GameStop

Gamestock Frenzy Reveals Financial Illiteracy

2021 is shaping up to be an eventful year, but one unexpected development was the GameStop short squeeze. After finding out that gaming retailer GameStop had the most shorted — or bet against — stock on the market, a group of Reddit users organized themselves and individually bought GameStop stock en masse. They drove up the cost of stock, forcing hedge funds that had bet GameStop stock would decrease in value and had hence borrowed stock to sell at a low price. This practice is known as “short selling” — buying borrowed stock back at a much higher value than anticipated, which created the “squeeze.”