A huge hedge fund "shorted" GameStop assuming it was gonna go out of business. Essentially they made a bet that GameStop would fail. And if it did, they'd make money. BUT, if GameStop stock goes up after they short it, they lose money. And like a lot of money. They made a huge bet GameStop (brick and mortar) would go under and in a week, it's gone up 600% thanks to reddit and the internet people. The hedge fund Melvin Capital is losing billions of dollars off of this bet.
I need a tl;dr on this situation. It sounds funny as hell but I don’t understand the implications.
A huge hedge fund "shorted" GameStop assuming it was gonna go out of business. Essentially they made a bet that GameStop would fail. And if it did, they'd make money. BUT, if GameStop stock goes up after they short it, they lose money. And like a lot of money. They made a huge bet GameStop (brick and mortar) would go under and in a week, it's gone up 600% thanks to reddit and the internet people. The hedge fund Melvin Capital is losing billions of dollars off of this bet.