Threats of killing among themselves that led the ant rebellion… After’GameStop’

The company that talked about the most in the US stock market this year is by far GameStop. GameStop, which used to be an old game distributor, led a revolt that shook Wall Street by winning in a short-selling confrontation with hedge funds. Thanks to that, it has surpassed Apple, the world’s No. 1 market capitalist, in the stock market for three consecutive trading days from the 22nd of last month. The stock price, which was $18, soared to $483 in just three weeks.

But the glory didn’t last long. On the 9th, after a week or so, the stock price of GameStop plunged to the 50 dollar level. What happened to GameStop, which fell into a wingless fall after standing tall as a stock symbolizing’ant rebellion’ in a company that was ruined? Back in the summer of last year, I looked back at the moments that changed the fate of GameStop.

It was last summer that GameStop began to attract attention. Ryan Cohen, CEO of Chey, an online pet shopping mall in the United States, announced that he bought 9 million shares of Gamestop in August last year. The stock price, which was only 4 dollars, has reached 10 dollars in a month.

Cohen, who became a major shareholder, lit up the stock price once again last month. The news that Cohen is joining GameStop’s board of directors has been announced. Cohen’s statement, “If we turn offline stores into online distribution stores, we will be able to improve profitability,” Cohen’s words sparked expectations for a share price hike. The ants started sweeping the gamestop.

Hedge funds also jumped into the game. It was judged that individual investors had created a bubble in a business that was going to go down. By responding to the’lion’ of ants with’selling’, 144% of the circulating volume was secured by short selling (an investment method in which a profit is obtained by borrowing and selling stock and repaying the stock price when the stock price goes down).

An angry individual investor gathered around the’Wall Streetbets’ (WSB), an online community called Reddit’s stock discussion room, called the’Holy Land of Ants’. In addition to spot stocks, it raised the stock price by buying call options in the derivatives market (the right to buy stocks at a price exercised before expiration).

The end of the zero-sum game, in which ants and hedge funds and one side must die.

In one line of Twitter, GameStop’s stock price was on a roller coaster. Elon Musk, Tesla CEO, posted a link to the online community Reddit’s stock discussion room called’Wall Streetbets (WSB)’ on his Twitter on the 26th of last month.

At the same time, he added a line called’gamestonk’. Stonk is an acronym for’stock’, which means stock, and it means fierce bombing. Stock prices soared as the new word that synthesized GameStop and onslaught was regarded as a message of support for WSB and ants. Musk tweeted after the close of the regular market, but on that day, GameStop’s stock price soared more than 60% in after-hours trading, exceeding $300.

Musk wrote on his Twitter on the 28th of last month, “You can’t sell a house or car you don’t own, but you can sell stocks you don’t own,” and “short selling is a scam.” The ants who went out the other day with the short sale cheered Musk’s message. In WSB, a “meme” (a fun synthesis of a meme, photo or video) that synthesized Musk’s face on various hero movie posters spread.

The ants who shouted “Zonber” (persist to the end) won. On the 27th of last month, hedge fund Melvin Capital lost over $3.7 billion (4,132.5 billion won) and liquidated the short sale contract for GameStop. The day after Melvin Capital left GameStop, the stock rose to $483 during the intraday. According to S3 Partners, a financial analyst firm, the amount of losses that Melvin Capital and other hedge funds suffered from the short sale of Gamestop exceeded $5 billion (about 5,584.5 trillion won).

The reason the hedge fund made a surrender with huge losses was to reduce losses before the stock price rose further. In general, if you sell short stocks, you have to borrow and sell stocks, and if the stock price goes down, you have to buy stocks at a low price and pay them back. However, the situation was reversed due to the soaring stock price.

Hedge funds that bet on falling stock prices cry to reduce losses and have to buy stocks at a high price by eating mustard and end the short sale contract. He was concentrating on squeezing a short sale (short squeeze). Gamestop’s stock price ignited properly as hedge funds added the money that the hedge fund raised to liquidate the short selling contract to the individual’s collective buying tax.

Robin Hood, a hero of the ants, struck the back of the ant, who had been prosperous like General Triumphal. On the 28th of last month, the US stock app Robin Hood limited the purchase of GameStop and the stock price plummeted. I got rid of the buy button altogether.

Robin Hood explained, “The amount of margin demands from financial authorities soared due to the surge in GameStop stock prices, which inevitably had to restrict transactions,” Robin Hood explained. However, voices of suspicion that Robin Hood, who makes money by selling stock order information of individual investors to hedge funds, were on the side of the hedge fund, arose.

The suspicion was not completely resolved. On the 18th, the House of Representatives will hold a hearing on Robin Hood’s suspension of transactions. Some investors filed class action lawsuits claiming that Robin Hood’s arbitrary restrictions on transactions suffered massive losses. It is unclear how much Robin Hood’s explanation will be accepted during the hearing and litigation process.

After the Robin Hood crisis, GameStop shares have struggled. As of the 9th, the closing price of GameStop was $50. It was higher than $18 a month ago, but 90% evaporated from its intraday high ($483).

As the stock price plunged sharply, there was a self-determination among the WSB operators who led the short-selling campaign. The news that Netflix is ​​filming the GameStop incident sparked a fight. When some WSB operators promoted the filmization of the case, another operator who was marginalized in the process raised an objection, saying, “Why do certain groups take over the achievements of the entire individual investor?”

Those who promoted the film production claimed that they were trying to “donate the profits to charity,” but they could not calm the other’s anger. The side that did not know about the filmization even threatened to kill the side that promoted it. Criticism arose that the movement against short selling by individual investors against hedge funds turned into a power fight among some WSB operators.

Reporter Jiyu Hong [email protected]