US markets are uneasy… The conflict between small and large investors, which started over GameStop shares, has also become a political agenda. Analysts expect new regulations regarding ‘short selling’. GameStop, a video game vendor traded on US stock exchanges, announced that it would close nearly 450 of its stores. GameStop became one of the most ‘short-sold’ companies at the end of last year. For a long time, share prices were around $4-5, but the movement started to harden upwards. So how did this happen? Investment fund Melvin Capital, predicting that GameStop shares would fall, tried to make money from the price drop by “short selling”. However, an investor group called Wallstreetbets, which was established on the Reddit platform on social media to comment on financial markets, noticed this transaction. And in a mass movement, he started buying GameStop stock. So it started trading exactly the opposite of Melvin Capital. This move of the small investor caused losses to the big players.
Gamestop Shares Exceeded $480
While it was estimated that the value of the small investor would decrease further with this move, GameStop shares rose from 17-18 dollars to over 480 dollars. When the extent of the damage increased, the White House stepped in and the issue became on the agenda of politics. We talked to economist Belgin Maviş about the conflict that started between small and large investors in the stock market.
“The movement here is that companies whose shares are extremely low in price, such as GameStop, which has 5,500 computer game stores across America, are also listed on the stock exchange, these stocks have increased their balance sheets for about 3 quarters, especially with the expectation that people will be able to access games much more easily from digital platforms.” There are two types of investors in the market:
One aims to buy the stock and sell it higher, while the second one wins by thinking that the market and the stock will fall, selling it where it is and aiming to buy it lower. investor. Short selling position is the process of selling a share with the expectation that it may make a loss, its balance sheet may be bad or its price is not too premium. Some people make money from the upward movement of the markets, some with the expectation that it may move downwards… Short selling, as it is called, means selling a share that does not exist. and maintains this position for a certain period of time by obtaining it from the loan market. Normally, under market conditions, that stock continues to move, and while you are waiting for it to fall further, someone comes along and pulls its price upwards day by day. Considering that stocks like GameStop have gained a thousand percent in two weeks, it means that those short selling positions have caused serious losses.
Victory For The Small Investor?
GameStop was named after Tesla founder Elon Musk’s social media account “Gamestonk!!” He came to the fore a little more with his sharing. Belgin Maviş evaluated this development, which was described as ‘The victory of the small investor’ in many media, as follows:
“There are also statements regarding the issue from the White House. The statement is as follows; The new US Treasury Secretary, Janet Yellen, follows speculative movements closely… Here, of course, by retail investors, I mean all investors, and to prevent any grievances that may occur in the face of such movements.” It gives the message that the necessary steps will be taken to pass. Short positions and long positions are colliding not only in GameStop but also in other similar stocks, and when we look at the point we have reached, especially the funds and large investors that evaluate the ‘short selling’ position are in serious losses. Maybe right now “This may have appeared as if it were the victory of the small investor, but what should not be forgotten is that the investor, whether big or small, carries out healthy transactions on healthy platforms.”