![]() They bought in, and joined the chorus arguing that GameStop was worth real money. Some WallStreetBets users had noticed that the store was trading low, and caught on to the idea that it might have more upside than it was given credit for. When the market inevitably soured – Hertz was ultimately delisted in October – some people had sold out at the top, some had lost cash, but crucially, everyone involved had had fun. The end result? Hertz’s stock price grew tenfold in a matter of weeks, despite the company being bankrupt. That means if enough people buy those options, then the price of the stock will go up, for a fraction of the investment that would be required if they went and bought the shares anyway. But, redditors realised, the person who sells you those options then needs to go out and buy the stock anyway, just in case the price does go up. If that future is near, and the price wildly higher than the current price, those options are practically free, because conventional wisdom says they will never pay off. Rather than buying Hertz shares directly, you could buy call options – a deal that lets you buy shares in the future, for a price you pick today. ![]() Then came those who just thought it would be fun to join in, and finally those who were attracted by Hertz’s name showing up on the “most traded” list on Robinhood, the free stock trading app that lies at the heart of much of WallStreetBet’s activity.Īll of that interest was compounded by the hive mind of the community discovering an investing technique labelled “gamma squeeze”. Then came those who were convinced that enough other people would be convinced, and then Hertz really would have value. First came those who were convinced that Hertz had value. ![]() Wasn’t that surprisingly low? Could something not happen to rescue the company, particularly if a million retail investors piled in?Īnd so they did. Here, after all, was a household name, trading at just 59 cents a stock. But over the course of June, users on the subreddit began discussing the company. The car rental company filed for bankruptcy protection in May 2020 as a result of the Covid pandemic, and its stock price duly plummeted to record lows. A classic WallStreetBets trade tends to include a strong narrative at the root, an almost alarming insight into the deep workings of financial markets as the hook, and then, the essential element, enough self-awareness that the whole thing can be adopted as a sort of quantum joke: it’s either all for a laugh or an entirely reasonable investment proposition, and it is impossible to know which until the dust has settled and the winners and losers have emerged.
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