<p><img src="https://static1.businessinsider.com/image/60119db91d2df20018b7121d-2222/2020-11-12T160736Z_1089365026_RC2S1K91RZU1_RTRMADP_3_SONY-PLAYSTATION-5-NEW-YORK.JPG" border="0" alt="GameStop coronavirus New York" data-mce-source="Carlo Allegri/Reuters" data-mce-caption="Inside a GameStop store people line up to purchase a Sony PS5 gaming console in the Manhattan borough of New York City, New York, U.S., November 12, 2020."></p><p></p><bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><p>The absurd, sudden leap in GameStop stock value has nothing to do with game consoles. </p><p><a href="https://markets.businessinsider.com/news/stocks/gamestop-stock-climbs-reddit-fueled-rally-continues-2021-1-1030004902'utm_source=markets&utm_medium=ingest">GameStop shares have skyrocketed</a> 1,200% since mid-January, when members of the Reddit forum <a href="https://www.reddit.com/r/wallstreetbets/">r/WallStreetBets</a> began advocating for buying stock in the ailing video game retailer. In the last two weeks alone, GameStop stock has leapt by nearly 1,000%from about $30 to over $325 per unit as of Wednesday afternoon. </p><p>So, what's going on' Why is a community of Redditors suddenly going all-in on Gamestop's stock' </p><p><strong>Here are the four reasons why Redditors are sending GameStop "to the moon":</strong></p><p><strong>SEE ALSO: <a href="https://www.businessinsider.com/explainer-what-is-going-on-with-gamestop-stock-2021-1" >GameStop nearly died in 2019. Now, hedge funds are scrambling to deal with the company's exploding stock. Here's what's going on.</a></strong></p><h3>1. GameStop's stock price hit historic lows, at one point trading under $4 per unit, for much of 2019 and 2020. But things began to look up recently.</h3><img src="https://static3.businessinsider.com/image/5d4324b3b44ce743013ec846-400-300/1-gamestops-stock-price-hit-historic-lows-at-one-point-trading-under-4-per-unit-for-much-of-2019-and-2020-but-things-began-to-look-up-recently.jpg" alt="" /><p><p>In early 2019, GameStop's stock value fell off a cliff: It dropped from about $16 per share to under $4, and it <a href="https://www.businessinsider.com/gamestop-worlds-biggest-video-game-retailer-decline-explained-2019-7" data-analytics-module="body_link" data-analytics-post-depth="20" data-uri="a20bf964ae727634037d919ade1278c9">stayed in that range for just shy of two years</a>.</p><p>Even in 2020, while the video-game business (including GameStop) had huge gains during coronavirus lockdowns, GameStop's stock price remained in the gutter. As recently as August — just under five months ago — the largest video-game retail chain had a stock value of less than $5 per share. </p><p>But in the second half of 2020, with big financial names like Michael Burry and Ryan Cohen buying up shares in the ailing retailer, and new game consoles from Sony's PlayStation and Microsoft's Xbox, things started looking up. The company's share value gradually increased until it outright surpassed its pre-collapse value in late 2020. </p><p>By early January, there were a lot of signs that buying GameStop stock was a good idea. By mid-January, users of a Reddit forum named "r/WallStreetBets" began buying up stock in the company — the more they bought, the higher the price went, in a kind of modern bull raid. The group has over 2 million members, and uses its collective buying power to move stock prices.</p></p><br/><br/><h3>2. The Reddit forum WallStreetBets has a chip on its shoulder for short-sellersAndrew Left in particular.</h3><img src="https://static3.businessinsider.com/image/6011b6201d2df20018b712cb-400-300/2-the-reddit-forum-wallstreetbets-has-a-chip-on-its-shoulder-for-short-sellers--andrew-left-in-particular.jpg" alt="" /><p><p>The reason WallStreetBets traders gambled on GameStop had less to do with the company's business model, and more with embarrassing institutional short sellers — including Citron Research managing partner Andrew Left.</p><p>Left and r/WallStreetBets had feuded in the past over his short-sells on Palantir Technologies and Chinese carmaker Nio, per <a href="https://www.bloomberg.com/news/articles/2021-01-25/how-wallstreetbets-pushed-gamestop-shares-to-the-moon">Bloomberg</a>. </p><p>Just before GameStop exploded, Left posted a nearly seven-minute long video explaining why he expected <a href="https://markets.businessinsider.com/news/stocks/gamestop-stock-price-retail-traders-shorts-citron-andrew-left-gme-2021-1-1029994276">shares to crash</a>. He further provoked r/WallStreetBets by calling GameStop buyers <a href="https://twitter.com/CitronResearch/status/1351544479547760642's=20">"suckers at this poker game."