So I tried to explain the GameStop situation to some of my students using Pokémon. And I think what I said is mostly true so I figured I would share here (A thread)
#GameStop

Let’s say 10 Weedles costs $20. Weedle here is a metaphor for Gamestop’s stock
Ash Ketchum has 10 Weedles.
Gary Oak thinks he’s smart so he’s going to try and short Weedle. He borrows these 10 Weedles from Ash thinking that the price of Weedle will eventually go down. He sells them immediately thinking he can buy them again later at a lower price and return them to Ash then.
After seeing what Gary is planning, Brock and Misty talk to other Pokémon trainers and they all start buying up EVERY Weedle on the market. This will eventually force Gary to buy the Weedles from them. Remember, he needs to eventually return them to Ash since they were borrowed.
If these Pokémon trainers hold on long enough, these Weedles will evolve into much more expensive Beedrills. Gary will have to buy them at this more expensive price in order to give Ash his assets back.
As far as I understand there was a Hedge Fund (Gary) that shorted GameStop (The Weedles). He thought the price would go down. People on Reddit (Brock and Misty) saw this and told other Pokémon trainers to buy up all of the GameStop shares (the Weedles).
The Hedgefund (Gary) is now losing a ton of money while people on Reddit (Pokémon trainers) are making bank.
GameStop was a shitty stock to have just like Weedle is a shitty Pokémon so it made sense for the hedge fund to bet against it. I mean look at this dumb Pokémon.
They didn’t expect Weedle to evolve into this bomb ass Beedrill. But it did and now they are fucked. Womp womp
I’m not sure this is all 100% exactly how it works but that’s how I understand it. Hope that helps

More from Business

The Mother of All Squeezes

How Volkswagen went from being on the brink of bankruptcy to the most valuable company in the world in two days

/THREAD/


1/ At the peak of the 2008 financial crisis, Volkswagen was considered a very likely candidate for bankruptcy.

Heavily indebted and already financially struggling before 2008, with car sales expected to plummet due to the ongoing global crisis.


2/ With GM and Chrysler filing for bankruptcy in 2009, shorting the VW stock would seem a safe bet.

If you are not familiar with stock shorts and short squeezes check my thread


3/ On October 26, 2008, Porsche announced it had increased its stake at VW from 30% to 74%.

This was a surprise to many who were led to believe that Porsche wasn't planning a takeover of VW, based on the company's announcements.


4/ Before the announcement, the short interest was approximately 13% of the outstanding shares, a number considered relatively low.

Porsche had a 30% stake, the Lower Saxony government fund held 20% of the shares, and another 5% was held by index funds.

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