Emily Stewart discusses how the video game store became popular with short-sellers and then Redditors. The New York Stock Exchange has paused trading on it.
Publish Date: Feb 01, 2021
it's today explained. I'm Sean Ramos for maybe you heard that Gamestop stock has skyrocketed. Something like 1700% this month. Probably you're wondering how wondering if the stock market is just in elaborate lie? Definitely. That's the subject of the show today. Emily Stewart is here to explain. She covers business and politics of box, and she's going to start with what, exactly a Gamestop is in case you've been shopping exclusively on Amazon your entire life. So Gamestop is a store sweet voice you've ever been to the mall. You've probably seen one. So it's XGAMES store right where people buy games, cell that games, rent, games, things like that. Video games not like video Connect. Four correct video games. Gamestop power to the players. And so it is headquartered in Texas, and there are still more than 5000 stores you might not know because you probably haven't been to them all in a while. Most were dying before the pandemic, and during the pandemic, the situation for malls has gotten worse. That is sort of part of why Gamestop is at the center of the stock story right now. How come? What's going on Gamestop because it's not doing well, is popular among short sellers, short sellers, basically short sellers or people hedge funds. Big investors who bet against the stock. They basically think that the company is not doing well. The stock is not doing well, so it's popular among that group. Hedge fund big funds that make big bets. Think like Bill Ackman type people. I don't know if people have heard of him or like Carl, I can. David Tepper, Warren Buffett also kind of hedge fund. But Berkshire Hathaway is very big. Got it. Okay, so you've got Gamestop and you've got a bunch of rich guys betting that it's going to die. Along with a lot of like big box retail stores you find in malls. There is this kind of separate trend that is apart from game stuff. And then there is game self specific here, But basically like a lot of people, you've probably heard you've probably noticed like you might have been doing it yourself. A lot of people have been playing the stock market during the pandemic. Retail trading, which basically means like individual investing, has really been on the rise for a variety of reasons. um ah. Lot of people are bored at home. A lot of people got stimulus check. Um, and there are also APS out there like Robin Hood, where people can trade for free. You lose a barrier to entry. So that's kind of the broader context here. So you get specific to Gamestop. Um, it has become popular on this Reddit forum called Wall Street Bets. Wall Street bets. Wall Street bets a to beginning of this week ahead about two million people. Now it has more than three million in it, and it's a place where people kind of talk about their investments. They have sort of like this weird insider language, but it's kind of a sport like people kind of pile on to certain investments. Um, there's quite a vision misogyny, their their users, they call degenerates. Um, they used some pretty offensive language. When I've spoken to the moderators before, generally we lead with a little bit misogyny before I can like speak to them as a regular human being. So that's Wall Street. That's and basically it's been growing for quite some time, and we've seen in the past like certain stocks get popular. There and like people there, sometimes they're talking about like whether a company is a good or bad investment. For a lot of the time. It's just like a random ticker starts to pop up. And so about two years ago, Gamestop, like off and On, would bubble up. Little by little, it started to take off on Wall Street bets, and then some things. Outside of Wall Street bets kind of made people take more interest in the stock. The guy who co founded this e commerce pet company called Chewy disclosed last August that he had a stake in the company, which, like gives people like some sense that maybe it will do better because Gamestop has not been doing well. Some other big names started to kind of get into it, But so, like you can say, there's a business case for this. But basically last week, this short seller named Citron Research, which is run by a guy named Andrew Left, came out with some statements about their short position against game stock. This is a failing mall based retailers, so the amount of people who are so passionate about putting Gamestop higher not based on any fundamentals. It just shows the natural state of the market right now, or Seth Klarman said today. Ah, bunch of frogs in a pot of boiling water. Basically, being like this stock is going to go to $20 and Wall Street, that's like took notice. And then for the whole host of reasons that none of which makes sense, they decided to really pile into Gamestop. And so what we have seen is that at the beginning of the year, the stock was under $20 and it has just gone through the roof. Yeah, take a look at his wild intraday chart. Gamestop stock is looking like, UH, yeah, it's the Six Flags roller coaster theme today, up much as 144% of the upside. Then it turned negative, and now it's back up by about 22%. As we approach the closing bell, let's tack Gamestop chance have now risen some 700%. Yet today shares this year up 18 100 percent. The stock has exploded huge volume. It's like a David versus Goliath story, or it's a storyline in the TV show billions, or it's a Michael Lewis story. Uh, the New York Stock Exchange has had to pause trading on it because it's so volatile, it's bouncing all over the place. It's been about 304 $100 which is huge for for a company that, like sensibly, nothing has actually changed. For Gamestop itself as a business, this'll is wild like you for a long time. There's kind of in this question of, like, do the retail traders matter a t least. The answer on this is like they really dio.