Reddit vs. Wall Street: Here’s what’s going on with the GameStop stocks

GameStop stock sky rockets, investors lose big
Published: Jan. 27, 2021 at 10:49 PM EST
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KNOXVILLE, Tenn. (WVLT) - Social media, and Reddit are abuzz as investors lose big money as stocks in GameStop skyrocket after what’s referred to as a ‘short squeeze’.

”Hedge funds lost some money, DIYers made some money, at the end of the day what it’s called is a giant short squeeze,” said CEO of Heritage Investors Justin Goodbread.

In short, investors in large firms sold stock, hoping it would sell less, and the firm would make a large gain, this term is referred to as ‘short-selling’. Instead, a group of Reddit users banned together to buy stock in GameStop causing the price of the stock to skyrocket, forcing the firm to buy stock at the higher price to cover what they owned before, causing them to lose big money.

”A combination of events that happened perfectly,” said Goodbread describing what it took for this to happen.

Firms on Wall Street have backed out, and some users on Reddit have hit it big, but now danger looms for some looking to buy into the craze late.

”It’s going to create a scuttle bug, a hubbub, or some sort of fury behind ‘hey, we can get rich quick’, and there are a few times it has, but the stock market isn’t used as a get rich quick tool,” Goodbread added.

While all of this is completely legal, there is some expectation that there could, somewhere down the line, come a rule, or procedure in place to keep this from happening again.

”I think we’re going to see some protections come out to keep people from hurting themselves,” said Goodbread.

In the meantime, eyes stay glued to other stocks that have been short sold, possibly triggering a few more that go the same way GameStop did over the past few weeks.

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