The GameStop short squeeze of 2021 was one of the most extraordinary events in stock market history. It was a clash between retail traders and Wall Street, resulting in billions in losses for hedge funds and a massive market frenzy. Here’s the complete timeline with all the details.
📌 Background: Why Was GameStop Shorted?
GameStop Corp. (GME) was a struggling brick-and-mortar video game retailer.
With the rise of digital downloads and online gaming, GameStop’s business model was becoming obsolete.
By 2020, the company was reporting declining revenue and losses.
Hedge funds, particularly Melvin Capital, Citron Research, and others, bet that GameStop’s stock price would continue to fall.
As a result, they shorted GameStop stock heavily, meaning they borrowed shares and sold them, expecting to buy them back at a lower price.
🔍 Key Events in the GameStop Short Squeeze
🔹 July 2020 – The Initial Spark
A Reddit user named "DeepF*ingValue" (real name: Keith Gill, aka Roaring Kitty)** posted on r/WallStreetBets (WSB) that he had bought $50,000 worth of GameStop call options.
His conviction: GameStop was undervalued, and new leadership (including Chewy co-founder Ryan Cohen) could turn it around.
Most people laughed at him, but some started buying shares.
🔹 August 31, 2020 – Ryan Cohen Invests
Ryan Cohen, the founder of Chewy, took a 9% stake in GameStop.
Cohen believed GameStop could pivot to an online business model.
The stock began rising slightly, but hedge funds kept shorting it aggressively.
🔹 December 2020 – The Stage Is Set
Hedge funds had shorted more than 100% of GameStop’s available shares (a rare and risky move).
This meant that if the price started rising, short sellers would have to buy back shares quickly, fueling the rally—a phenomenon known as a short squeeze.
🚀 The Insane Short Squeeze Begins (January 2021)
🔹 January 11, 2021 – GameStop Jumps 13%
Ryan Cohen joined GameStop’s board of directors.
Investors saw this as a potential turnaround for the company.
🔹 January 13, 2021 – Stock Doubles in a Week
GameStop’s stock price jumped from $19 to $31.
More retail traders joined in after noticing the huge short interest.
🔹 January 22, 2021 – 🚨 The Real Chaos Begins
GameStop soars to $65 per share.
Hedge funds start losing billions.
CNBC and mainstream media take notice, warning about an unsustainable bubble.
🔹 January 25, 2021 – Melvin Capital on the Brink of Collapse
GameStop skyrockets to $76.79.
Hedge fund Melvin Capital, which had aggressively shorted GameStop, loses 30% of its total assets.
Citadel and Point72 inject $2.75 billion to bail out Melvin Capital.
🔹 January 26, 2021 – Short Squeeze in Full Force
GameStop closes at $147.98, up over 680% in just a few days.
Elon Musk tweets "Gamestonk!!" with a link to r/WallStreetBets.
More retail traders pile in.
🔹 January 27, 2021 – GameStop Hits $483 🚀
GameStop peaks at $483 per share during intraday trading.
Hedge funds are losing billions trying to cover their short positions.
Robinhood, TD Ameritrade, and other brokerages restrict buying GameStop shares, citing "market volatility."
📉 The Aftermath – The Fall Begins
🔹 January 28, 2021 – Robinhood Restricts Trading 🚫
Robinhood and other brokers halt GameStop purchases, allowing only selling.
This leads to outrage among retail traders, who call it market manipulation.
GameStop plunges from $483 to $197 within hours.
Lawsuits are filed against Robinhood.
🔹 February 1, 2021 – The Bubble Pops
GameStop drops to $225, then falls further to $90 within days.
Many traders who bought at the top suffer heavy losses.
🔹 February 18, 2021 – Congressional Hearing 🎙️
Keith Gill ("Roaring Kitty"), Robinhood CEO Vlad Tenev, and Citadel’s CEO Ken Griffin testify before Congress.
Robinhood is accused of protecting hedge funds at the expense of retail traders.
💰 The Financial Impact
Hedge Fund Losses:
Melvin Capital lost over $6.8 billion (53% of its total assets).
Other hedge funds suffered billions in losses.
Many short sellers closed their positions at massive losses.
Retail Trader Gains & Losses:
Some traders, like Keith Gill, turned $50K into $48 million.
Many late buyers lost thousands or even millions when the stock crashed.
GameStop’s Market Cap Surge:
Before the squeeze: $1.3 billion
At its peak: $34 billion
After the crash: Settled around $5-6 billion
🌍 The Legacy of GameStop & WallStreetBets
Retail investors proved they could challenge Wall Street.
Hedge funds became more cautious about shorting stocks.
Regulators began investigating trading platforms like Robinhood.
WallStreetBets became famous, and “meme stocks” became a trend.
GameStop used the hype to raise capital and shift its business model.
🎯 Final Takeaway
The GameStop saga was a once-in-a-lifetime event that showed the power of retail investors but also highlighted how Wall Street still holds the upper hand in some ways.
Do you think this was a fair fight, or was the system rigged? 😲
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