Something very peculiar happened last week: a group of small-time stock
traders who hang out on Reddit took on a well-funded Wall Street money
manager, and won.
What happened was, a company called Melvin Capital took out a “short
position” on shares in GameStop--that is, they put money on a bet that
the stock value would go down. The Redditors (part of a subreddit called
“wallstreetbets”) figured out that this position was vulnerable, and bet
against it by buying up GameStop shares. This drove up the price,
forcing Melvin to either put up or shut up--put up a bunch of money
to back up their position, or give up and lose an even bigger bunch of
In other words, Melvin was caught in a “short squeeze”, which drove it
to the verge of bankruptcy.
A good, clear intro to the whole story is here
A less-easy-to-understand analysis, with links to further articles, is
Show replies by date