GameStop’s rollercoaster explained

Business

(NBC News) – Last week GameStop was just another retailer struggling to survive during the pandemic.

Now, it’s the most talked about company in the world of big finance.

Its stock price has surged 8,000 percent in the last six months, briefly trading for more than $500 per share Wednesday, despite no real change in the company’s profitability or outlook.

Why the surge? 

Small-time, amateur investors decided to band together and do it.

Users of an internet chat board called “Wall Street Bets” on Reddit decided use the system to their advantage when they noticed big money Wall Street firms were betting that GameStop stock would go down, and would make big money if it did. 

Those small investors started pumping money into GameStop stock.

The resulting surge in GameStop’s stock price caused big hedge funds to lose more than $14 billion. 

While many small investors made a fortune on GameStop, analysts say some could lose money they can’t afford when the bubble ultimately bursts.

“Those of us who have seen this movie before have a responsibility to tell folks how it ends, and unfortunately it typically ends badly,” says Andrew Ross Sorkin of CNBC’s Squawk Box.

Read more: http://nbcnews.to/3ovPhwq

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