How GameStop stocks surge exposed Wall Street elites

GameStop is an American company and is on the verge of bankruptcy, however, its shares suddenly shot up by two thousand per cent in four days not because the company suddenly began doing well.

The astronomical jump was driven by a group of Netizens who were out to teach the bankers at Wall Street a lesson.

On January 25, one share of American company GameStop corp was selling at close to $43, however, on January the price shot up to $469 - a whopping jump of more than two thousand per cent in four days.

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GameStop is one of the world's biggest video game retailers but on Wall Street the market for GameStop stock is a battleground between financial elite and small investors which is exactly what some of the major hedge funds wanted to do with GameStop that is bet on the decline of the company to make money.

In other words, selling short but these Wall Street traders got torched by this trade. Short sellers lost more than $5 billion betting against GameStop which includes names like point72 asset management that lost nearly 15 per cent of its fund over this trade.

Andrew Left's Citron capital suffered a loss of 100 per cent over the Gamestop trade, Melvin Capital needed a $2.8 billion injection to save itself. The big traders were defeated at their own game by small traders.

It all began with Wall Street bets an internet forum on Reddit that decided to teach Wall Street a lesson after online traders, mom-and-pop investors and small brokers decided to buy GameStop shares. For many of these traders this was about punishing Wall Street for the financial collapse of 2008.

An army of small investors pushed the stock to record highs leading to a massive jump in Gamestop's market value from $2 billion to $24 billion while the big investors saw the money they bet against GameStop evaporate.

The volatile trading led to high drama forcing the Biden administration and the US Securities and Exchange Commission to start monitoring the situation.

Robinhood, the app used by many of the small investors to buy GameStop shares began blocking buys from fresh purchases. Some American lawmakers have now demanded an investigation into this halt. The bet against GameStop has left Wall Street traders burnt. The entire affair is a reminder that market investments remain a risky business.