January 28, 2021
In some corners of social media, the epic short squeeze on GameStop, the beleaguered video game company, is a David and Goliath battle between retail investors and hedge funds. As legions of day traders drove up GameStop’s share price more than than 1,700% this month, institutional investors who had bet against it have stomached massive losses, scrambling to cover their positions by buying the stock back.
But the fallout extends far beyond rich hedge funders. ”If there are a bunch of retail investors who are invested in this stock and a bubble bursts, investors get hurt,” says Jill Fisch, a business law professor at the University of Pennsylvania.