... GameStop, a company that sells physical copies of video games next to Auntie Anne’s pretzel shops in dying malls, is the most highly traded asset in the United States, a “meme stock,” and currently the primary front in a micro class war. GameStop’s stock price jumped from $4 last summer to $20 at the end of 2020, to $40 two weeks ago. It was worth $100-ish at times on Monday and Tuesday, and as I write this it is worth close to $300. Essentially, many normal-ish people have made a huge bet against gigantic financial institutions and are currently winning. In practice this means we are seeing one of the largest wealth transfers from the financial ruling class to the middle and middle-upper classes in recent memory, so it is, understandably, the only thing anyone is talking about.
How did this happen? A bunch of Redditors in the r/WallStreetBets subreddit, led by a person going by "DeepFuckingValue," analyzed GameStop stock and concluded that its price was undervalued. They then, over the course of months, identified a weakness in the strategies of several giant hedge funds that had bet many millions of dollars that GameStop would fail.
These Redditors purchased huge numbers of GameStop stock at low prices (and then kept buying more as the prices rose), held it, and are currently forcing something known as a “short squeeze” that is driving the price up and is emptying these hedge funds in the process. These Redditors are diamond-handing (holding) their stocks, imploring each other to not be a weak-minded stock seller (paper hands) and are waiting for their messiah Ryan Cohen—the CEO of Chewy.com who invested millions in GameStop last year—to hitch them to his rocket and take them to the moon/sun/Mars (become very rich). ...
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The rallying cry of the entirety of the WallStreetBets subreddit and its extraordinarily chaotic Discord became: buy GameStop stock, hold it, and fuck over the big hedge funds, specifically Melvin Capital and Citron Research, which, throughout this entire saga, was publishing various YouTube videos about why it believed GameStop stock would go down....
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This brings us to this week. By all accounts, Melvin Capital is in deep trouble. Earlier this week, it took in $2.75 billion in funding, reportedly to help cover its GameStop shorts. A prominent venture capitalist said he was buying GameStop stock. Every financial publisher is talking about GameStop stock. Elon Musk, who, again, famously hates Tesla's short sellers with a burning passion, tweeted about GameStop stock and said that he's hanging out in the WallStreetBets Discord. Meanwhile, the GameStop shorts have seemingly not figured out an elegant way out of this...
I'd noticed a bit of a ruckus but had been out of the loop until now.
