A game stop that became a battleground for’short selling forces vs. ants’ … “dangerous, crazy”

The U.S. offline video game retailer’GameStop (GME)’ is a hot topic every day. Gamestop, which is listed on the New York Exchange (NYSE) in the United States, has soared in the sky this month as a confrontation between the forces leading short selling and individual investors took place. Major foreign media such as Bloomberg expresses that ants “sent the gamestop stock price to the moon.”

On the 27th (local time) in the New York Stock Market, Gamestop closed at $347.51, up 199.53 dollars (134.8%) from the previous trading day. It is soaring two days after the 92.71% surge the previous day. The stock price, which was only $17.37 based on the closing price on the 5th, surged more than 20 times in just 15 trading days.

As a result, the market capitalization of GameStop, which slightly exceeded $1 billion (about 1.1 trillion won) earlier this month, surpassed $10 billion (about 11 trillion won) on the 26th, and is now $25 billion (about 27 trillion won). Is reaching.

Founded in 1984, Gamestop is a company that develops, manufactures, reproduces, and sells game software. It was listed on the New York Stock Exchange in February 2002, and currently has about 6,000 offline stores around the world.

In the past, most of the game packs and CDs were purchased offline, but as the proportion of online games gradually increased, GameStop was recognized as a representative’down-right’ company. In fact, in terms of corporate value alone, such as announcing a plan to close more than 1,000 stores by March due to the continued deficit march over the past few years, there is no good news to support such a surge in stock prices.

However, when the news that Wall Street’s short-selling forces were betting on the decline of Gamestop, individual investors gathered opinions to buy Gamestop stocks, centering on Reddit, an online community most visited by young Americans.

Here, Tesla’s CEO Elon Musk, loved by individual investors, cited GameStop and fueled the stock rally. On the 26th in local time, Musk posted a post on his Twitter account that was linked to Reddit, an investment chat room with over 2 million subscribers, immediately after the market close. Stonk means’blow bombing’.

Wall Street experts interpreted Musk’s mention of GameStop because Tesla also suffered from short selling. Last year, Musk ridiculed the short-selling force and tweeted that “selling red’short shorts'” is also famous.

Individual investors, who were keen on the gamestop stock price and feared a share price decline due to the involvement of the short selling force, began to increase their buying trend further thanks to Musk’s words.

Institutions such as the hedge fund, which short-selled GameStop, suffered astronomical losses due to the strong gathering of individual US investors called’Robin Hood’. Eventually, they were in a position to buy Gamestop stocks to make up for the loss.

Short selling, usually done by institutions, is selling stocks by lending them in anticipation of a fall in stock prices. When the stock price falls, the stocks are bought and paid back at a cheaper price. Conversely, if the stock price rises after selling the borrowed stock, loss is inevitable. To minimize losses, you need to buy and pay off the stock before the stock goes up. This is called short covering, and if short covering accelerates, it becomes a short squeeze situation in which the stock price surges.

According to Bloomberg and Marketwatch, the short selling force has reported losses of more than $5 billion (about 5 trillion won) in Gamestop so far this year. In addition, they reported that the ants, who have won a big win in the confrontation with the short selling forces, are expanding their forces by targeting stocks with a large proportion of short selling such as AMC Entertainment, Blackberry, and Express as their next targets.

Michael Burry, CEO of Science Asset Management, a US hedge fund, said on his Twitter, “The rally of Gamestop promoted by’Reddit’ ants is unnatural, crazy, and dangerous.” Legal action is needed for the act,” he said, and urged the US Securities and Exchange Commission (SEC) to investigate.

He is also famous for being the real protagonist of the movie’Big Short’, which deals with the story of a fund manager throwing away. He earned a lot of money by predicting the collapse of the US housing market that caused the financial crisis in 2008, and his story was made into a film in the movie’Big Short’ starring Christian Bale.

Meanwhile, the White House expressed concern over the soaring stock price of GameStop, saying that the situation is being’watchful’. White House spokesman Jen Saki said at a regular briefing on the day that he was asked about GameStop. “The New York Stock Market alone cannot measure the health of the US economy.” “I’m watching one other company.”

Reporter Ko Byung-hoon kbh6416@