How r/WallStreetBets gamed the stock of GameStop

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The GameStop chaos is what happens when a stock becomes a meme. While the Redditors of r/WallStreetBets are buying options, GameStop shorts are getting squeezed, and some big Wall Street firms are making profits. Here’s what happens when retail investment starts getting social.

There are three things to remember as you watch the chaos unfolding with GameStop’s stock price. First, Wall Street is just what happens when you mix money with feelings. Second, the internet is real life. And third, the Street always wins, especially if you’re trading with Robinhood. If you haven’t been paying attention, GameStop’s stock has been soaring in a remarkably volatile fashion; on January 22nd, GameStop zoomed upward 69 percent before it triggered a circuit breaker halt.

This drove up the stock price for GameStop, as their counterparties had to load up on stock to balance, and then more stock as more people bought options and so on. The soaring stock meant some shorts had to cover, sending the stock up further. As of January 26th, short-sellers have been trolled out of about $5 billion in 2021, just from their GameStop positions alone.

 

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