QRD on Gamestop for anyone wondering, from some guy on twitter. Please correct if wrong.
https://twitter.com/kamster999/status/1354442013161250821
A bunch of hedge funds made huge bets that Gamestop stock would drop and basically bankrupt. They borrowed stock & sold it, hoping to buy it back later at a lower price. SO many people did it that they borrowed and sold the equivalent of about 125% of all the shares.
A bunch of individual investors on a Reddit forum, Wall Street Bets, thought they could work together and drive up the stock price. That would force the hedge funds to buy back their shares as their losses increased. So they used the hedge funds against themselves.
As the internet guys pushed up the stock a little, hedge funds started buying back the shares to return the borrowed shares they sold off earlier. There were not enough shares though, so the demand was higher than supply, "squeezing" the shorts and driving up the stock.
As the initial short sellers covered their positions & got out, more short sellers saw the price increase & realized that the stock was overvalued, so they shorted the stock too. Then the buyers hit the stock again and squeezed the new short sellers, driving it up more.
At this point, people are figuring out there is money to be made buying GameStop in this short squeeze and a frenzy ensues. So it became a war between short sellers and buyers.
This began as a meme on Reddit but nearly bankrupted some Wall Street hedge funds, including Melvin Capital, which needed a $2.5 billion bailouts from friends.
Everyone is crediting Reddit for this, but the amount of money needed to squeeze the hedge funds was high.
Specifically, people credit a guy /DeepFuckingValue for buying $50k worth of call options and starting this. That's not moving the needle though.
Even all those retail guys together is not much compared to the hedge funds.
There is a strong possibility that it was more likely some major competitor hedge funds in the shadows, using Reddit as cover.
@Canny4 mentioned this first.
https://twitter.com/kamster999/status/1354442013161250821