Short sellers, for the uninitiated, are short traders who borrow shares of declining companies by paying interest. Their goal is then to sell them and buy them back at a lower price, betting on their decline, in order to forfeit a profit. Well, a group of small savers organized themselves on Reddit to send the stock into orbit, buying the shares in bulk and causing a significant increase in their value, thus collapsing all the certainties of short sellers. Panicked, the bears tried to limit the damage as much as possible by immediately buying back the shares, giving rise to what is called "short squeeze". According to estimates, the total losses of the bears would amount to about $ 20 billion. The most affected would be the Melvin fund, which has lost more than 30% of its value since the beginning of the year and has also decided to close many of its downward speculations in Europe (especially on companies like Evotec and Varta).
The GameStop stock, as we said, literally flew, earning 400%. On January 28, however, there was a sharp turnaround due to the decision of Robinhood (the platform most used by Redditors) to limit trading through its platform. Well, after the revolt of small investors, who said they were ready for a class action, yesterday January 29 Robinhood removed the limits on operations, and small investors were able to resume their attack on short sellers, who continue to lose mountains of money. . As you can see in the chart below, GameStop shares were trading at $ 325 each on January 29, up from $ 193.60 on January 28 and close to the $ 347.51 peak reached on January 27. Very high figures, if we think that first of all a share of GameStop, a company in decline for several years, was worth less than 20 dollars.