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You may have heard or seen the word GameStop dominating conversations on Twitter and other social networks in recent days.
What is happening to this American company, and why is it involved in an “unprecedented” phenomenon on Wall Street?
GameStop is an American chain of stores that you can find all over the United States, selling video games, consoles, and other electronics.
But this typical store, which can be found in many American malls, has actually not performed well due to the outbreak.
What is the relationship between what happened to Reddit?
Reddit is a social network similar to Twitter and Facebook, through which it is possible to join forums on topics of interest to the user, from football to history, politics and economics.
The forum we hold dear to understand this story is called “Wall Street Bets,” with over four million members who usually talk about stocks and where to invest their money.
What happened?
GameStop was not at its best this period, as the small number of people shopping due to the epidemic, and the widespread sale of the majority of video games on the internet, were not good things for the performance of American society.
Often times, people who buy and sell stocks are betting on companies that will not perform well in the future. What they do is this: they borrow shares of this company, sell it and promise to buy it back later.
If you are sure that the business will lose value, it will make a profit when you buy it again because the price will go down.
This is a very simplistic interpretation of something called “short circuit”. But if you lose your bet and the price goes up, you lose your money.
GameStop was one of the companies that so many mutual funds (hedge funds and companies that make this type of bet) bet that they would lose much of their value.
But contrary to expectations, a large number of people in the “Wall Street Betting” forum on Reddit have traded tips and bought GameStop shares.
This demand caused the share price to skyrocket, and everyone had to put their money into the belief that the stock would go down to buy back the shares they were borrowing … but at a higher price than expected, and so they lost a lot. silver.
What is Elon Musk’s relationship with?
The Tesla boss loves Twitter and when he tweets, the financial markets often take him seriously.
Elon musk
That comment Musk wrote on January 27 was a word: Gamestonk !! Enough to steal the share price.
Musk meant by his phrase the combination of GameStop and “stonk” which is used in English to refer to a financial decision that results in profits.
Musk also included his comment with a link to the “Wall Street Bets” forum on Reddit, where users often refer to Tesla’s boss as “Papa Musk.”
Blood pressure monitor
This phenomenon continued until Thursday, with other companies like AMC Entertainment, which owns a movie theater, or Blackberry, where investment funds were betting on them with large sums through “sales to”. discovered”.
The incident has raised questions from regulators, who are monitoring prices amid concerns about the illegal measures.
Brokers on Thursday stopped buying GameStop and other company shares, angering amateur investors who made it clear that they only compete against Wall Street with their own game.
In online forums, they discussed the possibility of legal action and accused some brokers of carrying out their own form of market manipulation by restricting purchases of certain stocks.
“They only support free market capitalism when it suits them,” said Myron Sacas, 18, a university student.
What is the point of all this?
For many involved, it was just a joke – an experiment to see the power of internet communities. Wall Street analysts described it as a “strange” and “crazy” event and as something “they had never seen before.”
For many, the goal was to make losses on mutual funds and brokers. Some of the more popular channels on Reddit include comments from people who say it was a form of revenge: retaliation against the big companies, believed to be the root of the 2008 financial crisis.
Analyst Neil Wilson explains in a commentary to the BBC that some investors had “very particular regulatory ethics”.
“They seemed so determined to take on Wall Street, they seemed to hate mutual funds, and the talks were full of insults about boom money,” he says.
GameStop
He adds, “It’s a struggle between generations, redistribution and everything about theft from the rich to give wealth to the millennial poor.”
Some people on the forum even said they donated the proceeds of this operation to a charity. It was a good opportunity for cynical “memes” to appear on “Wall Street”.
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