This Is How Social Media Ignited A Stock Revolution & Pushed GameStop Shares To A New Unbelievable High
In 2020, a single GameStop share was worth just $3.
The firm’s share price jumped from a few dollars in 2020 to a high of over $350 on January 27th, transforming a company that was valued at less than $200 million in April 2020 into a $24 billion middleweight.
GameStop is a high-street shop that sells games, consoles, and other electronics in the USA.
What happened actually? We will demystify this incredible surge in the share prices of GameStop right here.
GameStop Creates A New Record In Stock Trading
Even though GameStop was suffering at the hands of Pandemic by losing its money and, closing 450 stores this year, it still managed to become one of the hottest stocks by January 2021. It has been selling like hotcakes.
Early January 2021 witnessed a historic day for video game enthusiasts, the GameStop channel. When online shopping, has seen an army of geeks and small investors willing to spread blood on wall street barons, giving them protection, which could not have been further from offering a shining model of growth.
In September 2020 Ryan Cohen invested into GameStop to help them to turnaround. The stock price went up to $20/share, and in December 2020 a Reddit user made almost 2 million out of his 150k investment. In one of the sub-reddits named /wallstreetbets, every Reddit user celebrated this stubbornness and called it diamond hands.
Redditors Push GameStop Stocks To A New High
/wallstreetbets is an online community of young traders that call themselves autistic and usually post huge losses and large gains from their investments and other memes. They called their trades YOLO trades, but not all of them are complete beginners. Many of them gamble with small amounts. They usually joke about ETFs and other “boomer investments”, but it’s not that serious.
But it soon garnered attention from the short-sellers. While the stock price rose, hedge funds and other big players started to short GameStop even more. However, for GameStop, the short-sellers fell prey to greed and managed to sell more than 140% of the available shares short. And that’s the reason for what we see today. The Reddit community researched and figured that this situation is unique, and they could leverage it against the short-sellers. So, they started buying GME stocks.
GameStop buy orders outnumbered its sell orders by more than four to one. The New York stock exchange briefly halted trading nine times because of the volatility.
It is evident how social media has become the kingmaker in the Finance Industry. In the past too, we witnessed how one tweet from Elon Musk’s hacked account disrupted cryptocurrency. Social media is now a double-edged sword, which should be used carefully in the longer run, as it doesn’t guarantee reliability in longer runs.
This is a Guest Post by Shivangini, who is a Journalist, studying her Masters from the Indian Institute of Mass Communication, New Delhi. She has an avid reader and has worked as a journalist in the past. She is a storyteller and a writer who loves to explore the intricacies of writing. Her website can be found here.