GameStop’s business model might be unchanged in recent weeks, but it’s definitely not enough for them to become more valuable than it was at the start of 2021.
The company sells video games and Funko Pops and video games you’ve never wanted to play. However, the company’s stock price in recent days became very volatile. All thanks to day traders driving tons of money into the retailer on the market.
As a result, the move seen larger financial companies betting against these buyers in expectation of the stock failing. Clearly this crusade was not tied to whatever the actual company was doing. There was no big statement that enhanced or removed consumer confidence. Just a lot of people organizing online to buy stocks. When you see the development of the stock spread out over the course of years, it really is spectacular to see the exponential growth.
But by Monday afternoon, after the quick jump to $150 a share, the stock had crashed to half of that.
WallStreetBets from Reddit was responsible for the rocketing of sales, and some on there have made huge amount of money in the rise and fall of GameStop stock. And there’s a lot more involved than people simply buying a lot of stock of a company that’s fallen on tough times in recent years. Those in the subreddit had been eying GameStop for some time, and a number of market factors and more traditional economic players criticizing the moves eventually made those on WallStreetBets even more willing to buy into the stock to prove them wrong:
More and more users joined the movement as shares began their stable rise during the last four months of 2020. And as part of their welcome party they were recapped of the code of conduct: never sell, never surrender.
Or in WallStreetBets idiom, only buy if you have diamond hands.
That sense of unity, and rebellion against the people who have financial power, has worked in a big way. According to Business Insider, those who were betting in contradiction of GameStop have lost huge amounts of money in a short period of time.
Mark-to-market losses for GameStop shorts on a year-to-date basis reached $3.3 billion when trading closed on Friday, according to data from the financial-analytics firm S3 Partners. Losses totaled nearly $1.6 billion on Friday alone as shares rocketed 51% higher into the close.
It’s a trend that will sound very familiar to anyone who has actually bought and sold a game at GameStop:
Brandon Kochkodin’s piece on Bloomberg has a much more thorough breakdown of the subreddit’s campaign over the last year or so, including some screenshots of Redditors loosely organizing and showing off their big profits. But it’s fascinating to see real-world implications of some day traders banding together online, apparently in the hopes of sticking it to financial gurus who claim they know far more about the market. A market that, suddenly, they’re struggling to keep up with.
