People want to know what is going on with Gamestop and Reddit and I am here to deliver the goods in a glorious thread! 1/10

When you short a stock you borrow a stock and sell it. The hope is the price will go down and you can buy it on the cheap and return it. So you sell high and then buy low. 2/10

The important thing to remember is you have to buy the stock *sometime* so if the price goes up you have to shovel in new money because the stock is now more expensive. 3/10

Here's an example:

AAA stock is $100. You sell a share and get $100.

Next week AAA is $150.

In order to buy the stock you need to add $50 to cover the difference.

Uh oh! 4/10

A hedge fund named Melvin Capital shorted so much of Gamestop there were actually more shares shorted than actually owned. They got greedy and Reddit noticed. 5/10

"Hey, if we all start buying this stock the price will go up and Melvin will either have to shovel in more money to keep their short positions or they will have to buy the stock at a higher price to get out. If they buy the stock, the price goes even higher!" 6/10

This is called a "short squeeze" because there is an incredible amount of pressure on the people who shorted the stock. The longer they wait to buy and close their positions the worse it gets. And the sooner they buy, the faster the price goes up. 7/10

Melvin is in so deep they had to get a $2.75 BILLION BAILOUT from another hedge fund or else declare bankruptcy. They should have used that money to get out, but they doubled down expecting this to crash. 8/10

Except it didn't! In fact Gamestop's stock has continued to climb because this whole thing went viral. Melvin Capital is in serious trouble and regular people are profiting off their greed. More power to them. 9/10

This thread isn't investment advice. There's real risks to buying Gamestop stock, but watching a greedy hedge fund get cooked in realtime is fun to watch. May the odds be with the Redditors. 10/10