What is the GameStop crisis?


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What is the GameStop crisis
What is the GameStop crisis?

Gamestop shares, which were trading at $5 on U.S. exchanges in October 2020, a few months ago, reached as high as $492 today. Naturally, a share gaining more than 8,000 percent was not normally met. The arrival of the Gamestop stake is the result of a battle between small investors and huge funds such as Wall Street.

To put it simply, GameStop, the retail chain that sells games, has suffered a serious blood loss in recent years. At the end of 2020, Wall Street ‘hedge funds’ began to short-sell this company’s shares, meaning the shares would lose value (short).

Big investor became a ‘little fish’ this time

In contrast, GameStop closed 2020 at $18.84 as small investors who took action through groups on Reddit began buying the stock, outsming $40 in January. Things got a little hotr after major investors almost insulted the people who bought the stock, and the company’s stake rose as high as $400. Of course, this caused serious damage to the funds that played to the loss of the stock, that is, traded, and even caused some of them to go bankrupt.


The funds need to return the shares they shorted, that is, borrowed. However, their share of a few dollars has now reached hundreds of dollars. If the situation continues a little more, the little fish will swallow the big fish and a billion-dollar loss will arise.

Facebook shuts down Robinhood Stock Traders group

Facebook shut down Robinhood Stock Traders, a popular Wall Street discussion group, in response to talk that revived shares of GameStop Corp and other companies. Allen Tran, 23, founder of the robinhood stock traders group and a Chicago resident, said he woke up Wednesday to a notification that his 157,000-member group had disabled it.

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While it is quite absurd that the reason for the group’s shut-down was reported as “adult sexual abuse,” everyone is confident that such content is not shared. Some members of his group had said they had made tens of thousands of dollars in recent transactions popular on Reddit’s WallStreetBets forum.


Facebook spokeswoman Kristen Morea argued that the group’s closure had nothing to do with the stock craze, but was removed for violating Community standards.


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