On the 27th of January 2021, Melvin Capital finally accepted defeat and close out their position in GameStop,

losing the investment fund over $6 billion. How exactly did this happen?

Well, this is the story of how one subreddit R-slash Wall Street bets cost Wall Street billions.

GameStop. The owner of Robinite Wall Street Bet. Shockwaves through Wall billions. GameStop. The owner of Robin Wall Street bets.

Shockwaves through Wall Street.

GameStop.

GameStop.

What is going on here exactly?

First of all, it is important to talk about GameStop.

GameStop is a video game retailer that has been widely

popular across the Western world for years. But due to video game sales generally trending towards

the online world, it has suffered dramatically since 2016. In fact, it has closed over a thousand

of its stores in the past year alone. With the obvious difficulties that the coronavirus pandemic has brought to

physical shops, fewer expecting it to ever recover. Professional investors, including the major hedge fund

Melvin Capital, looked to take advantage of GameStop's demise. Known as short selling,

professional investors like Melvin Capital were basically betting that the company was going to

fail. They borrowed

shares in the company and sold them on immediately with a promise to buy them back at a later date.

Now, if you were confident that the company will lose value, you would expect to make a profit

when you buy the shares back and their price has fallen. However, if the price of the shares

does the opposite and they actually rise, you're going to lose a lot of money.

I have to add that this is completely legal and it is simply a type of transaction that happens thousands of times per day and it's a key part of investing.

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