Short selling takes the opposite approach. The whole idea is that you think a particular company is poised for big future growth, like Tesla, Inc. Normally, savvy investors buy stocks at low prices, hold the stocks and then sell them at high prices on a later date. For those who haven’t heard of shorting stock, Forbes offers a simple explanation: Based on that prediction, the investors “short-sold” GameStop stock. GameStop’s financial difficulties attracted the attention of several hedge funds and Wall Street-type investors that predicted that GameStop was doomed to failure. At one point, GameStop even attempted to sell itself - though, as with everything GameStop, the price it offered was too high. The consequences were hardly surprising: GameStop store closures, rumors of bankruptcy, and increasingly terrible policies for employees. While gaming as a whole has grown, most of that growth has been through digital sales. The fact is GameStop has been struggling for years. The Battle Over GameStop Didn’t Start This Week Then, in my next column, I’ll answer the burning questions people have been asking about the legal consequences of the GameStop incident.
This week, I’ll provide an accessible breakdown of what happened and why. Hard as it may be to believe, the actual explanation is just as bizarre, but a lot more entertaining. If you didn’t know better, you might think that traders were trying to design a theme park roller coaster. In just a few days, GameStop stock went from $145 up to $469, down to $132, and then back up to $379. If you’ve followed the news this week, you know that GameStop and a few other struggling stocks have been the center of a wild trading frenzy.
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