What started as an internet meme by a handful of pranksters on a Reddit forum called Wallstreetbets has turned into something far bigger than anyone could have foreseen. Shares of Gamestop (NYSE: GME), or “Gamestonk” dubbed by the Wallstreetbets community, were trading as low as USD 17 in mid January. A handful of investors on Wallstreetbets were angered at the fact that hedge funds had shorted over 100% of Gamestop’s share float, and decided to buy shares as a message of opposition to short sellers.
Users on Wallstreetbets encouraged others to keep buying shares by posting comments such as “We like the stock”, “GME to the moon”, “Hold the line with hands of diamond”, the latter encouraging investors to keep holding their shares and not panic sell. By February, shares of Gamestop were trading as high as USD 483, and short sellers were reported to have lost over an estimated USD 20 Billion. At one point Gamestop itself was valued at USD 44 Billion despite not even being profitable. Due to extreme volatility, stock brokerages such as Robinhood began to restrict the trading of Gamestop, in what many called an act of blatant market manipulation. As Gamestop’s shares plummeted as low as USD 45, Robinhood’s actions drew criticism from both sides of the political aisle in Washington. Robinhood’s CEO Vlad Tenev and Reddit user Keith Gill who is credited with starting the short squeeze, were called to testify in front of Congress on Feb 18th. On Thursday February 25th restrictions were lifted on the trading of Gamestop and another Reddit fueled short squeeze sent the shares soaring back up to as high as USD 170. Currently shares of Gamestop are trading at USD 112, as we await a second congressional hearing on the matter scheduled for March 17th.