GameStop Stock: 3 Lessons I Learned as an Average Joe
If you’re anything like me, you’ve probably heard, read, or discussed the GameStop & Reddit situation in the US. And if you’re also like me, you did some sly little googling to find out what the fuss was about and why it was trending on Twitter.
If this is all brand new information and you have no idea why the terms “GameStop” “Reddit” “Trading” and “Big Short” are trending — let me give you a quick recap of this David and Goliath situation from a very non-technical and not very financially savvy individual.
In January, a group of young traders connected through the Reddit wallstreetbets forum identified a number of companies including Nokia(NOK), Blackberrys (BB), AMC (AMC) and the main one for our story — GameStop (GME), as being significantly undervalued with many large hedge funds shorting against them.
Shorting a stock, also known as a short, in simple terms is when an investor loans a stock from someone, sells it immediately with the hope that the stock crashes and they can buy it back for cheaper before needing to return the stock to the person they loaned it from. For example, if you had 1 GME stock, currently worth $10 and you loaned it to me, I would sell it for $10, in a week as I predicted the stock crashes and I can now buy the stock back from someone for $1 and give you your 1 GME stock…
