![]() ![]() Many hedge funds and investors went to borrow GameStop's shares from the company's shareholders. Now, let's return to GameStop and the Wall Street hedge funds. Redditors decide to mess with Wall Street hedge funds Going back to the durian analogy, John would make a loss if the price of durians goes up to, say, S$30 - perhaps because of a blight that ruined a huge shipment of durians.īuying a durian back at S$30 means that he makes a loss of S$10. It is, however, very risky because the losses can be immense if the price goes up instead of falling. In fact, many Wall Street fortunes have been made this way. ![]() Receiving S$20 for the first durian and paying out S$13 for the second durian means that John made a profit of S$7 - all without needing a durian of his own. Seizing the opportunity, John buys a durian for S$13, which he returns to Peter. On the fifth day, the price of durians falls by another S$5. ![]() ![]() He surveys the local durian shops closely and true enough, the price of durians falls by S$2 within one day. It is durian season and he is pretty confident that the price of durians will go down. John goes out and sells this durian for S$20, which he promptly pockets. John comes along and takes one durian from Peter, promising that he would return the durian after a week. The market price of durians is S$20 a piece. Importantly, the shares must be returned to whomever loaned them out after a period of time, along with some interest.Ĭomplicated? Here's a simple analogy, using durians: You then sell the shares at the current price, buy them back once the price goes down, and make a profit in the process. This is when you borrow shares from someone and make a bet that the share price will go down. GameStop, the company whose stocks were shorted. Confirm will fail," thought several Wall Street hedge funds and investors who saw this as an opportunity to "short" GameStop's stock. However, in September 2020, Ryan Cohen, an investor and co-founder of a pet e-commerce company, acquired a 13 per cent stake in GameStop and urged the company to move its business online to rival Amazon, reported The Guardian. GameStop had not been doing well for a variety of reasons, as explained by Vox: Malls that are dying out, threats from digital game downloads, and, of course, the Covid-19 pandemic. We start with GameStop, the video game retailer who operates more than 5,000 stores in the United States. This story might seem a bit complicated, but read on we'll try our best to simplify it for you. In the process, the Redditors foiled the plans of several hedge funds who were betting that the GameStop's share value would go down, causing the hedge funds to lose billions of dollars. Simply put, a bunch of retail traders (people who trade on the stock market for their own personal accounts, instead of an organisation) on Reddit pushed up the value of shares belonging to GameStop, a video game retailer. His 2003 book Bringing Down the House was similarly adapted into 2008’s 21 both the film and the book dive into the world of card counting, another complicated topic we completely understand and could explain, if you didn’t know everything there is to know about that already.The saga concerning it is the classic story of David versus Goliath, except that in this epic tale, it was a battle of wills between small investors and a bunch of Wall Street hedge funds. If that seems like a super-tight turnaround on buying the rights to an as-yet unwritten book, well, Mezrich’s 2009 tome The Accidental Billionaires was memorably adapted into 2010’s Academy Award–winning drama The Social Network, directed by David Fincher and written for the screen by Aaron Sorkin. According to Deadline, the studio is reportedly developing a project based on a forthcoming book from author Ben Mezrich, having bought the rights to his proposal for the tome, titled The Antisocial Network. (Just kidding, we wouldn’t do you like that here’s a lengthy explainer.) While you might still be wrapping your mind around the whole “TL DR the stock market isn’t real per se” of it all, MGM is already ready to roll the dice on a film about the Reddit versus Wall Street debacle. You already know about, and completely understand, last week’s GameStop stock market fiasco, so we’re not going to bother to explain it all again to you now. ![]()
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