Short selling is a complicated, high-risk trading strategy. ![]() The rising stock price was disastrous for the large investors that had bet against it. Months ago, some members of a popular stock market discussion group on the Reddit website started encouraging others to invest in the company, saying that the big investors had gotten it wrong and that GameStop was significantly undervalued.Įventually, more investors bought in, and this week, as the conflict went viral on social media, additional investors bought into the company fueling its rapid rise in market value. Wall Street investors started betting heavily against the company months ago, believing that its brick-and-mortar business model is doomed.įILE - Reddit mascots are displayed at the company's headquarters in San Francisco. GameStop is a retailer facing the same pressures as many others in the United States, where shopping trends and the pandemic have led more people to buy goods online instead of in stores. The drama around GameStop’s trading has drawn scrutiny from members of Congress, some of whom are calling for an investigation into the investors, companies and regulators involved. As small investors championed their purchases of the retailer’s stock in viral posts online, the stock rapidly rose in price, forcing the large investors to spend billions of dollars to cover their losses. GameStop, which makes most of its money selling video games in stores across America, saw its stock price rise as much as 1,700% this week, backed by fans who believe it is unfairly undervalued by large investors who had bet billions that its stock would fall. ![]() In recent days, American financial markets have been gripped by the saga of a video game retailer’s soaring stock price.
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