Event of the Year: The GME Stock Story
First, what’s GME? GME aka Gamestop is a videogame and related merchandise retail seller which has over 5000+ physical stores in North America, Europe and Australia.
GME struggled to modernize with games going online and physical storage devices taking a hit. This led to a lot of hedge funds – call them vultures if you don’t know who they are – buying a short position in GME, thinking they will make big bucks when the price will go further down.
But around a month back, things changed, and their stock price rose from $20 apiece on 11th January to around $347 on 27th January 2021. A 1630% return. This all started with Ryan Cohen from RC Ventures disclosed a large position in the stock stating that he can help GME grow. How? No one knows. And boom! This became a meme, a meme on reddit. Twitter’s poster boy, Elon Musk and Chamath Palihapitiya started putting money in it. And retail investors – people like you and me – started pouring in money too. Just. For. Fun. Crazy, right?
Now, those vultures had to rethink. They had to buy GME stocks to cover their short positions – in a fear that if someone asks for those stocks, they should have some token stocks to give them – which further led to a rise in the demand for stocks.
This was perpetuated by gamma squeeze – more on that in coming days – and just like that, some memers on reddit brought the big guys on Wallstreet down. Robinhood (low commission app like Zerodha) put trading GME on halt and was criticized heavily for that.
This was the event of the decade. The Davids made the Goliaths kneel on their heels. Irrational, but sassy.
$GME, SET, MATCH
This isn’t a t-shirt stuff. Definitely, deserves a hoodie.
