The great rising of the GameStop stock - Economics Article Blog

 Aiden  Cunningham

Mr. Roddy
IHSS
1 February 2021

The great rising of GameStop

In recent times, the stock for the previously very popular store GameStop has been going down quite a bit, going down from the $50 it was in 2008 to the $4 it was just a few months ago, and people were worrying that it would go out of business. Specifically the people of Reddit, and it just so happened that there was enough of them wanting the store they shopped at so much to stay in business, they could just about save it. So what did they do? They all gathered together, and around January 12, they all started buying GameStop stocks. In the course of just about three-quarters of a month, the GameStop stock rose 8500%, from $4 to $347. This, while being great for GameStop, was devastating for people who were short-selling the GameStop stock. People who had bet that the GameStop stock would go down lost a total of about $13 billion in this past month alone. Since then, the act of several people getting together and all buying a stock at once, which has been illegal for quite some time, is now being enforced against on most popular trading websites.


I feel like this is an important article to economics because it shows just how quickly the stock market can change, and just how much the people have an influence on the economy. If a group of people can get together on a social media platform and cause a single stock to rise 8500% and cause $13 billion in losses for these businessmen who have done so much research, then the general public can easily do things to fix or break many of our modern systems. The stock trade is something that that is seen to go up about 0.1% every once in a while, so this is also way out of the usual. If I had bought two stocks of game stop two months ago for $8, today I would have about $680. Now imagine if major changes in the stock market happened more often than once every 80 years, it would be a major disruption for some and a major plus for others. This system of buying and selling parts of businesses around the world is quite a complex one, and you don’t really get into it until later in life, but I think that it would be great to use a simulator like Investopedia to learn more at a young age. Personally, I didn’t really know much about how the stock market worked until I was 13, and I learned mostly from the middle school Humanities teacher and my dad. This extremely quick rising of the stocks may be seen as good for the business, but I think that it can also cause the business to go more out of business, because when the people who originally frenzy investor start selling their stocks, the stock of that business is going to go way down. Possibly lower than it was previously, due to the people who were previously holding stocks selling when the stock was at its top, then the original frenzy investors start frenzy selling, and the business stock plunges lower then it ever has before. Overall, I believe that that a stable economy is much better than a frenzied one, even if people can make lots of money off that frenzy.



Works cited

Lipschultz, Bailey. “GameStop Sinks as Short Interest Drops, Retail Recalibrates.” Bloomberg.com, Bloomberg, Feb. 2021, www.bloomberg.com/news/articles/2021-02-01/gamestop-sinks-as-shorts-interest-drops-retail-looks-elsewhere Accessed 2 Feb. 2021.


“GameStop Corp. (GME : NYSE) Stock Price & News - Google Finance.” Google.com, Google Finance, 2011, www.google.com/finance/quote/GME:NYSE?sa=X&ved=2ahUKEwi91cfCvcvuAhWRQc0KHd7QAqsQ3ecFMAB6BAgBEBk Accessed 2 Feb. 2021.


Rani Molla. “How Much Short Sellers Lost in the GameStop Stock Rally.” Vox, Vox, 2 Feb. 2021, www.vox.com/recode/2021/2/2/22261097/gamestop-wallstreetbets-short-seller-hedge-funds-losses-robinhood#:~:text=Short%20sellers%20lost%20nearly%20%2413,data%20through%20market%20close%20Monday  Accessed 2 Feb. 2021.


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