How Redditors took down a multi-billion dollar hedge-fund betting against GameStop and made millions in the process

GameStop's stock prices have started rocketing after Redditors stepped in to save the "dying biz."

GameStop is an American retail brand that specializes in video games, consumer electronics, and gaming merchandise. With more than 5,500 retail outlets worldwide, GameStop is one of the most popular gaming retailers.

However, since the outbreak of the global pandemic, the company has suffered significant losses. So much so that speculations regarding the inevitable end of GameStop started rising.

However, in what is arguably the most stunning scenario in the stock market, a Reddit community has managed to boost GameStop's $30 stock-price to $140 within a week.

The r/wallstreetbets Reddit community is currently planning on how to escalate the situation further.

Planning threads on the r/wallstreetbets subreddit

Here's a rundown of the entire situation and how a bunch of Redditors are reviving GameStop, even if only for a while.

---

Redditors revive GameStop

According to reports posted by Shaan Puri, an angel investor, one specific multi-billion dollar hedge fund known as Melvin Capital Management had been "accruing a big short position in GameStop."

This hedge fund reportedly had a $55+ million short against GameStop.

Shaan Puri also put forward a definition of "shorting" in simple terms for everyone to understand.

Apparently, Redditors noticed the overloaded short position in this case and started buying their own stocks against Melvin Capital Management's short.

This resulted in the hedge fund finding themselves without the borrowed shares. When they attempted to purchase these shares from the Redditors, they refused to sell and kept demanding higher prices.

Although GameStop did not have anything to do with the entire scenario, it is the American retail chain benefiting from this feud between Redditors and Melvin Capital Management.

According to Shaan Puri's reports, the hedge fund has lost over $2 billion in two weeks.

This feud has resulted in a situation where GameStop's stocks were traded more in volume than Tesla, Apple, Amazon, or Microsoft. This has resulted in multiple members of the community earning a substantial amount from daily tradings.

After the massive surge in stock trading, GameStop has indeed found hope for an otherwise "dying biz." Additionally, the company's situation can trigger a rise for similar brands that have been suffering for a while.