The GameStop company faced a steep fall as the pandemic hit. The gaming world has transformed into a simple and easily accessible form. The virtual world can be accessed from the mobile phone itself. This flexibility lowered the profit bar of GameStop. A brilliant yet risky trick was pulled over. The short-selling method was implemented to acquire a desirable profit from the company. Gabe Plotkin’s Melvin Capital faced a huge loss in this tricky game.
The Wall to Defend the manipulation
A Reddit platform named ‘The Wall Street Bet’ discussed this strategy. When the discussion leads to controversy several people decided to purchase the shares of GameStop. They decided to do so because they thought the shares were undervalued and they want to teach a point to the Rich investors who play the game of investing as they like.
The huge purchases manipulated many others to buy shares from GameStop and as expected the price of the shares increased, the short-sellers are in trouble now as they can’t buy the shares at a low price. It caused a 4.5 billion loss. Yet how many dollars did Gabe lost was unrecorded.
Help coming from across
A 4.5 billion was a loss for Melvin Capital but not yet bankrupted. Gabe Plotkin had a net worth of 300 million and he has invested in Amazon. The number of shares is not disclosed and so the value is not known. Kin Griffin Citadel and Steve Cohen gave money into Melvin capital in exchange for non-controlling revenue shares of the fund.
Extra pushes for the firm
He posted 22 games but to balance off the loss 75 more games are needed. After this loss, there were rumours of Melvin Capital went into bankruptcy. Melvin and other company’s short positions resulted in 139 GME shares being shorted. At the end of January, it was down to 53.
Though the losses were a heavy blow Plotkin moved forward in his business. The retail investors taught the others a lesson as they willed for.