GameStop is an American computer games retail shop which has been suffering for the shift of gaming to the online space.
After being stagnant at $18, a month ago, the shares of GameStop have become twice in just 4 days. It kept hiking till it touched $347.51 on Wednesday. The total soar was 408% between Tuesday and Thursday.
Now what happened is that a few hedge funds including Melvin capital had been short-selling the GameStop shares to buy them back at lower prices, earning themselves a profit.
But a group of novice traders (retailers) on Reddit by the name of “WallStreetBets” started buying these shares and refused to sell them back to the hedge funds.
Now the hedge funds had to buy back the shares at a much higher price to avoid greater loss. A situation is known as short-squeeze. This has led to the fluctuation in the stock prices of GameStop.
Some financial companies including Robimhood Markets have banned trading in GameStop shares, which is supposedly illegal under the charges of market manipulation.
Some of the shareholders of GameStop became billionaires overnight. Namely, Ryan Cohen, Donald Foss, and CEO George Sherman.