When a group of amateur investors on a Reddit messageboard began buying up stock in a video games retailer it forced huge losses on major Wall Street hedge funds that had bet against it. But following a trading frenzy the stock began to fall, almost as quickly as it had risen
At the beginning of the year, not many people were paying attention to GameStop. Its business of selling video games in retail stores looked increasingly shaky as the market shifted ever more online in the grip of the Covid-19 pandemic. GameStop’s seemingly grim prospects led Wall Street hedge funds to take out big bets on the company’s share price falling further (known as short selling) but they had not reckoned with a force that was about to blow them away. Users of the Reddit messageboard WallStreetBets began grouping together to buy huge quantities of GameStop’s stock, driving the share price higher and higher and inflicting huge losses on the hedge fund titans.
Desmund Delaney tells Rachel Humphreys that as part of the Reddit community he was tipping shares in GameStop back in 2019 and took his own advice investing in the company, despite the derision of other users. But he gave up on the company last year while its share price was below $10 and cashed out. If he’d sold last week he would be sitting on half a million dollars.
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