Wall Street is “losing its head” after a group of small investors with trading accounts ranging from $ 500 to $ 2,500 came together to “bring down the billionaires”, Fox Business presenter Charles Payne told Tucker Carlson Tonight “on Wednesday.
Host “Making Money” addressed the dramatic rise in GameStop’s stock price after a group of Reddit users came together to buy the distressed retailer’s call options – pushing the company’s stock prices to unprecedented levels and hurting short sellers of the market.
“These hedge funds that sell these shares, they don’t own the shares, so they borrow them,” explained Payne. “Imagine that you borrow a stock that is trading at $ 10 and then lower the share price and buy it back for a dollar. You make a difference, nine dollars.”
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Short sellers, Payne explained, are investors who speculate that the value of a stock or bond will fall. The strategy involves borrowing shares to sell them in the hope of repurchasing them at a lower price in the future.
“They can short sell many shares,” he said. “Do you know how many shares were on sale at GameStop? Let’s just say 100% of the shares that are sold, they sold 140% of the shares, so they borrowed the same shares repeatedly, and more, the same shares and sold on the market .
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“Their job, their mission was to bring GameStop to zero,” he added. “Nobody said a word on any financial network, especially on CNBC, which always leaves short sales …”
The tired little investors revolted against Wall Street on Wednesday when they decided to collectively raise the stock price.
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“It’s called a short squeeze,” said Payne, “and it’s working.
“Wall Street is going crazy and now wants to change the rules of the game because a lot of people with accounts ranging from $ 500 to $ 2,500 are taking down billionaires.”