Gamestop, when small holders attack Wall Street hedge funds
Stock marketers have lost face to the Melvin Capital group, which was seeking to make money by betting on the fall of GameStop.
© Jim Young / Reuters
Text by: RFI Follow
3 min
Wall Street was jostled, Wednesday, January 27, by stock marketers who bet en masse on the stock market to disrupt the operations of "hedge funds", these speculative funds that rely on the fall in stock market values.
By mass-buying shares in troubled video game company Gamestop, these small holders have cost New York group Melvin Capital face and a lot of money.
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It all started with Gamestop, a struggling video game distributor whose stock collapsed on the stock market.
What attracts the desires of Melvin Capital.
As a good hedge fund, he is betting on this fall, thanks to short selling.
Short selling consists of selling a share that you do not yet have in the hope of buying it back later, therefore cheaper, and having cashed in the difference in the process.
This is where stock marketers, alerted and especially coordinated on social networks, intervene to stop the machine.
The online stock market has experienced a boom since the confinements of 2020. On Reddit, Facebook and Twitter, these small carriers agree to mass buy the Gamestop share.
To the rescue of AMC cinemas
Tesla boss and richest man on the planet Elon Musk even relayed the call, to the point that two days later, Gamestop stock reached $ 347.51 at the close.
Melvin Capital is ruined.
Gamestonk !!
https://t.co/RZtkDzAewJ
- Elon Musk (@elonmusk) January 26, 2021
And small carriers have already turned to other stocks in difficulty such as AMC cinemas, the value of which has in turn soared.
A small earthquake that has made applaud those who have criticized for a decade the excesses of hedge funds today taken at their own game.
►Also read: Today the economy - Stock market: why Wall Street seems disconnected from the US economy
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