What happened this past week with GameStop’s stock was unprecedented. And markets show that the three largest shareholders in GameStop’s stock have made nearly 2 billion dollars (1.65 billion euro) from the company’s stock rising this past week. The stock hit its high this past Wednesday at $354.83 and rose again on Thursday.
As the largest stockholder of GameStop, Mr Cohen’s now worth a staggering 1.4 billion dollars. In the last two weeks, with the rising of the stock, we calculated his net worth to increase an aver of around 90 million dollars a day. The GameStop Stock has increased more than 1,550% this year.
This sudden increase in the stock has never been seen before. Sure, we saw Tesla grow a hundred times over in the past year, but never has a stock increased so fast continuously in the timespan of a matter of days. On the social media platform Reddit, many small investors have started boasting about their gains from beating Wall Street and the amount of revenue they were able to generate if they caught wind of the news fast enough. The Reddit message board, WallStreetBets became private and unable to access, this was due to the posting and causing buyers to cause the GameStop surge in the first place. The page ultimately said that it was experiencing an unprecedented among of interest and visits, and therefore was facing technical difficulties with dealing with all the bandwidth. The online gaming platform, Discord, has also voiced that it will be removing the WallStreetBets server on its platform for violating guidelines and spreading misinformation.
Overall, these gains to small investors have forced Wall Street hedge funds, primarily Citron and Melvin Capital, to take billions of dollars in losses. These two were betting in the collapse of GameStop and bought and resold stock to gain a profit. But with the rising of the stock, these two companies will have to pay back all the borrowed stock and lose an overwhelming amount of money.
This situation even because talk in the white house with the Biden administration and the treasury as the monitored the situation. And an event like this will most likely not happen again. With the mix of misinformation given to the mass public and leaking of information from private companies, this resulted in the perfect incident to show how vulnerable our markets and economies are to the sway of the public voice.
Lucas Zhang was a Finance major at Ohio State University. He writes about finance, mortgages, and technology for Irish Mortgage Brokers.