Anyone else completely confused by the Reddit vs Wall Street action that's all over social media right now?
Well you're not alone, business journalist Gavin McLoughlin is here with the lowdown.
Who's Investing?
Gavin says amateur investors came together on Reddit to start the campaign.
"Many of these people see themselves doing battle."
He says they view themselves as "some sort of populist rising" against the Wall Street establishment.
"They don't like what the hedge funds are doing."
What's Short Selling?
Gavin says Reddit users aren't happy with the practice of "Short selling".
"[Short selling] is placing bets that the Game Stop share price will fall."
"If the share prices goes down the short seller goes down," he said.
"The more it goes up the more they stand to lose money."
When hedge funds invested in the struggling gaming shop, stocks were as low as 20USD a piece.
But, thanks to these amateur investors, they surged to $500 at one point yesterday.
Are Hedge Funds Losing Money Because Of This?
In some ways, yes.
Gavin warns that things are getting "pretty serious" for some short sellers.
"One of the firms involved - Melvin Capital - decided they couldn't take any more risk.
They got out of their bet on GameStop at a cost of around $3 billion.
"They took the loss out of fear it could end up getting worse."
"They ended up having to get a cash injection from various other hedge funds."
So... What Now?
Right now, Wall Street is bracing itself for an army of amateur investors to resume trading today.
Yesterday's activity has prompted a number of trading apps to introduce restrictions on buying stocks.
US regulators are currently reviewing the situation.
Still Confused?
Still not sure what's the story?
Hopefully these Tik Toks might explain it a little further...
Explaining how Reddit users made shite out of a hedge fund part one pic.twitter.com/VH5MaPkwAS
— Brianna Parkins (@parkinsbrea) January 28, 2021
Part two. Featuring The Lady of the Northside pic.twitter.com/DQFJypu1gY
— Brianna Parkins (@parkinsbrea) January 28, 2021
Part three. Please don’t come at me for my over simplified explanation, I’m a woman with my hand up a puppets bum. pic.twitter.com/GFnBFsWjcu
— Brianna Parkins (@parkinsbrea) January 28, 2021
