GameStop & The Stock Market: Here’s The Simple Version
Maybe I'm late to the party but I'm just a simple guy in Idaho trying to figure out why GameStop, Reddit and the stock market is all I'm seeing on social media in the past 24 hours. Here's (in simple terms) what went down...
Here I am, in my quaint Meridian home, slowly waking up from my Thursday afternoon nap and I notice that everyone on my friends list is not only talking about GameStop and the stock market, but also talking like they're experts, and I felt a little left out, so I did some research and this is what I've discovered:
GameStop seems to have had a rough go at it in much of 2020 as they announced in December they would be closing 1,000 stores by March. Well, come January and GameStop is all the rage. Apparently over the last six months, GameStop's stock has been growing and growing and this caught the attention of some buyers and sellers in a discussion forum on Reddit. In ONE DAY, according to Newser, there was a 135% increase in their share price for the day, bringing it to a high of $347.51 per share, which made a lot of money for GameStop's biggest investors and for a lot of individuals who wanted to get in on the action.
If you purchased 100 shares of GameStop back in July when the price was $4.06 per share, it would have cost you $406. If you had sold those 100 shares yesterday for $347.51 per share, you would have made $34,751. That's a net gain of $34,345 in six months. Not bad, huh?
However, there are some major hedge funds, like Melvin Capital who ended up losing billions on the deal because they had essentially bet that GameStop's shares would drop and with this massive uptick, that wasn't the case. So one of the trading platforms, Robinhood, put a stop to the trading to try and help the hedge fund guys and that sent the internet in a much expected uproar.
The argument being (in essence): Why are there protections by the trading platforms for the rich hedge fund guys to keep them from losing but nothing for the regular joe to keep them winning? The stock market is a confusing market for sure, but if you do some research, you can make a pretty penny, just don't try to take money from the rich guys!
Apparently the next stock people are keeping an eye on is AMC. Weird considering the troubling year they had in the movie theater industry but definitely something to keep an eye on.
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