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Here’s What’s Happening With GameStop Stock and Why it Matters

GameStop logos displayed on a phone and a laptop screens are seen in this illustration photo taken in Poland on January 28, 2021. In the last days the GameStop stock short squeeze continues.
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While many of us may find navigating investing and stock-talk (stonks?) intimidating, an unprecedented seismic shift caught even powerful Wall Street giants off-guard earlier this week.

This major shift in who holds the keys to influence was spurred on by none other than a band of redditors in a since-much-more-popular subreddit, r/wallstreetbets.

Basically, what happened is that this group — largely comprised of many casual small “day-trading” investors — agreed to individually buy and hold stocks for a company that by many traditional measures was on the decline; GameStop, with its brick-and-mortar video game shops, had seen closures not unlike that of Blockbuster due to declining sales and a shift towards digital game downloads.

This was so much the case that so-called hedge-fund investors bet against GameStop surviving by engaging in a type of trading called short-selling. This essentially means betting that a company would fold by borrowing stock at the present price, immediately selling all those stocks and then waiting for the price to drop to buy the borrowed number of shares back thereby making a profit off the difference.

Catching wind of this, this merry band of subredditors took the power in their numbers, buying GameStop stock, driving the stock up.

Amplified by Elon Musk’s historic “gamestonk” tweet, he drove his fanbase to the subreddit, with other small-scale and hobby investors following suit (at one point GameStop stock was up nearly 700 per cent).


In the past year, Musk himself profited heavily from a Tesla stock short squeeze (tradespeak for messing with the short sellers) and contributing his own astronomic ascent to the helm of the world’s richest list for 2021.

While the legality of all this (including trading what you don’t own) is still debated, the mass-move is still a major FU to Wall Street and powerful institutions who have regularly been accused of manipulating markets to their own benefit.

Now that the switch has been flipped, major financial institutions stepped in to temporarily halt trading for some in a bid to temper the volatility of the market. One of these financial institutions is the American Robinhood Markets Inc., causing a flurry of backlash on social media (with the irony of its mandate to “democratize finance for all” not being lost on critics).

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While the origin of these events is south of the border, Canadians too feel the impact (our own version of the bets account exists: r/baystreetbets). Canadian financial institutions too had to process the stock-buying frenzy and saw increased volumes on their sites, apps and customer service lines, with some reporting outages.

Canadian investors too have also cashed in on the wild ride, with one father-son duo reportedly taking in $123 million.

This critical shift is prompting many to more closely examine who gets to set the tone for what we value on the market and who gets left out of the narrative.

Related: Canadian women, this is how to reach your financial goals.



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