GameStop Short Squeeze explained (part 1) #hedgefund #wallstreetbets #shortsqueeze #stocks

Name: GameStop Short Squeeze explained (part 1) #hedgefund #wallstreetbets #shortsqueeze #stocks
Uploaded: 2023-05-10T19:16:49+00:00
Duration: 44 s
Channel: Rich Bello
Description: Rich Bello explains the GameStop short squeeze that sent the stock from $17 to nearly $500 in January. When Reddit traders on WallStreetBets bought…

10 May 2023 · 1 min

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Rich Bello explains the GameStop short squeeze that sent the stock from $17 to nearly $500 in January. When Reddit traders on WallStreetBets bought heavily, short sellers were forced to buy back shares at higher prices, creating a feedback loop that crushed hedge funds and made day traders rich.

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What happened to GameStop? In January of this year, social news website Reddit triggered a buying spree aimed to short squeeze hedge funds that had large positions. In GameStop, price went from 17 to almost $500 per share. It was crazy. It wasn't worth $500 per share. So short squeeze occurs when a shorter stock suddenly jumps in value, forcing the short sellers to buy back their positions to stem potential losses. It's a risk management thing. They've got to do it. Otherwise the firm can end right. Purchases are, you know, cause this death spiral because the purchases themselves cause even further price increases. Right now, some funds had to be bailed out with capital fusions to stay afloat. Volatility caused extreme profits for buyers and losses for sellers. Day traders, however, also cashed in big time just from the volatility. Many day traders made millions on this.