Let's just assume that there are 100 shares of GameStop (worldwide) and go from there. Let's assume that the price per share/stock before all of this was $100 (in a "good" economy, etc.). How would this all work?

A nice timeline, step by step, line by line would be nice. For ex:

  1. Stock is selling at $100 per share (100 shares total). June 20XX

  2. Economy starts tanking, stock now at $95 per share. August 20XX

  3. People start predicting that it will go down further, thus they start "betting" (insert definitions that are accessible and not jargony), etc.

^ something like that would be nice. Thanks!

  • howdyoudoo [comrade/them]
    ·
    4 years ago

    normies buy stocks and hope they go up.
    rich financial jerks short the stocks and hope they go down. Meaning they sell the stock first (without owning it), and buy it back later (hopefully at a lower price so they make money).

    In the interim period, the shorter is "on the hook" for the stock that he sold short, basically an IOU to his broker for whatever stock he sold.

    normies lose when stocks go down
    shorters lose when stocks go up

    • howdyoudoo [comrade/them]
      ·
      4 years ago

      The key difference here is that if you buy a stock at $100, it could go to 0 and you lose $100.

      If you short a stock at $100, it could go to 1000, or 10000000, or who knows what. So the amount of money you stand to lose is potentially infinite. That's why most normie accounts are literally restricted from doing this.

      • howdyoudoo [comrade/them]
        ·
        4 years ago

        "short interest" refers to the % of shares that are being shorted. If Hexbear company has 10 whole stocks, and 3 people short 1 stock each, then the short interest is 30%. This is high.

        Gamestop short interest was over 150%, which is unprecedented high. So the shorters were basically taking a huge risk for little reward.

        Because when you short a stock that much, and if the price increases (bad for you), it could trigger a lot of other shorters to buy back the stock they borrowed--because your broker has a limit on how high price can go--if they feel you WON'T be able to buy the stock back later, they will automatically do it on your account, and you lose money. other shorters buying = price increases more (supply&demand) = more shorters forced to buy = line go up more = more shorters forced to buy, rinse repeat

        • howdyoudoo [comrade/them]
          ·
          4 years ago

          what happened with gamestop is a few guys back in July felt like GME was undervalued. The high short interest was an additional opportunity if they could get the price up and into a "short squeeze" (the feedback loop I just mentioned)

          one of these guys (deepfuckingvalue) wrote a bunch of posts on reddit pointing it out. He bought tons of GME at $4 (worth $220 now)

          he kept posting on reddit and most people called him a dumbass, a few were convinced and went along.

          basically rinse and repeat until today. It has been rocketing up since late August.