About $1.6 billion, or about half, of those losses happened on Friday, Jan. 27, shorts seemed to have lost $5 billion betting against GameStop this year, according to Investopedia. Google Finance How much did GameStop shorts lose? There are other options and tools to bet against a company's future as well. But if they're wrong, they can lose a lot more money too. When a short is right, betting against a company, they can make a lot of money. That would mean the short effectively has to buy the shares at the new, higher price. stock jumps to $25, then the lender who made this bet possible may push the short to cover their bet. If it does, then, they can buy the shares at $4 and pocket the other $6. stock will actually drop below that - maybe to $4. A 'short' would borrow shares of Ian Corp. is a public company, and its shares are worth $10. Shorts trade with borrowed shares and sell them, with hopes they can make money if the stock falls in the future. Short sellers, or 'shorts,' do the opposite. When people buy a stock normally, they're betting it'll rise or share enough profits that they'll make more money than they put in. See also: GameStop's stock spike fueled by slang from Reddit's r/WallStreetBets community. Some of the Reddit crowd believe that GameStop stock could reach into the thousands of dollars just because of this mechanism.Īnd that's why we're seeing GameStop's value swing up and down. That pushed the price up even more, which forces more short sellers to cover their losses, which pushes the price up even more. What we do know is that all this activity appears to have created a 'short squeeze,' where the short sellers betting against GameStop are being forced to buy more GameStop stock to cover their losses. 27, there were 3.8 million members of the r/WallStreetBets community, though it's nearly impossible to determine how many people are involved in the GameStop, AMC and BlackBerry schemes. And some investors who couldn't even back up their bets against GameStop, would have to pay even more.Īs of Jan. The r/WallStreetBets crowd understood that if they could create artificial demand for GameStop shares with their own money, they could force Wall Street to recalibrate its bets, pushing prices even higher. People known as short sellers who were betting GameStop stock would fall had been too aggressive. GameStop is one of the largest video game retailers in the world, but it's struggled to remain relevant in the age of online sales.Įffectively, the r/WallStreetBets crowd realized Wall Street made a huge mistake.

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