What Happened to GME Stock?


Photo courtesy of Michael Förtsch on Unsplash.com

Adam Bear, Staff Writer

In late January, GME (GameStop) stock went through a major short squeeze, driven by investors from social media site Reddit. A short squeeze occurs when the stock price of a company rises, causing stock traders who bet against the company to lose significant amounts of money. 

Prior to the short squeeze, Reddit users had discovered that many stock traders were “shorting” GameStop stock and would be rewarded if the stock price fell, leading to a mass-buying of the stock in an attempt to drive the price up. Independent investors joined together on Reddit to encourage each other to buy and keep shares of GME stock. In the process, GME’s value increased fourteen-fold, and many major investors lost millions of dollars.

In a frenzy following the short squeeze, investment services, such as Interactive Brokers and Robinhood, placed limits on GME trade and received heavy backlash for the decisions. Users felt that the restrictions were placed to protect wealthy, elite investors, who were the targets of the short squeeze effort. Robinhood user Brandon Nelson filed a lawsuit saying he plans to seek class-action status against Robinhood.

Ever since the short squeeze’s end, GME’s stock value plummeted from a high of about $483 in January to around $53 on February 4. That is still, however, more than GME’s value at the beginning of the year, which was $17. GME stock will likely continue to fall, and investors who have not yet sold their stocks may end up losing serious amounts of money.