The War with Wall St. The Reddit Rebellion.

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What’s with all this nonsense about Game Stop’s share price?


The War with Wall St. The Reddit Rebellion!


First of all I have one thing in particular I would like to say about the situation with Game Stops share price and that is, wait until Monday comes...


If your up for a laugh you should check out Game Stops stock price come Monday morning, in particular, you should check it out shortly after the New York Stock exchange opens. My guess is that the price of Game Stop Shares will collapse under the weight of its own success. But hey, I’ve been wrong before, so who knows?
At close, as of today, the price for one share of GME was $325.00 USD. What’s so interesting about that, I hear you asking. Well, it helps to keep one simple fact in mind. That fact is as follows. Only a month ago the price for one share of GME was around nineteen US dollars a share. So, what’s up? Why did the price suddenly sky rocket to 325 dollars? Well, it wasn’t because of some amazing news released by the company, you can be sure of that. What happened was as follows.
One month ago a subreddit was created under the Wall Street Bets page on the sharing site Reddit. The post was created in response to the discovery that 160% of all the money in GME stocks was short sold. Why would someone create a page in response to this discovery? That would be because they want to see the financial world burn! After all, short sellers are not the most popular people in the market.
You see short selling means that someone has burrowed stock from a broker. Than they sell the stock quickly and take the money to their money caves. Meanwhile, the broker is still waiting for the stock that was borrowed to be returned, that’s part of the deal. The idea is that, if you short sell, you sell the stock, you stash the cash, you wait patiently for the price to continue to fall, you than re purchase the stock when it’s cheaper and than return the stock back to the broker. If the short sell is completed correctly you should be able to return the stocks to the broker and keep the difference of the trade. You should profit, so should the broker.
So, what’s wrong with this trade tactic?
Well, for starters, short selling is basically a way to bet against a companies success. The only reason you would ever perform a short sell is because you strongly believed that a companies share price was going down and would continue doing so for some time to come. Short selling is the polar opposite of the normal reason to buy stocks. Hoping that a company is going to fail is good for a laugh but it is evil. There’s no doubt about that. Keep in mind that thousands of jobs may be on the line if a company does fail. With that clarification it’s apparent that wanting a company to fail is plain and simply the wrong attitude to have. But, it’s not illegal and for that reason, neither is short selling.
So, in early January it was noted on reddit that an army was being created to go to war with Wall Street. This army was created with one purpose in mind and that was to drive the price of GME through the roof. You see, the more people who can be convinced to buy into a stock results in the demand for said stock to increase which results in the share price increasing, which than again results in the demand for the stock to increase. The whole event has turned into a snake eating it’s own tail. So what’s the goal of this attack? Well, in response, this rising price will put pressure on short sellers to close their positions before they lose too much money. The last thing a short seller wants to do is to buy back a short sold stock for higher than what they paid for it, keep in mind that the stock still needs to be returned to the broker at some point. The sale must be completed no matter what the cost and there are heavy penalties for failing to do so.
So, as the price in GME’s stock began to rise, the short sellers have been forced to buy the stock at higher and higher prices and yes they are losing money hand over fist. This demand for buying the stocks at a higher price has resulted in more short sellers buying in at a higher price which has driven the price into the stratosphere. Now the stock stands at a precipice. If people start to sell on Monday the price will collapse.
However if people hold onto the stock and more people get on board, which is possible, especially due to all the publicity around the stock, the price may continue to rise higher still. And in response, the potential rising prices will force more short sellers to close their positions which could result in the price continuing to climb.
All that is needed to sustain this attack is for more stock holders to hold! It’s that simple.
This is one of the first publicly coordinated attacks on Wall St that I have ever heard of and so far it appears to be working.
A couple of questions remain. Who is really orchestrating this attack? Is it as simple as it appears to be? And what will happen come Monday? Well, that’s anyone’s guess. But you can sure that it will be an interesting day! It helps to keep in mind that the rest of the stock market is starting to collapse. The Dow Jones has lost over $1000.00 in value over the past week alone. People are going to be looking for some where to put their money to stop the bleeding and for that reason alone Game Stops potential growth is awfully tempting.


Check back here for an update after the market opens on Monday!