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.