To the Moon! GME and AMC Stock Soar

One of the hottest topics on social media right now is the Game Stop and AMC stock controversy. For a person who has zero knowledge in the world of stock trading, all this talk may seem very foriegn and confusing. If this is you, this article is perfect since I will simplify what is going on!

Video game retailer GameStop and cinema chain AMC have lost a significant amount of revenue due to the pandemic causing their stock to plummet. When this happened, experienced stock traders were able to profit off the decline of the stock because of a strategy called short-selling. In essence, this is when investors sell a stock when it is high, and bet money on it to fall. Due to the high risk in this action, traders buy hundreds of stocks in order to reduce their losses. Online forums such as Reddit noticed this trend and realized that if they buy up GameStop and AMC stocks, they can short squeeze (a rapid increase of price) the stock and cause the short-sellers to lose millions of dollars; however, if the Redditors want to keep the stock rising and continue causing short-sellers to lose money, it is important for them to hold the line, and not sell the stock. Financial data company S3 Partners had estimated that hedge fund short-sellers had lost over $23 billion dollars in GameStop/ AMC stock in January.

Brokerage app Robinhood became extremely popular during the short-squeeze due to its small-investor approach through a simplicity in buying and selling stocks. This app was held in high regard until they shut down the ability to buy GameStop and AMC stock so they could prevent large hedge fund investors from losing more money. This action enraged hundreds short-squeeze investors, and they banded together to boycott the app since Robinhood was marketed to help new investors and not the large hedge funds. This ordeal is quite ironic since the name Robinhood refers to the fictional character who stole from the rich to give to the poor when in actuality, this app stopped the poor to help the rich.

What goes up must always come down, and unfortunately due to the unsustainability in short-squeezing, GameStop and AMC stock will inevitably drop in value. In the end, short-squeezers won the battle since they were able to get revenge on the large hedge funds and make them lose billions of dollars. This action shows how the power of small investors, brothership, and trust can allow them to take on the powerful, greedy hedge funds.