How did a group of people on Reddit, Inc.manage to increase GameStop's value by $8.8bn in one week & severely impact the fortunes hedge funds in the process❔
/WallStreetBets (“The Wild West of investing advice”) is a subreddit – an online community hosted on Reddit – of casual traders who play the markets and treat each investment like a spin at the roulette wheel than a long-term strategy to build wealth.
Followers of r/WallStreetBets have had their eye on Gamestop for a couple years now.
The arrival of investor Ryan Cohen, a reputable investor typically known for making safe bets, on the board of Gamestop, inspired confidence in the stock.
When it became apparent that the company was heavily shorted a band of subscribers realised that if they worked together they could make money from the short sellers.
They did this by orchestrating a short squeeze against short sellers.
Andrew Left of Citron Research ridiculed WallStreetBets users for investing in the “failing mall-based trader”.
In April following the announcement of mass closures shares in Gamestop could be purchased for just $3.25.
At close on January 26 shares cost $148.
The value of the business has soared to $10 billion, up from $1.2 billion in 2020.