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Message: <blockquote data-quote="embee" data-source="post: 8186719" data-attributes="member: 7026827">It's very easy to explain.GameStop is a dying company. Has been dying for years. Mainly because their revenue depends on buying used video games at a heavily discounted rate and reselling them at a heavily inflated price. They did this for a long time and it pissed off their customers. Meanwhile, video games themselves switched over to digital distribution, ruining the market for used video games. Basically, what iTunes and Napster did to record stores like Tower Records and Sam Goody, Steam and Epic and the EA Store and the Sony and XBox marketplaces did to GameStop. So, as a result, it's stock price was sitting at around $20 a share. Probably a little bit overvalued but not by much. So, several hedge funds bought a bunch of GME stock and were going to short it for a bit of a profit. On Reddit, there is a subreddit called WallStreetBuys. It has a lot of day traders, especially furloughed, unemployed, or idling at home folk. One of them noticed that a couple of hedge funds bought a large amount of GME and figured that they were going to short it. So, on a lark, he suggested that folk buy up a bunch of the stock so that they - not the hedge fund - could turn a quick profit and wouldn't it be hilarious if the hedge funds had to keep buying more stock to avoid taking a loss. It was easy to do this because there is an app called Robinhood that has no-fee trading and allows folk to trade on margin (basically borrowed money). So you can do a lot of trades without racking up fees by borrowing money. Yeah, it's as shady as it sounds. This vicious cycle went on for a couple of days until it finally hit The Wall Street Journal and The New York Times. Then, it exploded. Lots of people downloaded the app and started doing no-fee trading. One hedge fund took a huge bath on it. Robinhood had to borrow a ton of money from its investors to pay for all of the trades (because trades do cost money, even if the brokerage doesn't charge the user the fee). Some people were able to turn a little profit on day trading. Elon Musk stupidly weighed in on Twitter, telling people to buy, which is stupid FOR HIM because that's how he has gotten charged with SEC violations in the past. And GME itself is starting to lose value again because, at the end of the day, it's a dying company. That's pretty much it.</blockquote>

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