On a typical day in early January, the stock for GameStop, or GME—a beleaguered brick-and-mortar video game retailer undergoing downsizing—traded at around $18, with about 6.5 million shares changing hands. With the pandemic devastating retail and much video game purchasing having shifted to digital channels, GameStop’s prospects were poor. It became one of the most shorted stocks on Wall Street—that is, hedge funds and other large investors bet billions that GameStop’s stock price would go down.
Then Reddit stepped in. Led by users of a forum called r/WallStreetBets, Redditors are using memes, trolling, and their own money to drive up the price of GameStop dramatically. On Wednesday morning, GME opened at $354.83—an increase of almost $200 over its previous close. In the last few days, hundreds of millions of shares have changed hands, snapped up both by Reddit day traders and big hedge funds who have been forced to buy more shares to cover their short positions. On Tuesday, it was the most traded stock in America.
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