Its slogan is 'Like 4chan found a Bloomberg Terminal,' alluding to the fringe message board and the Bloomberg computer system that is nearly ubiquitous in finance.Īmateur investors on WSB have discussed GameStop (which they refer to by its stock ticker abbreviation, GME) for years, but things changed early this year. WSB takes something of an internet extremist's approach to investing. The internet has been used to prognosticate about stocks for decades, but there's never been anything quite like the Reddit community called r/wallstreetbets, also known as WSB. S3 Partners, a financial data company, said Wednesday that its analysis found that short sellers had lost $23.6 billion on GameStop this month. The speculative trading left short sellers with no more shares to buy to cover their positions, creating a short squeeze and leaving them with millions of dollars in stocks they had bought at a high price but which they then had to offload at an even higher price. In the case of GameStop, chatter on massive online trading forums invigorated interest in buying the stock, pushing up the price, which in turn fueled more interest.

Any positive news or enthusiasm for the stock will push up the stock's valuation, minimizing profit for the short seller. If that doesn't happen and the stock price rises, short sellers are forced to cover their positions or buy more stocks - to minimize their losses.īecause short sellers - frequently hedge funds - in essence are betting against a company's success, it can be a risky position.

Short sellers do the opposite - they borrow and sell a stock when it's high and bet that it will continue to fall. What is a short squeeze?įor the most part, investors follow the 'buy low, sell high' format when it comes to stocks. Remember those names.Īnd then GameStop became the source of a short squeeze. Other companies on the list include AMC Theatres, Bed Bath & Beyond and even the mostly defunct Blockbuster. GameStop was one of the most shorted of all publicly traded companies.

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