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

    "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.