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GameStop’s revenue and profit margins are in a serious decline, and it looks like GameStop may be going out of business soon unless they find a new way of monetization, but they are also trading at a higher stock price than ever before. Why? Because Reddit thought it would be really funny to see the company Citron lose a bunch of money.
What happened is that Citron decided to short GameStop. This means that they expected the stock to fall so they borrowed a bunch of shares and then sold them immediately. They thought GameStop stock would go down, so they planned to rebuy all the shares at a lower price and pocket the difference. Thing is, reddit has done everything that they can to keep GameStop from going down. They have been buying the stock up rapidly and the price per share is going through the roof. They have even had to halt trading 5 times so far.
This is really bad for Citron because Citron HAS to buy back the shares they borrowed eventually. When Citron borrowed the shares, they sold immediately so that they could buy them all back at a lower price and profit the difference, but now that the price is going up, they will have to buy back all the shares that they borrowed at the inflated price. This will cost Citron a TON of money.
So far, in 2021, 3.3 billion dollars has been lost from people trying to short GameStop. Many people think that this is only the beginning.
CWT BUSINESS 