Hedgefund guy "borrows" 10,000 shares of Gamestop stock at (we'll say) $2.50/share. He immediately sells it. He now has $25,000 in his pocket. The "short" is his gamble that the stock price will fall lower. When the stock hits $2/share, he buys back the 10,000 that he borrowed earlier for $20,000 and gives it back to the lender. The end result here is that he made $5,000.
r/WSB fucked all these guys over by raising the price of the stock by like A LOT. Imagine you borrowed those stocks at $2.50 and now you have to buy them back at $300/share because the lender is saying you need to give their stock back now.
Hedgefund guy is on the take for a 12000% increase. His $25,000 investment is now worth negative $3,000,000. If his whole hedgefund is only worth like $5,000,000 or so you can see how this scales up to really fuck over those guys on Wallstreet.
Can someone explain the stock short situation going on? I don't know much about the stock market and I don't understand what happened.
Hedgefund guy "borrows" 10,000 shares of Gamestop stock at (we'll say) $2.50/share. He immediately sells it. He now has $25,000 in his pocket. The "short" is his gamble that the stock price will fall lower. When the stock hits $2/share, he buys back the 10,000 that he borrowed earlier for $20,000 and gives it back to the lender. The end result here is that he made $5,000.
r/WSB fucked all these guys over by raising the price of the stock by like A LOT. Imagine you borrowed those stocks at $2.50 and now you have to buy them back at $300/share because the lender is saying you need to give their stock back now.
Hedgefund guy is on the take for a 12000% increase. His $25,000 investment is now worth negative $3,000,000. If his whole hedgefund is only worth like $5,000,000 or so you can see how this scales up to really fuck over those guys on Wallstreet.