Shorting stocks is where you sell a stock you don’t own to someone at the current price and you promise to buy the actual stock later, contractually it has to occur by the last Friday of the month, hoping that the price will go down when you purchase the stock. So you sell the promised stock for $10 and then hope to buy it later at $5 to make a $5 profit. In this case, the hedge funds did this but also shorted more stocks than actually exist, something like 130% of GameStop stock. People on Reddit caught wind of this and decided to buy all the GameStop stock they can which caused the GameStop stock to shoot up to $350+ due to increased demand for it and then hold it till this Friday. Well, those hedge funds have to purchase the stocks they promised no matter the price, so they sold it for $10 and have to buy it for $350 causing a $340 loss per stock. There is also the added wrinkle that the supply of GameStop stock is basically completely dry, so some hedge funds are buying stocks right now just so they are completely fucked.
Its easy, wall street gets away with shit the retail investor would go to jail over. Melvin was trying to bankrupt GME and clearly was naked short selling (google it). He got caught and now faces an infinite loss scenario. Stupid overly risky greed plays is something they ridicule retail for all the time, but now when a hedge funder gets caught in one its all hands on deck to save him.
A really simple way of explaining this is that a bunch of folks on reddit organized and used a financial strategy (look up how to short a stock) to outsmart the Big Kahunas on Wall Street. They (the Big Kahunas) have lost beaucoup bucks and are now crying to Dementia Joe to fix the problem (which isn't exactly a problem. They are just butthurt that the common folk dared to make money) while accusing the redditors of being white supremacists. That's all I got. This is what I have gleaned. Anyone can correct me if I am wrong.
Thanks! Please explain further in super simple laymans terms if you can. (Just made a post on new. Wish I would have seen your answer. ) Not sure how you can "like" a stock. Is that the same thing as just buying a stock?
anybody got an ELI5 on this?
Shorting stocks is where you sell a stock you don’t own to someone at the current price and you promise to buy the actual stock later, contractually it has to occur by the last Friday of the month, hoping that the price will go down when you purchase the stock. So you sell the promised stock for $10 and then hope to buy it later at $5 to make a $5 profit. In this case, the hedge funds did this but also shorted more stocks than actually exist, something like 130% of GameStop stock. People on Reddit caught wind of this and decided to buy all the GameStop stock they can which caused the GameStop stock to shoot up to $350+ due to increased demand for it and then hold it till this Friday. Well, those hedge funds have to purchase the stocks they promised no matter the price, so they sold it for $10 and have to buy it for $350 causing a $340 loss per stock. There is also the added wrinkle that the supply of GameStop stock is basically completely dry, so some hedge funds are buying stocks right now just so they are completely fucked.
Perfect explanation! I have no stocks but I have sure as heck enjoyed the show and wish I was in on it, for the sake of sticking it to the system!
And it's bleeding into other shorted stocks too. Haha.
Its easy, wall street gets away with shit the retail investor would go to jail over. Melvin was trying to bankrupt GME and clearly was naked short selling (google it). He got caught and now faces an infinite loss scenario. Stupid overly risky greed plays is something they ridicule retail for all the time, but now when a hedge funder gets caught in one its all hands on deck to save him.
A really simple way of explaining this is that a bunch of folks on reddit organized and used a financial strategy (look up how to short a stock) to outsmart the Big Kahunas on Wall Street. They (the Big Kahunas) have lost beaucoup bucks and are now crying to Dementia Joe to fix the problem (which isn't exactly a problem. They are just butthurt that the common folk dared to make money) while accusing the redditors of being white supremacists. That's all I got. This is what I have gleaned. Anyone can correct me if I am wrong.
They didn’t organize, they just liked the stock
Thanks! Please explain further in super simple laymans terms if you can. (Just made a post on new. Wish I would have seen your answer. ) Not sure how you can "like" a stock. Is that the same thing as just buying a stock?
You’re completely right otherwise, they just didn’t organize. A bunch of people just like the stock and bought it 😉
Nice summary in a nut shell.
How dare the People (the ones they think are mere peasants) make money!!!