What’s Up With GameStop’s Stock?
GameStop stock or (GME) has had all of Wall Street and stock enthusiasts intrigued over the past week.
The retail game storefront has seen an 8,000% increase in its stock over the past six months according to NBC News.
There are a couple of reasons as to why GameStop's stock has seen such a huge increase (however, it is down 31.29% today, January 28).
This past Friday, there was a spike due to the sheer volume of stock that was traded. The volume of stock that was traded on Friday for GME created a short squeeze
For the most part, people do not participate in these types of ideals when trading or buying stock. But this case involves short-sellers, people who borrow a stock that is at a high price thinking that it will fall to a lower price. If this does not occur, short-sellers are then forced to buy more stock in order to hope that they break even at the least.
"Because short sellers — frequently hedge funds — in essence are betting against a company's success, it can be a risky position. Any positive news or enthusiasm for the stock will push up the stock's valuation, minimizing profit for the short seller. In the case of GameStop, chatter on massive online trading forums invigorated interest in buying the stock, pushing up the price, which in turn fueled more interest"- NBC News.
So who all played a factor in this ideal for GameStop stock? We have a Reddit community to thank for that.
r/wallstreetbets or WSB saw that the GME stock price was increasing thus, this encouraged more community members to buy into the stock.
Source: NBC News
Because of the power of social media, this really rallied people together who had even the smallest amount of interest in the stock market.
This stock appears to be on the decline now, but it really had a lot of people questioning what was going on.
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