Suddenly, Wall Street can’t stop talking about GameStop, a video-game retailer whose stock price is popping far beyond what most people think the business is worth.Why is everyone talking about GameStop?
GameStop is a video game retailer. Like most stores that still sell products in person, it’s had a hard time lately as video game sales have moved online and as the COVID-19 pandemic keeps people away from stores. It’s still in business, but few people expect it to grow again.
Since short sellers — frequently hedge funds — are essentially betting against a company’s success, it can be a risky position to take. Any positive news or enthusiasm for the stock will push up that stock’s valuation, minimizing profit taking for the short seller. In the case of GameStop, chatter on massive online trading forums invigorated interest in purchasing the stock, pushing up the price, which in turn fueled more interest.
S3 Partners, a financial data company, said Wednesday that its analysis found short sellers had lost $23.6 billion on GameStop in 2021.The internet has been used to prognosticate about stocks for decades, but there’s never been anything quite like the Reddit community called r/wallstreetbets, also known as WSB.
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