GameStop shares soar on Wall Street over Reddit

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This article has been translated from our Spanish edition. Opinions expressed by Entrepreneur Contributors are their own.

GameStop is an American retailer of video game products, electronics and entertainment games. Recently, however, this chain has been identified through various controversies related to the continued decline in the value of its stocks. Recently, however, she has become a protagonist due to a surprising increase in the value of her stocks, thanks to one subreddit .

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Despite the fact that the launch of the next-generation consoles did not produce positive financial results, there has been a significant surge in stocks over the past few days. It is now known that this was due to a stock market phenomenon that included Reddit Users and especially too much speculation that a historical increase in GameStop Stocks and that they were already beginning to decline.

Image: GameStop – NYSE: GME

The enterprise GameStop (GME on the stock exchange) unexpectedly started attracting users’ attention in the past few days because the value of its stocks suddenly increased. January 22nd was clearer as the day began with it $ 42.59 , but achieved $ 76.76 , an increase of almost 80 percent.

With this in mind, it must be remembered that the highest value the stock had reached was in 2007 when it was achieved $ 63.30 , according to information from GamesIndustry.biz

However, operations on the stock exchange were suspended several times last Friday due to this increase. This was not the end of the situation, because on Monday, January 25th, the price rose even more and reached up to $ 159.18.

Certainly there are many doubts about the reasons and how it was GameStop won the trust of some investors and they were invited to bet on it. The truth is that it was all due to external factors. Although the chain has lost economic importance over time due to the decreasing demand for physical games for the benefit of digital games, the pandemic and other elements, its promotions have increased. GameStop had become one of the values Wall street with more short investors. Basically, what this means is that it is a bet that the company’s value will keep dropping and that they will benefit from the losses.

How did stocks rise?

The phenomenon is attributed to a battle between Reddit users, investment institutions and high speculation from shareholders. Likewise, it’s tied to the fact that the event involved users of the WallStreetBets subreddit, which was led because some YouTube and TikTok characters mentioned that the company had a large amount of short assets – around 71.2 million Shares – which had the sudden acquisition of promotions.

What does a short contraction refer to?

There are a few ways to make money in the stock market. One of these is when you bet low on a company, which allows you, the investor, to make money when that company’s stock price is low.

When talking about short selling a stock, it refers to selling a borrowed stock when it’s high in value and then getting it back (buying it) when it falls, and so is the difference in value Returns to their owner. If all had gone well, the price of that stock would have fallen, the stock would have been bought and returned to its owner at a profit.

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