The digital equivalent of the Peasants’ Revolt – why the GameStop story is both beautiful and terrifying

The digital equivalent of the Peasants’ Revolt – why the GameStop story is both beautiful and terrifying | The Independent

The Game Stop story is quintessentially American – the little guy not only beats up on the big guy, but also gets rich and engages in worthy actions with that new-found wealth. The story begins when Ryan Cohen, founder of the online pet food company Chewy, took a large position in Game Stop stock. Game Stop began discussions with Cohen about his idea to pivot Game Stop to specialty online retailing on games and gaming products.

Small investors picked up on the idea on Reddit messenger boards and began piling into the stock at the same time large institutional Wall Street investors began to aggressively short the stock, betting against the idea and Game Stop in general. Short selling involves borrowing shares from big institutions in the hope that the price will fall. If that happens, these investors can make big profits buying the stock back at the new low price. However, as most of you know, Game Stop then went on a wild ride, at one point increasing 700 percent above its pre-Cohen stock price. In the process, many short sellers came out on the short end of the stick, losing millions of dollars.

While the spectacle may be entertaining, speculating in the stock market can be dangerous. The paper profits many gained from Game Stop have already evaporated, as the stock closed at $50.31, down 16.15 percent on Tuesday, Feb. 9.