Asherlee10 posted... Can someone give me the ELI5 version of this? I thought gamestops were closing and physical media is dying.
It is. The expectation is that a short squeeze will happen forcing the price up at extreme levels because of all the negative positions held my intelligent investors that will have to buy shares to cover their options once the price gets to a certain level. Its a cycle that will propel the price up.
This played out a few years ago when a bunch of people bought shares expecting the stock price to sky rocket for the same reason, and it mostly did. Eventually the financial institutions stopped the shinanigans and retail investors mostly got fucked. It has become a meme stock since then that maintains support from people buying shares hoping for it to pump again while ignoring basic fundamentals.
I was in on the first pump. Had 100 shares at $12 dollars and made some money on it by selling as it rose. The day the real pump happened several of the trading platforms prevented people from selling shares which stopped the explosion of the price and prevented people from making money (I still had about 20 shares that I was trying to sell for over $400 that day for example). What people should have learned is that the big money will not allow retail to win and does not have to cover their positions.
The whole short squeeze premise works on the idea that institutions will have to buy tens of thousands of shares at 10 or even 30x what they think its worth. Thats just not going to happen. Its cheaper for the fund to pay the SEC fine and settle law suits than to buy $2b in GME stock to cover a losing position.
GME may continue to run today but the underlying value of the company is not good and retail will likely get fucked again.