Two years after the GME event: If the next party came, what would you do?

Many people have strong emotional connections. But the problem is that fewer and fewer people are buying game CDs now. Over the past few years, it can be said that the commercial situation of Game Station has deteriorated every day. Earnings were terrible, and stocks naturally underperformed, with a low of only $3 per share.

In 2019, it then announced that the company lost $470 million; in 2020, the world pandemic and Americans' spending declined. Naturally, the situation at the game station was worse, and 300 stores had to be permanently closed.

Long and short positions reach the battlefield
In September 2020, Ryan Cohen, founder of pet food e-commerce giant Chewy, acquired 13% of GameStop's shares. His addition was a strong shot for GameStop.

Ryan Cohen

On January 11, 2021, GameStop appointed Cohen and his two partners to the board of directors, hoping they can lead the company out of trouble. The stock price at the time was $20, which many investors thought was good news. Two days later, the stock rose 60% to $31.40.

The rise in stocks attracted the attention of both groups of people at the same time.

A group of people are WSB users. They initially liked this game CD store, which carried the emotions of the past many years; they encouraged each other on the forum and urged everyone to buy this stock.

Another group of people who heard the news were financial institutions that are good at shorting.

First battle
On January 19, Citron Capital (Citron Capital) published an article arguing that Game Station is seriously overvalued and that the stock price will fall back to $20.

The comments caused quite a stir at WSB. Some netizens called on all retail investors to join forces to buy game stations to fight against the “greedy predators” of Citron Capital. Over the next two days, the stock price continued to rise.

Second battle
On January 21, Andrew Left, founder of Citron Capital (Citron Capital), couldn't help but make a video explaining his five reasons to be bearish on GameStop, and once again predicted that GameStop's stock price would fall back to $20.

Of course, WSB users saw the Left review as a challenge and began to frantically buy stocks, raising the stock price by 50%, and closing at $65 the next day. WSB users wanted to teach arrogant short sellers a lesson through “short selling” and cause them to suffer huge losses.

They came up with an inspiring slogan called yolo (you only live once). Since people only live once, don't worry too much. Currently, this opportunity to join forces to teach Wall Street predators is a once-in-a-lifetime opportunity. We should boldly follow up and speculate on stock prices to the sky while making a big profit for ourselves.

Eventually, Citron had to reopen the account, said it would no longer comment on GameStop, and promised to withdraw from the market.

Until now, a carnage between “Wall Street Bets” and the so-called “evil financial forces on Wall Street” has been inevitable. Since then, GameStop's stock price has fluctuated back and forth between 200-400, and according to Wall Street Bets users, the stock price will never stop rising until it rises to $1,000.

On the one hand, retail investors are starting to buy bullish options in large numbers. On the other hand, in the face of rising stock prices, market makers know that an initially unlikely miracle is becoming more likely to happen, that is, their own risk exposure is getting higher and higher. This is known as the “negative gamma effect” in finance; simply put, market makers must buy large amounts of stocks to reduce risk.

On January 29, 2021, GameStop's stock price hit a record high of $483. Half a month ago, it was only $20 or $30.