Can anyone TLDR; the Gamestop / Wallstreetbets thing?

Mave

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So far I’ve picked up that “rich investors” were betting(?) that Gamestop stock would go down. And that members of /r/wallstreetbets started buying stock so the stock would go up? But somehow the stock then went insanely high and for some reason the wealthy investors lost billion(s)?
 

Stybar

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So, what I know, I learned from TL;DRs all over reddit. But, as I understand it...

The whole story revolves around the concept of "short selling". It means that you try make big bank off of the falling price of a stock. Reddit caught wind of investors "short selling" GME (GameStop) stocks, and started buying those stocks like crazy, driving the price up instead of down. People who were short selling to make money of off a falling stock, now lose money because it's going up.

Imagine a company has 100 bananas. Every banana is worth $20. You guess that soon, the worth of those bananas is going to drop to $5 a piece. So, you go to some investors, who have some of those 100 bananas. You ask them to borrow 10 bananas, and promise to give them back at a later date. You then sell those bananas, and make $200. Later, when the worth of those bananas has indeed dropped, you buy them back for $5 a piece, spending $50 in total. You give those 10 bananas back to the original owner, and you keep the $150 difference.
What happened now, is that after you sold your bananas for $200, other people start massively buying any and all bananas they can find, and the price for bananas suddenly skyrockets to $100 per piece. You still have to buy them back, because you have to return them to the person you borrowed them from. So, now you're forced to spend $1000 to get those 10 bananas back, and you've lost $800.


It's a bit more complex than that, but this is how I understood it. The whole stockmarket stuff is crazy and weird, and I barely understand half of it.
 

Mave

TMS Founder
Administrator
Messages
177,757
Location
Belgium
So, what I know, I learned from TL;DRs all over reddit. But, as I understand it...

The whole story revolves around the concept of "short selling". It means that you try make big bank off of the falling price of a stock. Reddit caught wind of investors "short selling" GME (GameStop) stocks, and started buying those stocks like crazy, driving the price up instead of down. People who were short selling to make money of off a falling stock, now lose money because it's going up.

Imagine a company has 100 bananas. Every banana is worth $20. You guess that soon, the worth of those bananas is going to drop to $5 a piece. So, you go to some investors, who have some of those 100 bananas. You ask them to borrow 10 bananas, and promise to give them back at a later date. You then sell those bananas, and make $200. Later, when the worth of those bananas has indeed dropped, you buy them back for $5 a piece, spending $50 in total. You give those 10 bananas back to the original owner, and you keep the $150 difference.
What happened now, is that after you sold your bananas for $200, other people start massively buying any and all bananas they can find, and the price for bananas suddenly skyrockets to $100 per piece. You still have to buy them back, because you have to return them to the person you borrowed them from. So, now you're forced to spend $1000 to get those 10 bananas back, and you've lost $800.


It's a bit more complex than that, but this is how I understood it. The whole stockmarket stuff is crazy and weird, and I barely understand half of it.
That was a great explanation! Thanks Sty!
Also saw the video of the billionaire stating "they're stealing from wealthy people!!!"
 

Stybar

Yeah, groupsex seems to be the way to go
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14,055
That was a great explanation! Thanks Sty!
Also saw the video of the billionaire stating "they're stealing from wealthy people!!!"
The drama goes even deeper... RobinHood, and other popular stock trading apps, have blocked any transactions involving GME or AMC. However, the hedgefunds and other "official" traders can easily trade those stocks without issues. People are now rallying against those apps as well, even forcing Ted Cruz to agree with AOC.

These years are a weird time to be alive, man.
 

Mave

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The drama goes even deeper... RobinHood, and other popular stock trading apps, have blocked any transactions involving GME or AMC. However, the hedgefunds and other "official" traders can easily trade those stocks without issues. People are now rallying against those apps as well, even forcing Ted Cruz to agree with AOC.

These years are a weird time to be alive, man.
Yeah I noticed that on Reddit too, RobinHood should see some consequences for this...
 

Stybar

Yeah, groupsex seems to be the way to go
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14,055
Yeah I noticed that on Reddit too, RobinHood should see some consequences for this...
They won't. This seems like a "people are winning against big business" right now, but I guarantee you that in two weeks, everything will be back to normal.
 
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