Are your Boomer parents as baffled by your $GME gains as mine are? Feel free to use my G-rated, very basic explanation of what the fuck is going on!

So to start, you need to know what "shorting" a stock is. When someone thinks a stock is going to go down or a company will go bankrupt, they can borrow shares from their broker to open a "short" position. They then sell the shares immediately at the current market price. They have a specified amount of time to return the borrowed shares to the brokerage.If the stock does go down, the investor buys that number of shares at the now lower current market price, and then returns them to the broker. He/she keeps the difference.If the stock goes up, they have to "cover" their position. They can "buy-to-close" whenever they want, but many of them will wait for a very long time because they are large firms who have a lot of money and leeway with their brokerage. However, if a stock keeps going up and up, the brokerages can call the investor and demand the shares back to hedge their losses. This forced buying drives the price up even more, which then causes other brokerages to make the same phone call to their clients, and so on and so forth. This is called a "short squeeze".---GameStop is a declining brick-and-mortar video game retailer. Their management has not adapted to the digital world where many video games are downloaded instead of on discs. They have been making some moves in the right direction, such as closing underperforming stores and paying down some debt, but they need to reinvent themselves to succeed. Many large investors/firms have seen this coming and took out short positions a few years ago. The stock kept going down so the brokerages and banks hadn't called yet. GME is the most-heavily shorted stock on the market. More shares are shorted than are in circulation. It's called "naked short selling", it's complicated, and some of it is probably illegal but the SEC looks away.Ryan Cohen founded Chewy.com when he was 25 and sold it six or so years later for $3.5 billion. Last August, he purchased 9% of GME's shares. When it was disclosed in the SEC filings, the stock went up 22% in a day (which is a LOT in normal circumstances). The thought being that he was going to attempt to take over the company. There was a lot of speculation online. In late November he wrote a strongly-worded letter to the Board of Directors.Shortly before Christmas, he disclosed that he had bought more shares and now owns 12.9% of the company. He bought the new shares at $16ish, after buying the first batch around $4. When someone owns 10% or more of a company, there are heavy limitations on how much they can sell at one time, in a given period, and they have to disclose everything.This signaled that he wasn't in it for a quick buck and he probably really was going to try to take over and modernize the entire company. Gamestop has something like 55 million members in their club/newsletter thing, and that data can be used to make a lot of money through targeted advertising and such. There have also been confirmed rumors that the company will be making a serious run at the fast-growing PC gaming market (many serious gamers build their own computers). Video game competitions are also very popular and can be capitalized on. The stock continued to slowly climb, with some sell-offs and such along the way. It was not for the faint of heart.Fast-forward to January 10th, when it was announced that Cohen and two of his board members from Chewy were officially appointed to the GameStop Board. It was really looking like the theories from last fall were correct. The news sent the stock soaring and the investors who had short positions were in big trouble. Some of them started covering their debt, but many didn't and still haven't. The ones that did have incurred losses in the collective billions, and there are many more billions still out there that will be lost by short investors.For the past two weeks, the pro-GameStop investors have shown great interest in the potential turnaround story of a store that plays a big role in their childhood memories. With the presence of Cohen and his buddies from Chewy, an e-commerce giant, small investors can see that GameStop is now undervalued to those who believe in the new Board members.The stock has been incredibly volatile as the large investment firms try to drive the price down. One way they can do this by opening massive new short positions (AKA selling large chunks of shares all at once) as other shorts return their borrowed shares to the pool. This can be seen many times along the daily charts of GME, in nearly vertical declines. Knowing the potential of both Cohen and the short squeeze, small investors have been buying up all the dips. If the shares are being held, and not sold, they are unavailable to be returned to brokerages. This drives the price up even MORE as the short investors scramble to buy whatever shares are available to fill their debt before the price continues to rise. Eventually someone is left holding the shares purchased at the highest possible price, but in this once-in-a-lifetime case, it probably won't be someone with a net worth under $100 million.​Position: Go fuck yourself, shorts via /r/wallstreetbets https://ift.tt/3iOfkO8