Game on Wall Street; Conversations about GameStop (GME) video game vendors and vendors on Reddit have been buzzing over the past week and have finally spilled over from the financial world to the mainstream. Here is what happened:
What or who is ‘WallStreetGames’?
WallStreet Game is actually “r / wallstreetgame” and is a forum or “subreddit” on the popular website Reddit, which is a social forum and discussion group that balances web content.
Basically, it is a group of people who enjoy talking about investing and often, speculative investments. Given that it is on Reddit, it is in line with the traditional Reddit style, which often includes swearing, confusion, and a large number of memes.
Consumers are generally ordinary people who are marketable and considerate, but occasionally find and exploit major weaknesses on Wall Street or in financial products.
Game on Wall Street
As of this week, it had an estimated 2.9 million “declining” people (what subscribers call themselves) and 726,000 in writing were watching the forum.
What is the option?
An optional contract option that allows you to buy or sell stock at a certain price. For example, you pay a small amount for the right to buy a stock share such as Game on Wall Street at a later agreed price. For speculators who think stock can go up, it’s a way to make a bigger profit than just buying stock.
What are they doing in the market?
Wall Street Game is not an organized group with a leader, but the public sometimes comes to an agreement when a convincing argument is put forward. If that happens near stock with a small market bag, wild things can happen.
For example, their performance and influence may be enough to hold shares in collateral companies such as Hertz (HTZ) to deny, which has led the company to try to release new stock by 2020 despite collapsing and “technically” worthless. Recently, the group has caused a number of companies to stock up, especially GameStop.
One Wall Street Game user has made a stock claim as an investment, meaning that this user considers the stock to be more valuable than the stock price shown. The stock-buying case, the user wrote, had nothing to do with the company’s business transformation, which had suffered during the epidemic.
Now what happened to Game on Wall Street?
Many people buy into this concept. At the same time, a few hedge funds – professional investors with billions of dollars under management – were selling short-term stocks, Gaming that they would fall.
So while short sellers Gaming will go down, the Wall Street Games community has started buying GameStop shares, taking the gaming side. In the aftermath of the war, stock prices began to rise – and quickly. At least in this case, the Reddit community seemed to be more powerful than a short-lived retailer.
great pressure on short-term traders
At the same time, rising stock prices put great pressure on short-term traders. Shortening means that you are selling the stock unless you own it – you are lending it – so these short sellers should have deposited money as collateral (a margin call) or “closed” their summary by buying the stock in excess of what they sold, at a loss.
Read more: Not Just GameStop: Here Are The Meme Stocks
To date, GameStop shares have risen sharply (starting at $ 17 and close to $ 270 from Wednesday afternoon) to put these hedge funds under extreme financial pressure.
Who is right about Game on Wall Street?
It’s hard to say. But it doesn’t matter. Economist John Maynard Keynes once said, “markets may remain unreliable for longer than when you live alone.”
So even if the Redditors are wrong and the stock ends up pushing the limits, it is likely to work long enough that it could actually damage these fence funds, causing about 30% loss to one of them.
However, that hedge fund short seller, Melvin Capital, recently received $ 2.75 billion. It’s like Club Royale where James Bond was given another $ 5 million in chips by Felix Leiter to continue playing.