I invest a little (very little) from each check in stocks on Robinhood/stash and a lady at my job made a ton with gamestock. Why is there so much outrage if a bunch of ppl buy a stock? I have like five thousand dogecoins and I see that has doubled in price.
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The way I understand it is like this.
Hedge fund "borrows" Gamestop stocks valued at $4 a piece or whatever.
They sell them at $4 a piece, expecting the stock to eventually crash, and then they'll buy them back at $0.10 a piece, and return them.
They keep the $3.90 per stock they've made in profit.
A bunch of mad lads saw this, and drove the price of the stock up, now around $400 a piece.
The hedge fund still has to return all the stocks they borrowed and therefore has to buy them, but now they cost $400 a piece, and they only made $4 a piece selling them, putting them $396 down for each stock. Basically they're losing a crapload of money.
Lmao
Almost 140% actually.
this. with the addition that you can borrow more stocks than the actual amount of stocks possible because "finance magic"
That's "naked" short-selling. It is illegal, and a shit ton of it was going on-- especially with regards to $gme. The figure I heard was 127% of the available shares were shorted, but I've heard higher as well. Anything over 100% is supposed to not be legal.
tl;dr: Someone got caught with their dick in the cookie jar.