U.S. video game retailer GameStop (GME) was recently shorted by hedge funds, but the battle continues today with a call to buy GME shares on the online forum Reddit to take on the predators who tried to profit from the short selling. According to BBC analysis, this incident is a generational struggle between a new generation of individual investors (i.e., retail investors) and the traditional Wall Street big players.
GME is a U.S. video game retailer, its own business conditions are not ideal, mainly because the current mainstream sales platform for the video game market has shifted to online, there are still operating physical stores GME face losses, 2019 losses of up to $ 795 million.
In the international financial markets, there are many predators specializing in short-selling profits, often targeting some of the shares of listed companies that are considered too high value to short, that is, a listed company’s share price is expected to have the opportunity to fall, will “borrow shares” from other investors to sell in the market, when the increase in selling, it will often depress the share price, the predator will be available after cheaper The predator can then buy back the shares at a cheaper price and return them to the original “borrowed shares” investors before the deadline, and profit from the difference in price.
A user of the online forum Reddit learned that an investment company’s short-selling deadline was about to expire, so he organized other retail investors to keep buying GME shares to hold up GME’s stock price, thus undermining the short-selling profit plan. As a result, GME shares, which had a 52-week low of just $2.57, continued to rise to a high of $483 this week, seen as a small victory over the short-selling predators. However, with a number of brokerage firms on Thursday to make the “extraordinary means” may be illegal to prevent retail investors to continue to buy goods, GME shares closed down 44.3% to $ 193.6 on Thursday, but some brokerage firms in the off-exchange trading session again open to buy GME, the stock price to then 8 pm has been back on the more than $ 300 level.
Some analysts believe that the GME incident only fulfilled some people’s plans to “get rich”, but some experts have noted the ideological controversy involved, as much of Reddit’s content is critical of the previous generation of “baby boomers”, saying that these middle-aged and older people control most of society’s wealth. Some are clearly “vindictive” and target financial institutions that make huge profits.
Markets.com analyst Neil Wilson mentioned that the most unusual thing about this incident is that the netizens took on the investment funds involved in short selling. He said bluntly: “It’s a generational battle, targeting those who are rich and robbing them, and then distributing them to the poor young people born in the millennium.” John Patrick Lee, an analyst at US investment firm VanEck, agreed that the GME incident reflects a conflict between the new generation and the Wall Street elite as an establishment, and “will not be a fleeting phenomenon.
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