I believe the GameStop situation was mentioned in another thread, but I’d like to start one regarding the fallout and what it means for the future.
Cliff notes:
Melvin Capital shorted GameStop, likely to drive the price down. The subreddit WallStreetBets took offense and started driving the price up. The nerds took the upper hand and forced Melvin Capital to double down on their short with another $1.7B. Nerds respond and the price eventually is up over 700%. Melvin Capital surrenders and is now down 30%. Two billionaires just bailed them out with an investment of almost $3B to save the company.
Why is this significant?
It means the stock market can weaponized. The Internet has allowed the coordination necessary to use the stock market as a political tool. If my group has the cash, we can attack your investments.
Is this concerning to anyone else? Just a risk companies take? If my understanding is accurate, Soros used investments to cripple the Bank of England on Black Wednesday.
Cliff notes:
Melvin Capital shorted GameStop, likely to drive the price down. The subreddit WallStreetBets took offense and started driving the price up. The nerds took the upper hand and forced Melvin Capital to double down on their short with another $1.7B. Nerds respond and the price eventually is up over 700%. Melvin Capital surrenders and is now down 30%. Two billionaires just bailed them out with an investment of almost $3B to save the company.
Why is this significant?
It means the stock market can weaponized. The Internet has allowed the coordination necessary to use the stock market as a political tool. If my group has the cash, we can attack your investments.
Is this concerning to anyone else? Just a risk companies take? If my understanding is accurate, Soros used investments to cripple the Bank of England on Black Wednesday.
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