Riding The Rollercoaster: Understanding the GameStop Short Squeeze

     The Beginning of The Storm   

    In early January of 2021, the world watched as a group of retail investors threw all of their chips into one stock, GameStop. This group of retail investors were apart of a sub-Reddit by the name of WallStreet Bets. everyone who was apart of the group had the burning desire to challenge the status quo of big WallStreet Hedge funds. The GameStop short squeeze caught the attention of millions of other americans. This showed the true power of individual investors, how the stock market works, and the influence of socail media on financial markets.

   
 Word got out about Melvin Capital, A prominant hedge fund, opening a huge short position valued at around 113 million. Shorting a compnay means you are betting that the value of the stock goes down, or the company goes out of business. When WallStreet bets caught wind of this massive short position the sub-reddit rallyed the GameStop stock into unprecedented levels, leading to the intense panic of big financial institutions. Janurary 24th, 2021 Gamestop hit a peak price of $81.06 per share, the highest in company history.
This rally of GameStop earned average americans hundreds of thousands of dollars and the leading investor, Keith Gill, 48 million dollars. This caused many huge financail institutions to file bankruptcy after this unprecedented event.
    The GameStop short squeeze of 2021 will be remembered as a watershed moment in the history of financial markets. It was more than just a unprecedented surge in a single stock; it was an event that shook the foundations of Wall Street and across the globe. As the dust settles and GameStop's stock price returns to more subdued levels, the impact of this extraordinary episode continues to echo throughout the investment community. The GameStop short squeeze prompted a much-needed reevaluation of market practices and regulatory oversight. Lawmakers and regulators are now grappling with how to address issues of market manipulation, transparency, and investor protection in an era of heightened volatility and digital connectivity.




Sources:
https://www.cato.org/cato-journal/fall-2021/gamestop-episode-what-happened-what-does-it-mean
https://www.thestreet.com/investing/stocks/a-timeline-of-the-gamestop-short-squeeze

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