Current Events > Explain the Gamestop situation like I'm ten and barely understand stocks

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Yeah but who is Godzilla in this scenario

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Gamestop is still gonna give you 4 cents and a handful of doodoo in trade-in value for your unopened PS5

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People bought stock to save companies and it caused billionaire hedge fund owners to lose money. They raced to the government and they bailed them out overnight and put a stop to it.

Half of the country didnt get their $600 check, but our government can bail these rich assholes out overnight, even though they fucking deserved what was happening. These people arent rich from working hard, but rather from fucking people like us over.

The government essentially prevented individuals from purchasing stock of it hurts billionaires.

So are these hedge investors required to buy back the stock at these astronomical levels? That's the only part I don't get. What if they just don't return the stocks to the original owners? Jail time?

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FLOUR posted...

So are these hedge investors required to buy back the stock at these astronomical levels? That's the only part I don't get. What if they just don't return the stocks to the original owners? Jail time?

Yes to the first question. The idea with shorting is I borrow your stocks, sell them at some amount, then buy them BACK at a lower amount and return them to you. The risk is that I am legally required to return your stocks to you at the agreed time, whether or not the value has gone up or down.

What this means is these hedge fund accounts borrowed stock and sold it at like $20, and they'll be legally required to buy it back at whatever the current price is (like... $300?) by the deadline (which IIRC is tomorrow). That's going to cost them billions in losses, but that's the risk they take when the short a stock.

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