US 'GameStop' Short Selling Incident... Wall Street's Mistake Touching the Memories of the 30s and 40s Generation

4000 Stores Across the US, As Familiar as Convenience Stores
Gamers' Outrage at Hedge Funds' Short Selling Assault

[Image source=EPA Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] The reason why GameStop became known as the American version of the "retail investors' rebellion," with countless individual investors voluntarily stepping up to block short sellers, is largely attributed to the inherent power of the GameStop brand. Analysts believe that hedge funds, which entered purely for investment purposes, overlooked the fact that GameStop itself was imprinted as a nostalgic place for American men in their 30s and 40s, which greatly influenced this unexpected event.

According to CNBC on the 28th (local time), GameStop originally started as a small company in 1984 as a software retailer. It mainly sold video game packs in small towns across the United States, but after being acquired by the large bookstore chain Barnes & Noble in 1996, it transformed into a giant corporation by acquiring video game distributors worldwide. At its peak in 2012, GameStop operated about 6,700 stores, including 4,000 in the U.S. and 2,700 overseas.

In the 1990s, it was as familiar as convenience stores in the U.S., and for men in their 30s and 40s, it was imprinted as a place that reminded them of their childhood enthusiasm for video games. However, from 2018, it faced worsening management difficulties due to competition from online PC games and mobile games, and last year, the COVID-19 pandemic forced the closure of 450 stores, pushing it to the brink of bankruptcy.

At this time, the savior who appeared for GameStop was American billionaire Ryan Cohen. According to CNN, he was the CEO of Chewy, an American online pet supplies retailer, and after purchasing shares in GameStop, he joined the GameStop board of directors on the 13th. He claimed that transforming GameStop into an online shopping mall could significantly increase sales and pledged to improve the corporate structure. As a result, GameStop emerged as a kind of theme stock, and many individual investors began purchasing its shares. Consequently, hedge funds in the U.S. started large-scale short selling investments in GameStop stock, expecting substantial profits.

As the bankruptcy risk of GameStop increased due to the hedge funds' short selling offensive, a movement began among numerous American gamers in their 30s and 40s who hoped for the survival of the GameStop brand to buy GameStop shares. Among these gamers was a celebrity like Elon Musk. When he started tweeting about the GameStop short selling issue on his Twitter account, the matter became more widely publicized among gamers. As these individuals massively purchased stocks as retail investors in opposition to the short sellers, the American version of the retail investors' rebellion began.

This content was produced with the assistance of AI translation services.