If you've been on the internet at all within the past few days, you've probably heard that something is going on with GameStop's stock. Long story short: The store's business model is outdated at this point, but its stock value increased by 8,000% over the past six months because amateur stock traders online decided to buy of bunch of stock, pushing up the price.
Comedian Trevor Noah explained this idea in more detail in a recent segment on "The Daily Show," but to make the subject matter more interesting, he decided to imitate actor Margot Robbie, known for her good looks, Australian accent and two Oscar nominations. The skit was actually a reference to movie "The Big Short," which used Robbie in a bath tub to explain complex and complicated finance topics.
"Basically, there's a group of people on Reddit who don't use the stock market to invest. They use it to gamble," Noah says with a glass of champagne in a bathtub while speak in an exaggerated Australian accent. "And yeah, that's what a lot of serious investors do, too, but these guys on Reddit are more honest about it, and they love to troll the people who aren't."
"So there's a store called GameStop that sells video games, not a great business to be in since games can be downloaded now," he continues. "Which is why the serious investor decided to short GameStop, which means to bet against it. But the Redditors are gamers who have a semi-ironic love for the store, so they started making memes encouraging each other to punish the serious people by buying worthless GameStop stocks."
"Now instead of failing, GameStop is succeeding wildly. Not really of course, not as a business," Noah adds with a twinkle in his eye. "But come on, stocks are never real. The serious people have already lost $5 billion, and some giant hedge funds have gone bankrupt."
"Got it? Good," he says, then turning to the camera. "Now let's get out of Margot Robbie's bathroom before she gets home and asks me what I'm doing here. The last time she caught me here, it was a bit awkward."
NBC's Stephanie Ruhle also broke down what's going on with GameStop in a slightly more serious manner on TODAY Thursday.
Calling the saga an "extraordinary story," she explained, "This is populism coming for capitalism. GameStop, a struggling brick-and-mortar video game retailer — it's been losing hundreds of millions for years — suddenly saw it's stock go up by 1,600%."
"An army of individual investors, day traders, many of whom have never been investors before ... are not trading with big broker dealers. They're trading on mobile apps, like Robinhood, and they communicate and congregate on social media platforms and chatrooms."
These individuals noticed that professional investors were betting the price of GameStop stocks was going to go down, so "all those individuals started buying up GameStop over and over, driving up the price."
As a result, something called a short squeeze occurred, where those who bet against GameStop had to buy the stock at that inflated price, driving up the price even more. This idea isn't new, except for one aspect, Ruhle said.
"We've never seen little guys, individuals, make a dent like this. It's like the villagers storming the castle," she added.