GameStop Short-Sellers Lose Betting Battle Against Reddit Traders
GameStop is the talk of the town recently as its shares tripled in value over the last three days this week.
This was after a buying spree of retail investors on the Reddit site, and they seem to have facilitated the increase of GameStop shares.
People are seeing it as their way of opposing hedge funds and investing norms.
Wall Street Bets: who are they?
The Wall Street Bets is a subreddit where its members have banded together trying to put a dent in hedge funds trying to sell short shares.
Although currently, people have put a halt on buying GameStop shares on stock trading apps, and Redditors initially speculated that it may have been removed or put on private.
As of press time, the subreddit is still up and running.
GameStop’s shares have hit a record high and retail investors cheer each other on, especially on the subreddit Wall Street Bets, which currently has around 3.5 million members.
They also have had the past three weeks bidding up on GameStop, resulting in its shares shooting up sky-high, up to 1,200% since the Wall Street Bets first added in on January 11.
But as the higher in value the stock went, the higher the losses incurred by the companies that had bet before against any price rise.
They had to repurchase the shares, whatever the cost may be.
According to data from financial-analytics companies, high-profile hedge funds have already lost $5 billion for this month alone.
But as the stock trading operates, the high comes to the lows. The stock dropped to about 64% on Thursday after retail trading app Robinhood prevented trading on GameStop stocks and other highly volatile stocks.
It wasn’t just GameStop that Robinhood restricted trading on. AMC and Blackberry were included, and other companies who Robinhood informed they could close positions in the stocks, but they’re not allowed to buy more shares.
Here’s also the list of hedge funds that lost in the battle versus the day traders:
- Point72 Asset Management (CEO and Chairman, Steve Cohen)
- Andrew Left’s Citron Capital
- Melvin Capital (Founder, Gabe Plotkin)
- D1 Capital Partners (Founder and CIO, Dan Sundheim)
- Maplelane Capital
- Candlestick Capital Management
GameStop was founded in 1984 in Dallas, Texas, by Garm M. Kusin and James McCurry.
They sell video games, consumer electronics, and gaming merchandise.
Their headquarters are in Grapevine, Texas, and has 5,509 retail stores in the US, Canada, Australia, New Zealand, and Europe as of last year.
Editor’s Note on GameStop Stock Battle Against Hedge Funds:
This article is created to update you of the recent focus of Stock Market, GameStop.
What are your thoughts on this piece? Have something to share?
Send us a message by clicking the ‘Contact Us’ button below! We’d love to hear back from you.
Learn the truth about Robinhood!