First off, the article you posted was apparently outed as fake news. Melvin is still in and still losing their asses. Now that we've got that out of the way:
Melvin, and apparently several other hedge funds, shorted GameStop stock expecting to force the company into bankruptcy and make money doing it. They got greedy and actually shorted more stock than was actually available. A bunch of redditards caught wind of this and bought up all the shares of GameStop stock, driving it's price up and causing these hedge funds to lose massive amounts of money. Meanwhile, the actual stock price of GameStop is now like 50 times higher than it was last week, meaning some of those redditards will make serious bank on this happening.
If you don't know what a short is read this paragraph. So this is probably going to be an over-simplified example but here's the jist of it: We have two people: Bill and Tom. Bill goes to Tom and says "I'm going to sell you 100 marbles for $6 each". Tom says "okay, I'll give you until next week to get me them", Bill agrees and Tom then pays Bill $600 for the marbles. Now, Bill doesn't actually have any marbles yet. Marbles are currently $6 a piece but Bill believes they will only be $3 each next week by the time he has to give them to Tom. If he's right and is able to buy them at the cheaper price, he'll get Tom his 100 marbles and Bill will make $300 profit. If he's wrong and marbles are still $6 each in a week, Bill doesn't make any money. If the marbles go to $9 each next week, Bill loses money.
To tie the above example back to GameStop: marbles went up to $350 and Bill's losing a whole boatload of money.
so if i short a stock that is 100 dollars right now
so i make a promise i will sell you that stcok for 100 dollar one day
so the stock goes to 0 dollar. so i buy that stock and give it to you as promised for 100 dollar! now i have a profit for 50 dollars
but if the stock is 150 dollars now i have to buy it for 150 and give it to you for 50 thereby losing 50 dollars
now that they been shorting at 20 buck or whatever the price was and now it is 300 they are losing money left and right because people are meming the stock to the moon!
First off, the article you posted was apparently outed as fake news. Melvin is still in and still losing their asses. Now that we've got that out of the way:
Melvin, and apparently several other hedge funds, shorted GameStop stock expecting to force the company into bankruptcy and make money doing it. They got greedy and actually shorted more stock than was actually available. A bunch of redditards caught wind of this and bought up all the shares of GameStop stock, driving it's price up and causing these hedge funds to lose massive amounts of money. Meanwhile, the actual stock price of GameStop is now like 50 times higher than it was last week, meaning some of those redditards will make serious bank on this happening.
If you don't know what a short is read this paragraph. So this is probably going to be an over-simplified example but here's the jist of it: We have two people: Bill and Tom. Bill goes to Tom and says "I'm going to sell you 100 marbles for $6 each". Tom says "okay, I'll give you until next week to get me them", Bill agrees and Tom then pays Bill $600 for the marbles. Now, Bill doesn't actually have any marbles yet. Marbles are currently $6 a piece but Bill believes they will only be $3 each next week by the time he has to give them to Tom. If he's right and is able to buy them at the cheaper price, he'll get Tom his 100 marbles and Bill will make $300 profit. If he's wrong and marbles are still $6 each in a week, Bill doesn't make any money. If the marbles go to $9 each next week, Bill loses money.
To tie the above example back to GameStop: marbles went up to $350 and Bill's losing a whole boatload of money.
so if i short a stock that is 100 dollars right now
so i make a promise i will sell you that stcok for 100 dollar one day
so the stock goes to 0 dollar. so i buy that stock and give it to you as promised for 100 dollar! now i have a profit for 50 dollars
but if the stock is 150 dollars now i have to buy it for 150 and give it to you for 50 thereby losing 50 dollars
now that they been shorting at 20 buck or whatever the price was and now it is 300 they are losing money left and right because people are meming the stock to the moon!
Hedge funds heavily shorted GameStop stocks, ie bet that the stocks would go down and in turn make them money.
Retail investors decided to buy up these stocks and raise the price to the point where the hedge funds lose their ass.