#wallstreetbets Takes on Hedgefund and Wins – wsb and the Spike in GameStop Explained

Let’s talk about this historic moment and explain it too – #wallstreetbets Takes on Hedgefund and Wins – wsb and the Spike in GameStop Explained

I am not a day trader but today when I heard about #wallstreetbets and what they did to Melvin Capital and CitronResearch, I was watching the stock price of GameStop fluctuate for the last hour of trading.

GameStop is a company that sells games and gaming equipment.

They have had a low stock price for years, hovering between $3 and $5. Well, today at 10am the stock went up as high as $469.14!

Well, when the stock price was low, Melvin Capital and CitronResearch decided to make a bet that the company would go out of business.

From what I hear, they were taking on enormous Short positions.

Later on, GameStop had good things happen for it business wise, so the stock price started rallying.

A trader at #wallstreetbets (a group with 2 million and probably growing followers), a social media group on Reddit, saw all the short positions and the value in GameStop and suggested the group go the opposite way, buy stocks and calls (which are basically bets that the stock will go up – the opposite of puts).

What happened is they drove the price of GameStop so high that it caused a short squeeze.

What is a short squeeze?

Taken from Investopedia – ” A short squeeze occurs when a stock or other asset jumps sharply higher, forcing traders who had bet that its price would fall, to buy it in order to forestall even greater losses. “

This video is very helpful in understanding the short squeeze and GameStop-

I unfortunately know exactly what it is because I’ve lost over $10,000 in my own short squeeze experience with Tesla and that tweet Elon Musk did in 2018.

So, #wallstreetbets traders collectively decided to buy GameStop (or buy calls), driving the price up, and force a short squeeze.

From Market Watch – “The stock leaped on Tuesday after the billionaire investor Chamath Palihapitiya tweeted that he had bought call options on the stock with a February 19 expiration date.

Shares skyrocketed again when, minutes after markets closed on Tuesday, Tesla CEO Elon Musk tweeted “Gamestonk” and a link to the WallStreetBets forum.”

And it hurt, as the Wall Street Journal reported on Monday that Melvin Capital would receive $2.75 Billion dollars from Citadel and Point72 Asset Management.

What makes it so historic is that everyday people got together on Social Media and won against hedgefunds at their own game.

The media was portraying #wallstreetbets as the bad guys, and then it became more than an investment, and more of a social movement.

They are exposing just how elite wall streeters manipulate the market for years for gains, and when everyday people do it and wall street big shots lose, they start asking for reforms.

This video is great at showing the social movement behind #wallstreetbets

Now you are going to get people siding with #wallstreetbets because they are being beat up by the media and wall street elites, and buying stocks they recommend such as nokia, amc and blackberry.

Traders were on live forums all morning during trading, some extremely upset about how #wallstreetbets was taken down by Reddit and that RobinHood halted trading.

It’s more a movement now, a social movement that if you understand and follow may make you money (or lose you money).

What do you think of #wallstreetbets, hedge funds and the stock market? Leave your comments below!