The group WallStreetBets, which has a thriving membership on the popular social-media discussion forum site Reddit, was especially buoyant about GameStop’s fortunes, which helped push its share price higher during the final quarter of 2020.

This bearish view was only further reinforced by GameStop’s share price, which had been on a long-term downtrend-from just below $50 at the start of 2014 to a mere $3 about a year ago.īut was GameStop, in fact, a failing company? According to some internet traders, absolutely not. It was widely deemed a company in declining health-indeed, its mere existence as a physical shop was viewed on Wall Street as being decidedly outdated, and its business model was hurtling towards failure. GameStop is an American brick-and-mortar retailer that specialises in video games, consumer electronics and gaming merchandise. Indeed, even today, despite this story first making the rounds in late January, what is likely to be one of the biggest financial news stories of the year remains firmly wedged in the public’s consciousness. And along with GameStop, it’s also likely that the words and phrases Reddit, WallStreetBets and the stock market have graced your screens almost as frequently. Unless you’ve been completely cut off from the outside world, there’s a good chance you’ve heard the word GameStop circulating around social media and in news headlines over the last couple of months.

Overnight, the group has seen its Discord server shut down - with the platform citing hateful content, not financial fraud as the reason behind this - and temporarily made its subreddit private after overwhelming interest and activity.By Alexander Jones, International Banker Reddit group WallStreetBets has been widely credited as being the heart of the campaign to increase the price. Yesterday, the Biden administration said Treasury Secretary Janet Yellen and her economic team are 'monitoring the situation.' They'll look at this and say 'We won the game,' if that's winning - it's unclear where the finish line is.' 'The thing that concerns me most at this point is whether some of these investors will start to get out today. 'It clearly has nothing to do with the fundamentals of GameStop itself any more, and much more to do with pop psychology of who's going to be left holding the bag,' he said. The reporter added that these events have raised 'real questions about stock manipulation, about the power of what's taking place on places like Reddit' as well as the motivation behind this campaign. 'There's nothing normal about what you're seeing with this stock right now,' said Sorkin. GameStop's share price has risen more than 700% since it opened on Friday at $42.59, closing last night at $347.51 after several days of rollercoaster trading.Īfter hours trading has since brought the price back down to $292. It quickly reached the point where there were more short shares on the market than there were actual outstanding shares of GameStop. The rapid increase in GameStop's share price has been driven by a combination of short-sellers - those selling borrowed stock with the hopes of seeing the price lower before they're obliged to buy it back - and online investment communities campaigning to increase that price and the short-sellers losses. Two other hedge funds, Citadel and Point72, have infused approximately $3 billion into Melvin Capital in an effort to shore up its finances. The reporter said the short squeeze had 'not been enough to put them out of business but boy, did they come close.' Sorkin said he did not have an exact figure but described it as a 'huge loss.' He added Plotkin claims any speculation that the company was filing for bankruptcy is false.

The company is credited as the one that shorted GameStop's stock before it was 'attacked by an army of investors trying to push up the price.' A hedge fund at the heart of the GameStop stock surge has withdrawn from the financial battle, closing out its short position at a loss.ĬNBC's Andrew Ross Sorkin revealed Melvin Capital has sold all of its shares in GameStop during the network's Squawk Box programme, following a conversation he had with the fund's manager Gabe Plotkin.

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