After being valued around $5 per share at times in the past two years, Gamestop stock has surged over $200 per share as of Tuesday, June 22nd. Just like AMC before it, the stock skyrocketing represents a paradigm shift in the way the stock market works.
In the past, hedge fund companies have been able to run major companies out of business simply by running negative media and research about those entities. Not knowing the conflict of interest connections, stockholders would then believe the negative press and sell. For the hedge funds profiting off of a company’s woes, the reward was immense. But WallStreetBets on Reddit has managed now to save two companies in AMC and Gamestop, while simultaneously putting the big squeeze on short-squeeze hedgers.
Just yesterday, Gamestop’s nemesis — White Square Capital — was forced to drop its main fund after being walloped betting against Gamestop. In turn, Gamestop stock rose another 12% at times, and the company was able to raise 1.13 billion dollars in capital.
“We are going to crash those stocks so all our hedge fund billionaire friends can get out and not get killed is one of the most remarkable, illegal, shocking robberies in history.” — Dave Portnoy, Barstool Sports Founder
Of course, not everyone is happy about the way a Reddit subgroup is able to take action to save companies. Senator Elizabeth Warren is calling for investigations into market manipulation. Others caution strongly against investing into what they term “meme stocks”.
That said, it seems WallStreetBets is next targeting Blackberry, whose stock has not yet seen the kind of positive growth the other memes have seen. For gamers, however, the saving of Gamestop will keep more competition in the marketplace for selling, distributing, and servicing video games, pop culture, and more. So while it may not be a fun day for London-based hedge fund managers, it’s not a bad time to be a gaming consumer.
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