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GameStop stock prices skyrocket after a single tweet from Elon Musk: "Gamestonk"

By Amitesh Dhar
Modified Jan 27, 2021 10:33 GMT
The COVID pandemic had a major effect on the revenue of GameStop (Image via TheVerge)
The COVID pandemic had a major effect on the revenue of GameStop (Image via TheVerge)

GameStop is currently the hottest pancake on Wall Street. The company saw its stock value rise by 160% this Monday, probably the highest the stock has ever been in a while.

For those who don't know what GameStop is, it's a store that sells game DVDs and Pokemon cards. Given the recent digital boom, people barely buy DVDs, and with COVID around, people have stopped frequenting malls. So, GameStop was dying.

Seeing this opportunity, a company tried short-selling GameStop stocks. However, a group of brokers from the r/WallStreetBets subreddit realized what was happening and stepped in, driving the GameStop stock prices higher.

Elon Musks tweet drives up GameStop stock prices

Elon Musk, the CEO of SpaceX and Tesla, hopped on the GameStop bandwagon with a single tweet that said, "Gamestonk!!"

This post was enough to push the price of the company's stocks higher. Although the price rose to above $200 for a while before coming down, this tweet was enough to acknowledge the group of brokers, who have somehow declared war on the short sellers of the GameStop stocks.

Funnily enough, r/WallStreetBets was the reason why the prices of the stock went up in the first place.

Twitter was in splits when they saw Elon Musk commenting on the post.

GameStop isn't the only company seeing a considerable rise in its stock value. The group of investors on r/WallStreetBets have gotten together and invested individually in many other companies, like AMC and Blackberry.

For those who are still wondering, yes, Blackberry is still operational.

Stocks that have a single-digit value are potential targets for hedge fund corporations because these companies are bound to fall. This is the primary reason why they opt to short sell these stocks.

But in cases like these, if a crowd of individual traders decides to invest in these stocks, it causes a lot of hurt for the hedge fund corporations because the more money invested into these stocks, the higher the price.

And if the price goes exceptionally high, the company short selling the stock will have to pay a higher price to buy back these stocks.

Funnily enough, the rise of GameStop stocks is an excellent example of how the internet collectively can work wonders.