Short Selling is when you borrow someone else's stock to sell it for the short run. You are betting the stock will drop in price. When the pre-determined period the short sell is for ends, you must buy back in. If the stock price dropped, you buy back in at a lower price and keep the difference, thus turning a profit. If it goes up, you buy back in at the higher price and have to pay the difference.
Several Hedge Funds saw that Gamestop is looking to collapse soon, and decided to make a profit by a massive shot sell which would drop the price of the stock. Word got out and internet investors bought in and caused the stock price to triple. At the moment it looks like the Hedge Fund managers stand to loose around 91 billion dollars from their shorting.
Gamestop will likely collapse anyway hurting the short term buyers, but it will take long enough that the Hedge Fund managers will still take a bath and several will likely need a bailout to avoid going out of business.
I don't understand any of this.
Short Selling is when you borrow someone else's stock to sell it for the short run. You are betting the stock will drop in price. When the pre-determined period the short sell is for ends, you must buy back in. If the stock price dropped, you buy back in at a lower price and keep the difference, thus turning a profit. If it goes up, you buy back in at the higher price and have to pay the difference.
Several Hedge Funds saw that Gamestop is looking to collapse soon, and decided to make a profit by a massive shot sell which would drop the price of the stock. Word got out and internet investors bought in and caused the stock price to triple. At the moment it looks like the Hedge Fund managers stand to loose around 91 billion dollars from their shorting.
Gamestop will likely collapse anyway hurting the short term buyers, but it will take long enough that the Hedge Fund managers will still take a bath and several will likely need a bailout to avoid going out of business.