The GameStop Saga: How Elon Musk Turned the Tides

In 2021, GameStop became the Dogecoin of the stock market. The stock price experienced massive surges, amidst lawsuits and last-minute announcements. Yes, we are talking about the GameStop company that made its mark in 2021. With just a single tweet from Elon Musk, the stock price skyrocketed.

Elon Musk and GameStop

For those who are unaware, summarizing this entertaining tale will be enjoyable. We will also get to see important details regarding large funds. Hedge funds open short positions for stocks of companies that are likely to go bankrupt. This is similar to opening short positions in futures trading, which is banned for cryptocurrencies in our country. In fact, it is exactly the same.

GameStop, a video game company, and other companies realized in 2020 that the brand was on the verge of bankruptcy. Hedge fund companies/managers who wanted to make easy money and deliver the final blow started accumulating short positions in GameStop. A group of individual investors noticed this. They organized through Reddit and started buying the company’s stock. The intersection of this community is closely related to Dogecoin and other meme coins. Therefore, understanding the core community of meme coins requires a good grasp of the GameStop incident. Furthermore, this incident will help you see how Elon Musk enjoys entertaining people. It is an undeniable fact that sometimes he makes money while having fun.

The war against hedge funds gained great interest. As individuals rapidly bought shares, GameStop’s stock began to rise. Hedge funds were bewildered, but they seemed confident that this situation would eventually resolve in their favor. Then, even larger waves of demand emerged. As the price experienced double-digit increases, the phenomenon known as a short squeeze, which is also commonly used in cryptocurrencies, occurred.

As the stock approached the liquidation price of the short positions opened by the funds, it forced them to liquidate, and some added to their positions to avoid liquidation. This meant more shares were being bought. When short positions were in trouble, it fueled the rise (with a short squeeze), and that’s when Elon Musk entered the scene. With a single post, he suddenly surpassed a challenging resistance level. Then, Robinhood removed the buy button for the stock, allowing only selling, which extinguished the fire.

With Wallstreetbets, Robinhood, and the GameStop victims, the topic would extend too much, so let’s conclude the first part with Musk’s famous post below:

GameStop and Cryptocurrencies

GameStop had previously added support for cryptocurrency wallets. We have explained the source of their sympathy in detail above. However, they are now reversing this decision. GameStop announced that it will end its support for cryptocurrency wallets, citing “regulatory uncertainty.” According to the company’s website, they will remove iOS and Chrome Extension wallets on November 1st.

The removal of these wallets is an indication that GameStop is stepping back from its crypto strategy, which is part of a broader initiative for digital services led by Chairman Ryan Cohen to revive the struggling video game retailer. The company launched the NFT market a year ago, just when the NFT hype had died down. What happened next is well-known to all of us.