What Happened With GameStop?


Alejandro Bermudez, Contributor

How did the whole GameStop fiasco come to be? Well, we start off with a Reddit group called Wallstreetbets. Then, we need to consider how did they come to be so rich on Wall Street? Well, it is because they do something called shorting a stock. How it works is that Wall Street borrows your stock and immediately sells it. Then, by the time the stock is sold, it is usually decreased, and they make a profit. So simply put, imagine you had a stock “borrowed” for 16 bucks, and they sell it immediately. Then they buy the stock back later for a lower price keeping the profit. So let’s say they bought it back for 8 bucks. Now looking at this individually, it doesn’t look like a lot of profit- but if you are doing this on a larger scale, it can created a massive profit. This only works if the stock is going down. But, the Redditor group known as Wallstreetbets saw the pattern and decided to intervene.

So where does this bring us?

Well let’s see, GameStop was going out of business. As a result, its stock was plummeting and Wall Street saw its chance to take advantage of this situation and make a profit. They started to short sell the stock and wait for the stock to fall down in order to buyback. However, to their dismay, a bunch of Redditors decided to take a stand and began to buy tons of GameStop stock. The prices went up and the people on Wall Street started to lose a bunch of money. They bought stock for 16 bucks, when it was supposed to fall only for the stock to rise to up to 500 dollars. Wall Street lost a lot of money, and they were obviously angered. They tried to say that the Redditors were manipulating the market.


What happened next? Well, the Wall Street guys had to make back the money and had to make up for their losses. A lot of people tried to take advantage of GameStop’s rising stocks. Unfortunately, for them, they were too late to take advantage. Apps that allowed amateurs to invest such as Robinhood began to freeze GameStop stock, and sell it off to bring the price of the stock down. Users were not able to do anything about it, as they weren’t able to buy, sell or retain what they wanted. This resulted in the rating of the app dropping to one star. But, why would Robinhood do this? Well, 60% of Robinhood’s income comes from the rich people on Wall Street. In return, Robinhood sells patterns and gives the people on Wall Street all the information they need to reap in the profits. This time, however, they messed with a cult favorite store in which a lot of gamers, and Redditors alike, came out with a whole bunch of profit. Unfortunately, there are those who came too late and ended up losing money, and there are those who are still holding on to the stock, hoping to sell or to see it inflate more. However, it seems that for now, this is all over.