Hobby speculators on Reddit managed to get a GameStop stock bobbing around in the $ 10-20 range in the past few days to soar over $ 300
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What happened?
Im Subreddit Wallstreetbets There is a gathering of stock market enthusiasts and system critics who seem to take great pleasure in wiping out large hedge funds. And that is still formulated mildly, because apparently the big investors drove the rise in GameStop shares Billions in losses a how GamesWirtschaft reported.
So-called shortsellers, i.e. investors who speculate on falling prices, were specifically affected. They borrow shares and then sell them (so-called short sales) in order to later buy them back at a cheaper price and make a profit.
This is where the rebellious Reddit users came in. They drove up the stock price by bought the paper en masse. As a result, shortsellers were forced to buy more GameStop shares in order not to incur more losses. A snowball started rolling because the share price continued to rise due to the purchases made by large hedge funds.
A targeted action by hobby speculators catapulted the GameStop share into the game within a few days new record highs
As Twitter user Robert Laubach explains, hedge funds are said to have carried out more short sales than there are at all GameStop shares.
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This is possible through uncovered short sales, which make it possible to sell stocks that you don’t even own. This type of trading is banned in the EU, as the stock exchange expert Thomas Vittner explained in the blog post.
Now the trading of the GameStop paper has apparently been suspended in order to prevent further damage to the hedge fund companies involved. What if one loses is the other gain. This is how speculators involved in the guerrilla action proudly shared their juicy profits on Reddit:
Link to Reddit content
Meanwhile, even entrepreneur Elon Musk shows himself in one Tweet excited about the events. Members of the subreddit celebrate themselves as rascals in the style of “Robin Hood”. The whole incident is a memorable example of the potential power (and danger) of coordinated groups on the Internet.
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How game postponements affect the economy
Need more background knowledge? In the above-linked interview with experts, we will work out how strong a game shift can have on the share prices of companies.
