Hedge funds shorted more than 100% of all shares of gamestop, to do this that means they had to sell more shares than actually existed.
The hedge funds never actually owned these shares to begin with because they were short selling so they never actually paid for them.
Redditors saw this and decided to buy up all these shorted shares to gamestop a company that wasnt failing that the hedge funds would then be forced to buy back as they never actually owned the shares.
The beauty of this is if you knew what to look for you could’ve seen this coming too. It isn’t mystical, it isn’t magic. They made these billionaires pay back more than what they basically stole by being greedy, this is a good thing.
Let me explain a bit
rich hedge funds have the ability to sell stocks they havent paid for yet that other people actually own and then pay for them after a certain amount of time. they can sell these stocks trade them whatever but they will eventually have to buy them back.
So they shorted gamestop shares from 20 dollars all the way down to 3 dollars, meaning they borrowed shares to then massively sell.
they sold shares at like 20 dollars and then 18, etc. and because when investors see massive amounts of shares being sold they get nervous and then sell their shares which drives the price of the stock ever further down.
so they took something worth 20 that they sold for 20 dollars and all its downward prices and instead of paying for it at $3 dollars they thought theyd CONTINUE to short the market, meaning they kept driving the prices down because apparently this obscene amount of money wasnt good enough.
Redditors who dont say the stock market is magic and mystical astrology saw this very obvious evidence that these hedge funds would be forced to buy back all these fucking gamestop shares and decided to drive the price of these shares up knowing that the hedge funds would then be forced to buy back the shares they have yet to pay for at increasingly wild prices.
what they were looking for was over 100% of all stocks shorted on a company that wasnt even failing or in complete disarray
they used this knowledge to bring stock that was 20 dollars brought down to $3 all the way back up to $140
the hedge funds still have to pay for all of those shares they never technically even owned in the first place which these redditors knew so they held onto these stocks they bought in a company whose shares were oversold.
INSTEAD of acknowledging this they decided to have media campaigns lie and make the stock market look even more mystical and crazy to people who dont know shit about finance so that your average folks wouldnt catch them in the act of just getting a fucking 2 billion dollar bailout for being greedy fucking pieces of shit.
They also dont want your average person to KNOW they do this shit especially when they drive shares so deep into the ground ($3)
TL;DR: Every time you call the stock market magic and mystical and ooo makes no sense, you pretty much allow these motherfuckers to get away with robbery of the average person (given a government bailout is paying for this)
Understanding how these things happen and knowing what to look for allows people to work together and not only stop it but rob back from the billionaires when they pull this shit.
financial illiteracy isnt helpful to anyone.
my point about financial illiteracy isnt to make anyone feel bad it’s more saying you shouldnt repeat the myth that these things dont make any sense especially when something like this happens because very set laws and rules allowed for this to happen and mystifying that only benefits hedge funds who dont want people catching them doing this.
the real TL;DR
thank you u/Scheebs_ for explaining this like i’m five years old