</a></p><p>Members of r/WallStreetBets ridiculed Left and used his video as fuel to keep buying GameStop, <a href="https://markets.businessinsider.com/news/stocks/gamestop-stock-price-retail-traders-shorts-citron-andrew-left-gme-2021-1-1029994276">Insider's Ben Winck reported</a>.</p><p>Left has since ended all comment on GameStop after saying he was <a href="https://markets.businessinsider.com/news/stocks/citron-andrew-left-gamestop-fight-angry-mob-investors-harass-family-2021-1-1029995012">harassed</a>, and said his hedge fund covered the majority of its GameStop short positions at a <a href="https://markets.businessinsider.com/news/stocks/citron-gamestop-reddit-short-position-covered-loss-reddit-andrew-left-2021-1-1030009872">100% loss</a>.</p></p><br/><br/><h3>3. For the lolsGameStop is the first major "meme stock."</h3><img src="https://static4.businessinsider.com/image/6011ac2b6dfbe10018e0049f-400-300/3-for-the-lols--gamestop-is-the-first-major-meme-stock.jpg" alt="" /><p><p>Like so many memes before it, buying shares of GameStop spread from person to person through Reddit and other social media communities.</p><p>Markets writers define "<a href="https://www.bloomberg.com/news/articles/2020-12-26/year-of-the-meme-stock-hertz-kodak-top-list-of-2020-highlights">meme stocks</a>" as those that experience wild swings after online posts lead a mass of individuals to buy or sell. These movements to stock price have little to do with company financials or news. </p><p>GameStop's buyers likely aren't true believers in the future of physical video game sales — they're buying the stock to make a big return and, perhaps more importantly, to demonstrate power.</p><p>The prevailing theme of posts on WallStreetBets is collective power — enough collective power to push back on the hedge funds and analysts that predicted GameStop's stock would never reach such heights.</p><p>There's another theme as well: A grand bet, to "hold on tight" and not sell, no matter how high the stock's value goes. "GME will stay going until WE sell. Do not f---ing sell boys, $1,000 was the original target but nothing is stopping this from getting to $5,000 but us."</p></p><br/><br/><h3>4. The co-founder of Chewy bought a 12% stake to keep the struggling GameStop afloat, which caused a Wall Street rally even before this recent surge in value.</h3><img src="https://static6.businessinsider.com/image/6011b60c6dfbe10018e004d8-400-300/4-the-co-founder-of-chewy-bought-a-12-stake-to-keep-the-struggling-gamestop-afloat-which-caused-a-wall-street-rally-even-before-this-recent-surge-in-value.jpg" alt="" /><p><p>Ryan Cohen, the cofounder and former chief executive of the pet-product firm Chewy, <a href="https://www.businessinsider.com/gamestop-adds-chewy-ryan-cohen-wall-street-darling-to-board-2021-1">accumulated over 12% of GameStop by December 2020</a>. Cohen hoped to expand GameStop's e-commerce arm and rescue it from years of slumped sales due to increased competition from digital game stores. </p><p>On January 11, before r/WallStreetBets went all-in on buying GameStop, Cohen <a href="https://www.businessinsider.com/gamestop-adds-chewy-ryan-cohen-wall-street-darling-to-board-2021-1">announced</a> two former Chewy lieutenants would join the gaming store's board of directors. GameStop shares <a href="https://www.bloomberg.com/news/articles/2021-01-11/gamestop-soars-with-activist-ryan-cohen-gaining-board-seats">jumped</a> following the news after Cohen promised to <a href="https://www.wsj.com/articles/chewy-co-founder-joins-gamestops-board-after-pushing-overhaul-11610378574">overhaul</a> the struggling retailer with digital sales. </p><p>The Chewy cofounder has reportedly made a <a href="https://markets.businessinsider.com/news/stocks/gamestop-stock-price-investment-ryan-cohen-chewy-founder-1700-return-2021-1-1030000866">1,700% return</a> from his 2020 investment of $76 million after GameStop's improbable rally. Cohen is now a billionaire, according to <a href="https://www.forbes.com/sites/jonathanponciano/2021/01/26/gamestops-massive-surge-creates-a-new-billionaire-as-wall-street-bets-against-reddit-traders/'sh=75fa317a35ae">Forbes</a>.</p></p><br/><br/>
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