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The Short Squeeze: What GameStop Actually Was

Beginner Investing • 7 min

In January 2021, a hedge fund called Melvin Capital lost roughly 53% of its value in about a week. Not because of a scandal or bad earnings — because of GameStop, a struggling video game retailer that a huge number of hedge funds had bet against.GameStop had an extraordinarily high percentage of its available shares sold short — meaning many funds were betting the stock would fall. When the price started rising…

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