The Reddit, GameStop And Wall Street Saga, Explained

The Reddit, GameStop And Wall Street Saga, Explained

In the most basic terms, the battle over GameStop stock is a David-and-Goliath story, pitting old against new, “smart money” against “dumb money,” the Wall Street establishment against everyone else. Who wouldn't want to root for the underdog?

Of course, it's all a bit more complicated than that.

So what is happening with GameStop?

The video game retailer's stock price has seen a nearly 2,000% increase since the start of January. A year ago, it was trading under $4. On Thursday, it reached a high of $470 ― which is weird, because the increase has not been driven by astonishingly good performance on the company's part. Rather, a bunch of Reddit users worked together to catapult the price, at the extraordinary expense of hedge fund managers.

Even before the pandemic, GameStop was struggling to compete with a digital video game economy that's made it easier than ever to download or stream a game without needing to buy a physical copy. As the pandemic arrived, the company's fate appeared to take a turn for the worse. GameStop is largely a brick-and-mortar enterprise, and the coronavirus was putting people off in-store shopping for good reason.

In March, we wrote about how GameStop retail locations were attempting to bill themselves