![]() ![]() Mobile-friendly trading apps such as Robinhood and Trading212 both suffered outages during the opening of the American markets Wednesday morning as retail traders flooded in to join the frenzy. BlackBerry, AMC, Nokia, and Bed Bath & Beyond have become the next set of heavily shorted stocks to enjoy the WSB treatment, posting 24%, 310%, 70%, and 46% gains on Wednesday, respectively. The WallStreetBets traders didn’t stop there. The world’s richest man, Elon Musk, added even more fuel to the WSB inferno by tweeting his support with the word “ Gamestonk!” – a deliberately misspelled version of “stock” popularized by an internet meme. Cohen’s 13% stake in the company is now worth $2.5 billion. In nine days, GME stocks skyrocketed over 1,800% from $19.79 to a high of $380. Related: Market Wrap: Bitcoin Reverses Wednesday’s Losses, Ether Climbs If they’re successful, they hand the initial borrowed amount back and pocket the difference. When institutional investors short-sell a stock, what they actually do is borrow a number of shares they believe will drop in value, sell them at the highest price possible and try to buy them back later at a lower price. A short squeeze might sound complicated but it’s actually a relatively straightforward process. The WallStreetBets Reddit community saw this as an opportunity to push back against the financial elite and decided to whip up a buying frenzy in the hopes of creating a major short squeeze. This was likely an attempt by large players to out-muscle amateur traders and induce panic selling. 11, causing the stock price to soar 50%.Įven after Cohen joined the board and the stock price began to rebound, a handful of hedge funds and other institutional investors continued to short-sell GME stock. – later joined the GameStop board along with two former associates from his pet health products company on Jan. Cohen – the largest individual shareholder of Apple Inc. The author noted that GameStop stock was being heavily sold short at the time by a number of institutional investors, despite the fact “their books are rock-solid” and Chewy CEO and co-founder Ryan Cohen had spent almost $76 million for a 12.9% stake in the company. Related: US Congress Plans Hearings on GameStop Market Pumps Since November 2015 the company’s stocks had been steadily declining due to a shift from physical media to digital, and the arrival of the COVID-19 pandemic. 19, 2020, a Redditor with the handle Player896 published a post in the channel entitled “Bankrupting Institutional Investors For Dummies, ft GameStop.” In it, the person outlined a strong bullish case for GameStop (GME), a brick-and-mortar business that primarily sells video games and consoles. Described as “like 4chan found a Bloomberg Terminal,” the community has caused huge disruption to financial markets this week. The group “r/Wallstreetbets” (aka WSB) is a longstanding subreddit channel where over 3.5 million Reddit users discuss highly speculative trading ideas and strategies. A decentralized Reddit forum called WallStreetBets is causing chaos on Wall Street. ![]()
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