Reddits WallStreetBets Spurs GameStop Stock Surge in Battle With Hedge Funds
Amateur investors using Reddit message boards team up to send a message
Hedge fund managers reel from massive losses as small-time players strike back
In a stunning turn of events, amateur investors using the popular Reddit message board WallStreetBets have banded together to send a message to hedge fund managers who have been shorting GameStop stock. The result has been a massive surge in GameStop's stock price, causing billions of dollars in losses for the hedge funds.
The saga began in January 2021, when a group of Reddit users noticed that GameStop's stock was heavily shorted by hedge funds. This means that the hedge funds had bet that GameStop's stock price would fall. However, the Reddit users decided to take matters into their own hands and began buying GameStop stock in large numbers.
The result was a short squeeze, which occurs when a stock price rises rapidly, forcing short sellers to buy back the stock in order to cover their losses. The short squeeze sent GameStop's stock price soaring, from $17.25 per share on January 12, 2021 to a high of $483 per share on January 28, 2021.
The GameStop short squeeze has been a major embarrassment for the hedge fund industry, and it has raised questions about the role of short selling in the financial markets. The SEC is currently investigating the short squeeze, and it is possible that new regulations could be put in place to prevent similar events from happening in the future.
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