Stonks: Slang – a tongue-in-cheek use of the word “Stocks”, usually used in meme form.
Everyone loves money, that’s a well-known fact. This is especially true for wealthy people, who have long accumulated wealth in the stock markets by trading a wide range of stocks around the world. They are, for all intents and purposes, the Goliaths of the industry.
But this united Goliath faces a relentless challenge from an unlikely enemy: Reddit. Or rather, one community on Reddit. Deceived by years of looting at market manipulation, Redditors have finally come together to spend the entire game on its own, across one game store where stocks have been seeing a wild rise over the a few days ago.
But what is it about? Here’s what you need to know.
GameStop, center of drama:
Based out of Texas, United States, GameStop is a brick-and-mortar game store chain founded 37 years ago. The company works in the areas of selling games and games consoles, and purchasing games and game consoles to upgrade and resell in the market.
As digital game markets set a precedent for publishers, GameStop, like many others, opposed the sale of new and used games, and many of their stores were melted down over the years.
This became more apparent when the Covid-19 pandemic struck, effectively locking most people into their homes, even though GameStop made a short-term decision , controversial to classify it as an essential service to stay open.
So what’s going on with GameStop stock?
It’s called a ‘short push’, and involves investors betting on the way a stock will go – up or down. These bets are placed by purchasing the shares themselves, or stock options, which we overstate here significantly.
Investors who place a bet against a stock are called “shorts”. In the case of GameStop, the summaries include at least two major hedge funds.
Read: From broker notes to memes: How the stock market went viral
Shortening stock essentially means borrowing shares from a broker and selling them with the agreement that the shares will be returned at a later date. When the price falls, you buy the shares back and pocket the difference. But there is a risk in shortening stocks – if the price goes up, you can make a big loss.
Sometimes you just make a bad message. But you can also lose if someone tries to raise the price by buying a lot of shares, even if the company does nothing differently.
This is the tension.
Minutes must close the position – that is, the shares they have bought their brokers and returned them. This application kicks the stock higher, and a short person working too late could be spoiled.
These types of standoffs typically involve sophisticated Wall Street investors, for example when Bill Ackman squared against two other billionaires – Daniel Loeb and Carl Icahn – over the diet maker Herbalife.
Who started the GameStop frenzy?
Keith Patrick Gill, nicknamed “Roaring Kitty” is the man behind a series of YouTube streams that, along with a series of posts by Reddit user DFV, helped attract a flood of retail money. into GameStop, burning hedge funds that had a bet against the company and roiling the market in general.
In his social media messages and videos, Gill once again made the bull case for the grieving brick-and-mortar vendor and shared images of his trading account profit on the stock, taking his -out the following of similar GameStop enthusiasts.
Read: How Reddit user ‘Roaring Kitty’ and his friends rode the markets
But this would not have been possible if it weren’t for r / wallstreetbets, a vibrant community of people talking about stock betting, which has come to the fore in recent days. gone because of the GameStop drama. The community has become an online gathering place for those who persuade people to buy and hold GameStop shares, punishing short sellers by pushing up prices.
The subreddit was filled with memes like her memebers, and even those who were not related to the relationship, shared phrases like “stonks” or “Gamestonks”. “To the Moon” is particularly popular with the community, with a number of high-profile posts using it as a rally call to express the belief that stocks will rise sharply. The phrase is often accompanied by a rocket emoji.
The company’s disappointing rocket ride on Wall Street – shares have gone from just $ 18.84 at the start of the year to as high as $ 492 – as a case of masses rebelling against slow-moving single-percenters the wealth of the world.
And their next target? AMC, a former BlackBerry phone maker, and Dogecoin, a cryptocurrency meme, will chain that, but that’s a story for another day.
What is the backlash about?
When Redditors discovered that hedge funds were shortening GameStop stock and raising the money, they decided to go on strike with counter-protests, buying stock by the thousands – causing stock prices to skyrocket and causing huge loss of hedge funds to money hemmorage.
The rampant rate at which currency changed hands encouraged brokers like Robinhood, who abruptly stopped all GME quota trading, which led to an explosive reversal, which was ultimately like a class action lawsuit against the broker, alleging that he filed a Wall claim. Street and rigging the market against the buyers themselves, while the Head of the broker said he was restricting trade to protect company and buyers. He eventually resumed trading on the stock.
The backlash is even on its way into the U.S. political arena, with some representatives wanting to probe into the market manipulation of the breakup.
The GameStop saga and a referendum on who controls the markets is a generational issue, pitting an army of retail investors – many of them young digital natives – against hedge fund sellers, who had bet that GameStop stock would fall.
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