Hedge Funders have undervalued Gamestop stocks ever since it struggled from the Pandemic. Michael Burry and a certain subreddit didn’t.
People love David vs. Goliath stories. No wonder the hottest news right now is Gamestonk. It is the feud between the subreddit r/Wallstreetbets and Hedge fund managers. Melvin Capital is the Hedge Fund manager in question. Who would have thought that a community online will make a billionaire cry. Gamestonk is like a real life soap opera with the underdog prevailing.
Melvin Capital see Gamestop as dead in arrival in the next few years. I can understand their sentiment because many people now buy their games digitally. Then there is the prediction that Cloud gaming services like Google Stadia will kill off consoles. The Pandemic also made it harder for Gamestop to recover.
So that makes Melvin Capital aggressively shortchange the struggling Brick and Mortar store? They think they can bully this struggling franchise to death. If their shortchanging is successful, they will make lots of cash.
This video can explain how shortchange squeeze works
There is a loophole that they never notice. Some people still believe that there is hope for Gamestop.
The Pet food company Chewy and the hedge fund investor Michael Burry still see potential with GameStop, and they decided to invest in the company despite the circumstances. Chewy thinks Gamestop needs restructuring, and with two upcoming Game consoles like PS5 and X-series, there is still a chance for recovery.
The more Hedge funders shortchange Gamestop, the more its stock value will drop. They will lose money if the stock value of Gamestop rises.
Well, the Miracle happens because the 2.4 million members of r/Wallstreetbets purchased stocks of Gamestop. The stock value of Gamestop is now $325.00. It was originally $3.00 before all the madness. Michael Burry invested a 3.3% stake in Gamestop and gained 1500% from his investment. Until now people are still buying Gamestop Stocks.
People gained interest in who Michael Burry is. His 2015 Biopic, The Big Short, is now resurfacing. Amazon UK made a discount for the rental of the film because they know people will want to know who this man is. He is worth $300 million before this madness, and he is most likely a billionaire now.
Maybe this movie should get a sequel and it should cover this historical event.