The inventor of the world’s most popular board game, Monopoly, created it in 1904 to demonstrate what? Was it … property ownership, gambling, land overdevelopment or the stock market?
GameStop phenomenon: How Reddit rocked Wall Street
Let’s rewind to 2020. Keith Gill, a 33-year-old investing enthusiast, was frequenting a Reddit forum dedicated to investing. During one discussion, someone said that GameStop’s stock, priced at $5 per share, was a great bargain.
Over the next year, Gill invested his life savings into this stock. By January 2021, the value of Gill’s initial $53,000 investment in GameStop had skyrocketed to nearly $50 million.
Was he a financial whiz? Nope. Gill wasn’t the only person who made tens of millions of dollars or lost more than that. Sony just released the trailer for a movie based on GameStop that shows how interconnected the world of technology, finance and social media is. You’re not going to believe this story.
David vs. Goliath showdown
In late 2020, folks hanging out in the Reddit group r/WallStreetBets were chatting about GameStop. They saw that the big hedge funds were betting on GameStop’s failure and thought, “Hey, what if we could change that?” So, they started to work together to buy lots of GameStop stock.
This would increase each share’s price and hopefully show those hedge funds they were wrong to bet against GameStop.
The hedge funds had been “shorting” GameStop’s stock, effectively gambling on its price to keep dropping. This involved borrowing and selling shares on the open market, intending to repurchase them later at a lower price and profit from the difference.
Retail investors take the stage
More investors were now following the stock and began buying GameStop shares and call options in droves, leading to a “short squeeze.” This sudden influx of buying activity drove up the stock’s price, putting the hedge funds in a very tight spot. Their bets were not working, to the tune of hundreds of millions of dollars.
At the peak of the frenzy, GameStop’s stock price skyrocketed from around $17 to a high of $483. That’s how Gill’s $53,000 investment grew to $50 million.
GameStop saw its market cap soar from $2 billion to over $30 billion in a matter of months. Remember, downloading games was the norm, not people visiting video game stores.
The bubble burst
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The pandemic has caused financial hardships across the globe, and people are seeking to supplement their income. People on the fence about investing are treading into the stock market for the first time, while others are following the cryptocurrency hype caused by social media and public figures.
Reddit: Beginner’s guide to using the front page of the internet
It doesn’t matter if you’re a tech-savvy internet warrior or an occasional web researcher. Chances are if you’ve searched the web for answers for any topic, you’ve stumbled upon a website called Reddit.
It’s not just the place where viral content is born. It’s also a venue where questions are answered, debates are waged and community knowledge is shared. And now Reddit is being used to manipulate the stock market. Tap or click here for details on GameStop’s wild ride and the lawsuit it brought on.
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Coronavirus scams: How to spot bogus sites, emails and alerts
The coronavirus outbreak has been dominating headlines for weeks now. It seems to have impacted every aspect of life, from the stock market taking a huge dive to retailers all over the country selling out of things like hand sanitizer. It’s everywhere.