(WXYZ) — It’s a week that will go down in the history books for Wall Street. Shares of the video game retailer Gamestop skyrocketed, gaining more than 1,700% percent this month.
The push is fueled by many young investors like Josh Hoogendoorn in Royal Oak.
“We saw it really start to ramp up at the end of last week and on Monday my buddy was like ‘alright, I’m getting in,’ so I was like ‘OK, I'll go in with you man,’” said Josh Hoogendoorn.
The 26-year-old Central Michigan grad is a member of the Reddit group "Wall Street Bets" which began pushing Gamestop stock, after noticing it was heavily shorted.
Matthew Roling, an Adjunct Professor of Finance at the Mike Ilitch School of Business at Wayne State University can explain.
“With a short, you’re basically borrowing shares in a company expecting that they’re going to decline in value," Roling said. "When they decline in value, you can pay back what you borrowed with less money making a profit.”
But if the stock goes up, those Wall Street hedge funds that shorted it lose millions, which is exactly what Josh and his Reddit group want to see.
“It’s time they get their end of the bargain," Hoogendoorn said. "That’s what we see in this.”
As the Reddit investors poured money into the stock, it drove up demand and the price, which would in turn force the short sellers to buy it back at a loss.
“The community on Reddit, a lot of them really have their heels dug in,” Roling said. "There’s enough people holding onto the shares right now that the prices continue to escalate.”
Hoogendoorn bought in on Monday at $90 a share. The stock is now worth more than $300 a share. Even so, he says he’s not selling.
“I could pay off my student loans right now if I wanted, but this is much more to me than that,” Hoogendoorn said.
It’s a very risky play, worth it to Hoogendoorn. Whether it’s him or Wall Street, someone in this game is gonna lose, and lose big.
“This stock is not worth 300 dollars," Roling said. "One way or the other it’s going to come back down to Earth and someone is going to be left holding the bag.”