The financial titans silenced the ‘retail investors’ who sought to boost an unloved video store chain
For those of us who are as intimate with the inner workings of the stock market as we are with the circuitry of the Large Hadron Collider, the brouhaha over GameStop has been illuminating. While the story may seem esoteric, it is highly revealing of the way economic and political power operates today, laying bare both the irrationality of the market and the reach of corporate privilege.
For those who don’t know, GameStop is a US video game retailer that has lost much of its market share to online trade and whose stock plummeted from $56 (£40) a share in 2013 to about $5 in 2019. It is set to close 450 shops this year. Some big hedge funds decided that they would cash in on GameStop’s misery by shorting its shares. A short is a bet that an asset, such as a share, will decline in price. It’s a manoeuvre that can generate huge profits. But if the asset price doesn’t fall, investors can also lose a lot of money.
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