GameStop has lost over $20 billion in market cap since the Reddit-saga peak (GME)

<p><img src="https://static2.businessinsider.com/image/6022b21bcca90200129b7354-2400/AP20154677504618.jpg" border="0" alt="GameStop" data-mce-source="Evan Agostini/AP"></p><p><a href="https://markets.businessinsider.com/stocks/gme-stock"></a></p><bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><p><a href="https://markets.businessinsider.com/stocks/gme-stock">GameStop</a> has lost over $20 billion in market cap since the stock's Reddit-saga peak back on January 27th.</p><p>Shares in the video game retailer have plummeted around 86% over the past week and a half to under $50 per share on Tuesday. The fall comes as the <a href="https://www.businessinsider.com/panel-gamestop-rally-reddit-retail-investors-robinhood-gme-stock-market-2021-2">Reddit retail-trader phenomenon</a> continues to fade, despite consistent posts on the popular Wall Street Bets subreddit urging users to "hold the line".</p><p>The Reddit drama began back on January 11, when activist investor and Chewy co-founder Ryan Cohen sent a letter to GameStop decrying the current state of the company and arguing for changes to modernize the brand.</p><p><strong><em>Read More:&nbsp;</em></strong><a href="https://www.businessinsider.com/bitcoin-bubble-ubs-cryptocurrency-could-become-worthless-volatility-not-currency-2021-2'utm_source=markets&amp;utm_medium=ingest" target="_blank" rel="noopener"><em>UBS says bitcoin is a bubble and too volatile to diversify a portfolio, unlike gold - here's why the bank says it could end up 'worthless.'</em></a></p><p>Then Reddit traders on the <a href="https://www.reddit.com/r/wallstreetbets/">r/ WallStreetBets forum</a> realized that GameStop and other companies with high short interestindicating a large number of bets against their stockswere susceptible to what's known as a short-squeeze.</p><p>A short squeeze occurs when a stock jumps sharply higher due to new investment, forcing short sellers to buy in order to limit their losses, pushing stock prices even higher.</p><p>GameStop shares popped after Reddit traders rushed into the name, rising some 1,600% in under a month in one of the largest short-squeezes in history.</p><p>The dramatic move saw institutional investors who&nbsp;<a href="https://www.businessinsider.com/gamestop-short-sellers-squeezed-losses-reddit-traders-army-cohen-palihapitiya-2021-1">held short positions in GameStop lose billions</a> in a matter of days, while some <a href="https://www.businessinsider.com/reddit-trader-claims-make-millions-risky-tesla-call-options-wallstreetbets-2020-2">Reddit traders saw huge gains</a>.</p><p><strong><em>Read more:</em></strong><a href="https://www.businessinsider.com/stocks-to-buy-stock-picks-rising-inflation-cogs-goldman-sachs-2021-2'utm_source=markets&amp;utm_medium=ingest" target="_blank" rel="noopener">&nbsp;<em>GOLDMAN SACHS: Buy these 13 stocks poised to benefit from surging commodity costs - including 2 set to soar by more than 40%</em></a></p><p>The returns for retail investors were so significant that Reddit traders started looking for other short squeeze opportunities. They targeted shares of <a href="https://www.businessinsider.com/nokia-stock-jump-legacy-tech-brands-become-reddit-traders-playgrounds-2021-1">legacy tech names</a>, <a href="https://www.businessinsider.com/amc-stock-price-day-traders-gamestop-blackberry-bed-bath-beyond-2021-1">AMC movie theatres</a>, and even <a href="https://www.businessinsider.com/reddit-day-traders-silver-next-short-squeeze-2021-1">silver</a> for a while until brokerages stepped in and <a href="https://www.businessinsider.com/robinhood-raises-trading-limits-gamestop-amc-koss-nokia-express-naked-2021-2">halted buying</a> in many of the most popular stocks for Reddit traders, citing financial requirements from their clearinghouse.</p><p>The move led <a href="https://www.businessinsider.com/robinhood-class-action-lawsuit-restricting-removed-gamestop-trading-wallstreetbets-2021-1">retail traders to sue</a>, arguing they weren't allowed to close their positions, essentially being forced into losses by their brokers.</p><p>For now, it appears the Reddit trader phenomenon is winding down. Shares of the video game retailer broke past the $60 and $50 resistance levels on Monday, leaving little hope for sudden huge gains for anyone who bought the stock at all-time highs. &nbsp;&nbsp;</p><p>GameStop traded down 21% on Monday as of 11:14 AM EST, giving the company a market cap of just $3.3 billion.&nbsp;</p><p><a href="https://markets.businessinsider.com/news/stocks/gamestop-stock-lost-billions-market-cap-reddit-saga-peak-2021-2-1030062086#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="https://www.businessinsider.com/worlds-most-expensive-liquid-thoroughbred-horse-semen-2020-3">Why thoroughbred horse semen is the world's most expensive liquid</a></p>
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