There was this long-held idea about social media that it wasn’t “real life,” and this feels like just another form of proof that it is in fact real life - to the extent that any of the stock market is “real,” at least.ī.E.: Yeah, that part is fascinating: Is it that online reality has become “real,” or just that what we think of as reality has become more virtual? I would not be surprised if some of these redditors aren’t playing with any “real” money, except, of course, they are. It’s not just that some weird stuff is happening with the stock market it’s that this is being driven by a huge group of anonymous people who have all somehow coordinated enough financial activity to create a noticeable blip in the global financial world.
One element that I find so fascinating about this, and why I think it’s created so much attention, is the whole extremely-online Reddit element. It's heavily simplified, and I left out a few things like like puts and naked calls, but hopefully anybody who is new to all of this will get the gist of it. Did my best to explain the GameStop hedge fund massacre in seven TikToks. I am mostly capable of following that, but I’m also a learner who does better when math-related information comes in my ears versus my eyes, so this thread of short TikTok videos was also helpful to me. What the redditors are doing is basically pumping the price of that book/stock to astronomical amounts so that the short sellers are, as the saying goes, “squeezed.” Only it’s not $10 we’re talking about but billions of dollars. (This is a highly reductive and possibly inaccurate description of what short sellers do.) But if, in that span of ten days, that book’s value goes up to, say, $1,000, you will have to buy the book for $1,000 before you return it to your friend. Now imagine that book is actually the stock of a company. So in ten days, you buy the book for $4 and return the book to your friend. You are betting that, in ten days, you will be able to buy that book for cheaper. You then sell that book to someone else for $10. You ask to borrow that book and promise to give it back to them in ten days. Let me give it a shot: Say your friend has a book worth $10. Maybe another helpful thing can be to explain how short selling works in a ridiculously simplified fashion. Some of them were looking to take advantage of its current dire straits, with little concern for or interest in its long-term financial health.) But then again, a lot of the short sellers weren’t necessarily looking at the company’s fundamentals either. As any smart investor will tell you, a company’s fundamentals are a lot more important than any momentary stock-market surges or crazes. So that’s good! (Does that mean AMC is completely fine now? No, not really.
And AMC just announced that it has raised a bunch of new capital and is no longer in any danger of bankruptcy, which was a real possibility last year. Is this right? Am I roughly in the right area?īilge Ebiri: Yeah, that’s about it. Buying them costs money, but it’s also like participating in a meme, which is why they’re getting called meme stocks. And now it’s bleeding over into other threatened companies, including AMC and BlackBerry. A bunch of redditors in a group called WallStreetBets then bought a billion gazillion GameStop shares in order to screw over those hedge-fund guys, and they did it with apps like Robinhood that make it really easy to trade stocks. A bunch of hedge-fund guys, because of how the stock market works, were able to bet that GameStop will fail in a way that earns them money. GameStop, a company largely made of brick-and-mortar stores, has been in dire straits thanks to the pandemic and general trouble in the retail world. reddit stock traders juiced it so it would rise, which fucked the finance bros- rachel handler January 27, 2021 Me: can u explain in 20 words what’s going on with “game stop”? In case this is similarly helpful for anyone else. Kathryn VanArendonk: The most simple, basic, explain-it-to-a-child version I have been able to find for what is happening to GameStop stock actually comes from our co-worker Rachel Handler’s boyfriend.
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