Photograph by Victor J. Blue / Bloomberg / Getty

Sir, This is a Casino

What’s Really Happening with GameStop’s Short Squeeze

Can’t Stop, Won’t Stop, GameStop

Screenshot of GME’s 3 month (Nov 2020 — Jan 2021) price history by Author

Shorting

Photo by an_vision on Unsplash

The best case scenario for short-traders is when the company goes bankrupt, which means the company’s stock has become pretty much worthless.

140% Short

Photo by Louis Hansel @shotsoflouis on Unsplash

From the original 10 apples, now there are a total of 20 owed apples and 10 apples which sum up to 30 “apples” in total. In this case, the apple is shorted by 200% (20 owed apples compared to 10 real apples)

Short Squeeze

What if the price goes much higher than expected?

Photo by Mick Haupt on Unsplash

Both Charlie and Diane refuse to sell any apple for less than $1,000 each.

This is what we call a short squeeze.

Wall Street Bets & GameStop

Screenshot from this Reddit Post by Author
Tweet by @CNBC on November 21, 2020

This is not a financial advice.

We like the stock!

💎👐

Current Situation

Tweet by @elonmusk on January 27, 2021
Screenshot of GME’s 1 week (25–29 Jan 2021) price history by Author

I have never seen a trading halt before, but with GME it is almost a daily occurrence.

Tweet by @AOC on January 27, 2021

Final Thoughts

Tweet by @CNBC on January 29, 2021

Data Scientist. I write about DS & ML. Sometimes.

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