Wall Street is not going to forget the last week of January 2021. The big hedge funds had to stick together and urgently recapitalize one of them, Melvin Capital, while the research firm Citron announced stopping its activities.
Melvin had speculated on the downside against GameStop action and found himself in the straw in a few days, put at fault by the “crowd”, the “multitude”, a movement of stock marketers, who aggregated on the Reddit forum , on the WallStreetBets page.
For these individuals – rather young, who came to the Stock Exchange during confinement, using Robinhood, the American platform with no brokerage fees -, GameStop is a symbol, a brand associated with their adolescence, those of the stores where they bought, resold, video games (in France, GameStop owns Micromania). So they spread the word to buy GameStop shares and boost the price. The declining company was worth 200 million euros in 2020, but traded around 20 billion euros last week, a price at which hedge funds, betting on a decline, had to throw in the towel. At the height of its activity, the real value of GameStop never exceeded 2 billion …
“GameStop”: how a group of Internet users is leading the insurgency against Wall Street
The funds haven’t just given up on speculating against GameStop. They also had to review their intentions on many other companies, also iconic
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