What happened with GameStop stock prices? Why did their stock prices rocket up?

GameStop has been in news recently over its soaring stock price. At time of writing this article, share price of GameStop is around 347 USD. Why this is really surprising is fact that just a year ago, stock price of this GameStop was just around 4 USD. What happened? Re below to find out. 

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GameStop Stock Explained 

Before trying to understand what happened with GameStop stock prices soaring, one needs to understand how shorting works. Shorting or short selling is borrowing (like taking a loan) of a company's stock believing prices of stock will go down in future. se stocks are n sold at market price by trers to clients and use that money to buy or shares to make a profit from. When time comes to return borrowed company shares, prices of those shares have fallen and trers who borrowed those shares can buy those shares at low prices to return m at a profit. However, re is always potential risk of a borrowed share skyrocketing in value, in which case, trer has to buy back borrowed stock at a very higher price than what he paid for it. It's a very risky and shy tre and is often looked down on. 

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GameStop Stock Short 

whole thing started when Melvin Capital, a hedge fund group started shorting GameStop stock around a month ago. firm did this when price of stock was around 15 USD, believing it would go down furr as GameStop was suffering heavy losses during COVID lockdown. However, w popular Reddit community r/WallStreetBets(WSB) h or things on ir minds.

What Happened With GameStop Stock?

At same time, Melvin Capital was shorting GameStop stocks, Reddit community of WSB started pumping money into stock. This caused GameStop stock to soar to very high prices. As mentioned above, ir stock price is around 347 USD at time of writing this, a massive jump from what Melvin Capital sold shorted stocks for. Melin Capital h to borrow somewhere around 3 billion dollar bailout from government following ir losses on GameStop stock.

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This is just an example of how wrong things can get when shorting stocks. This was basically a very large online community of trolls fighting back against billion-dollar corporations who eng in shy practices like shorting to make a profit at expense of or investors. WSB has seen number of its members rise higher and higher since pandemic started, as youth who were sitting at home started joining tring business in ir free time.

Is AMC next GameStop?

Trers have ir eyes on AMC stocks next. A company that shares a lot of similar characteristics with GameStop. AMC is a physical business(AMC atres) like GameStop and since pandemic has suffered heave losses. Wall Street trers have also been shorting AMC stocks and some re have been discussions on WSB to pump up AMC stocks. 

This is an unprecedented incident and will be remembered in years to come. How an ordinary group of people sitting at home, caused an uproar in stock market. This incident also goes a long way in proving that actual stock price of a company is t real indicator of how company is doing and wall street is t in line with current ecomy. 

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