Short Selling, Covid19, GameStop and WallStreet

🔴⚠ What’s happening at WallStreet is….

one of the closest things to the concept of “class struggle” in recent years, which makes it a historic event, not because it’s the first time, but because it’s the first time that happens with these proportions. What scares the “sharks” of finance is that it is easily replicable:

Who doesn’t know GameStop?

The largest video game retailer in the world enters a crisis already at the end of 2019 due to the first economic repercussions of Covid19, the crisis becomes even more black in 2020 but it is only in recent months that it becomes very black when large and famous Hedge Funds of WallStreet (called “HedgeFunds”) begin to implement a speculative strategy known as “#ShortSelling” (short selling):

If you are a hedge fund, borrow shares – in this case of GameStop – with the promise to pay them back within a short time. In the meantime, you sell them on the market at 100, you know that they are shares at a loss, so you wait for them to lose value, for example going down to 60, at which point you buy them back because, as you promised, you have to return them, but in the meantime you have made a profit 40. Not bad, right?

Put simply

the wallStreet “sharks” bet large amounts of money on GameStop stock failing to make a profit, but something happens:

On Reddit, an online platform that gathers millions of users around the world by grouping them by common interests, users of the “r / wallstreetbet” channel, which has 3 million members, begin to promote the bulk purchase of GameStop shares. These are ordinary people, often simple guys with a smartphone and a few dollars in the prepaid card, but capable of making the value of GameStop shares jump in a few days through micro-investments, an encouraging effect that infects the stock market even outside the Reddit users: The stock went from $ 3 in mid-2020 to $ 454 today.

Simplifying:

Now imagine speculators, companies that have millions of dollars to use exclusively for betting on the bankruptcy of other companies for pure profit, who have sold a huge amount of shares borrowed for $ 3 and are now forced to having to buy them back for $ 454 each.

The bet on the collapse of the GameStop shares was shattered and the losses were enormous for speculators: a well-known investment fund had to request a new injection of money equal to 2.75 billion dollars (!!) to level the losses.

But there’s more: the millions of users who have bought GameStop shares are not reselling them, but if they keep them like this their value not only does not decrease, but rather increases: the intent is to want to lead to bankruptcy. just the Hedge Funds, the “sharks”, which would like to buy as soon as possible to limit their losses (better to buy back a share at 454 dollars than at 600).

The Hedge Funds are beating their fists on the tables of the Wall Street regulators right now, but what they don’t understand is that they have been beaten at their own game.

Let me be clear,

An unfair and unethical game that has been in the dock for years. This time, however, it has been revisited in a “David against Goliath” key. Here again a reflection on the aggregating value of #SocialMedia and, at the same time, on the distortions of #capitalism.

It is not certain that this is the recipe against financial #speculations: in fact, a broad capacity for involvement and organization is required, certainly replicable, but not always with these results.

P.s. Some trading platforms (stock exchange investment) have stopped working.

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