“BUCKLE THE FUCK UP.” (Another user, u/DeepFuckingValue, appears to have held major amounts of GameStop shares for over a year-giving them demigod status among r/WallStreetBets superfans-while hedge fund manager Michael Burry of The Big Short fame has also long held the stock.) “IM NOT SELLING THIS UNTIL AT LEAST $1000+ GME”-GME is the stock ticker symbol for GameStop-reads one of the subreddit’s most popular posts, from u/dumbledoreRothIRA, a user who claimed to have made nearly $300,000 in the scheme as of this morning. Community pressure to hold for more gains, rather than sell is intense, as the gravy train only lasts as long as a major selloff can be avoided. Value is weird!īut unlike most Internet memes, there’s big money to be had here: some r/WallStreetBets users are claiming massive overnight gains as GameStop’s stock continues to defy typical market physics. The r/WallStreetBets community, which has more than 2 million subscribers, has turned GameStop into a meme stock-it has value because a small number of people decided it would be fun (and potentially profitable) to pretend it had value, other people wanted in on the fun (and profit), and suddenly it had real value. With so many people-many of them well-established Wall Street institutional players-shorting the company, it could be possible to convince enough Redditors to buy up a bunch of GameStop stock, thereby increasing its value enough to trigger a short squeeze, blasting the stock into the upper mesosphere to the benefit of those who bought in early-all while sticking it to the man. Which brings us to Reddit, and more specifically, r/WallStreetBets, a half-fascinating, half-terrifying forum for meme-fueled day-traders that bills itself as “4chan with a Bloomberg terminal.” The short version of the story is this: influential r/WallStreetBets users realized that a staggering amount of GameStop’s shares were being shorted- per CNBC, it was the most-shorted stock on U.S. It’s a vicious cycle that can destroy short sellers, but benefit investors who owned the stock before the squeeze. That drives up demand and reduces supply, further increasing the price and thus getting even more short sellers to buy, and so on. But when a huge number of people are shorting a particular stock that suddenly takes off, it can trigger a “short squeeze,” wherein short sellers rush to buy up more shares to give back to their lenders. For instance, if a company they’re shorting suddenly skyrockets in value, they can buy the shares back at a slightly higher price rather than risk a bigger loss-if you short Tesla at $20 and it climbs to $30, you may decide to eat the $10 loss rather than chance an even worse fate. Short sellers have ways to defend against this.
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