The GameStop stocks have steadily decreased over the past five years, but on January 27th, 2021, the stock prices skyrocketed. In February of 2016, the stock prices had a value of $20-$30 USD, and continued to decrease from there; moreover, GameStop’s stocks were shockingly low during the midst of the pandemic. At their lowest, the stock prices were $2.80 USD on April 3rd of 2020, and as the year continued, GameStop was unable to bring their stock values higher than single digits, until September 24th, 2020. The value of GameStop stock went up in value consistently, prior to late January. On January 27th, 2021, the value soared up to the value of $325.00 USD. The people of Reddit are those who should be applauded for the change.

On the financial side of Reddit, a social media platform, many users determined that they would participate in short selling. Short selling is the action of borrowing a stock that is initially low in price from a dealer and selling it, and then buying it back after it has increased in value. After that transaction, the short seller must buy the stock back; although, if the stock were to rise in value, and the short seller bought it back the dealer would have to pay the remaining balance. This, unfortunately, caused chaos to some degree. Wall Street and hedge fund workers were not pleased with the common people’s deception. The rise in stocks was unexpected due to business workers’ tendency to turn a blind eye towards amateur stock buyers. The new stock buyers were able to successfully make a large sum of money, but GameStop investment workers lost some as well.

In conclusion, many Reddit users participated in short selling; resulting in an increase in GameStop’s stocks. The use of short selling is often controversial because Wall Street and hedge funds often overlook smaller stock buyers. This causes investment workers to lose money while short sellers make it. In the end, GameStop had an influx of stock values due to short selling, however, these changes may not last because their stocks will eventually fall again.

Sources

Luu, Christopher. “What’s Going on with GameStop Stock, in Terms Simple Enough for a Kid to Understand.” Parents, Parents, 29 Jan. 2021, www.parents.com/news/whats-going-on-with-gamestop-stock-in-terms-simple-enough-for-a-kid-to-understand/. Accessed 1 Feb. 2021.
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