The Attack of the Nerds: The best Tweets About the GameStop Craze

Ok, even if you think the stock exchange is a place to exchange stockings, it’s very likely that you’ve realized there is something noteworthy going on these days. We want to shed some light on the current war between Wall Street and the nerd community.

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It all started with the GameStop shops. The video game chain has been struggling for years as online sale platforms have more and more gained control over the market and the pandemic seemed to be the coffin nail to it. Basically the end of GameStop was a done deal, except that in the last days, GameStop’s stock has soared to unbelievable heights. Just hours later the shares fell more than 60% after some brokers imposed trading limits on the stock. What happened?

As many struggling firms, GameStop became the focus point of a trading strategy known as short selling: Big Investment firms expect the company’s shares to lose value. Hedge funds then borrow GameStop shares from lenders (at a small fee), promising them to give all back. The firm sells the stocks at their current price, then waits for their price to sink, so they can repurchase them for cheaper and earn a profit. It is a morally controversial and risky maneuver but in terms of GameStop it seemed to be profitable for the deep-pocketed hedge funds.

This is when the Reddit forum «Wall Street Bets» hit the dance floor. The community currently consists of more than 4 million members; they understand how the systems works and they know how to network! By buying as many shares as possible, the crowd of small investors coming from different online platforms increased the share price! And when the stock started rising, short sellers had to buy the stock as well to avoid greater losses. Which obviously caused the stock price to rise even further! All of this led to a market phenomenon known as a short squeeze as the short sellers are then forced to buy the stock back at the higher price.

It didn’t take long before independent investors as tech mogul Elon Musk joined the party and just by sending a couple of tweets put another spin to the developments. GameStop’s price went skyrocketing, causing hedge fund Melving Capital to suffer heavy losses. But all that excitement stalled on January 28, when popular brokers Robinhood and TD Ameritrade all of a sudden issued trading restrictions on GameStop.

This in turn caught the attention of celebrities and politicians, who accused the brokerage of keeping smaller investors out of the game while hedge funds were still free to act. Strangely enough, a lot of usually incompatible parties seem to agree on this subject for a change. We have collected the best tweets about the phenomenon for you.

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