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What Is Going on With GameStop? Meme Stocks Explained


Thanks to some financially savvy Redditors, and a push from Elon Musk, a number of flailing companies, including GameStop, are having a great week on the stock market. Here’s what you need to know.
Did you wake up this morning, check the news, and have FOMO about not buying GameStop stock, but also had no idea what was actually going on? Us, too. GameStop has had a rocky time of things for the past few years and particularly during the pandemic, when it has had to shutter stores and saw its stock price plummet. Until yesterday, that is, when its stock price rose astronomically thanks to Reddit. We had questions and you probably do, too, so let’s see if we can answer some. Something has happened with GameStop stock. According to my Twitter feed, it seems that way, yes. TL;DR? Redditors on the r/wallstreetbets subreddit (bio: Like 4chan found a Bloomberg terminal) banded together to buy GameStop stock to inflate the price, make a huge profit for themselves, and thus destroy the financial guys who were betting against the company. Think of it as a DDoS attack on hedge funds. What is short selling? Short selling is when you bet against a stock. It’s an easy concept, but not easily explained, so here I will rely on Investopedia: In short selling, a position is opened by borrowing shares of a stock or other asset that the investor believes will decrease in value by a set future date—the expiration date. The investor then sells these borrowed shares to buyers willing to pay the market price. Before the borrowed shares must be returned, the trader is betting that the price will continue to decline and they can purchase them at a lower cost. Short selling can be immensely profitable or infinitely bad. If the stock price goes up, you can lose more than you put in.

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