The Sardine Revolt in the American financial market

In recent days, economic news outlets have been talking about nothing other than the Gamestop case. The much underrated American game store played a role in American financial market which worried even President Biden.

But after all, what happened to the game store's shares that left financial analysts appalled this past week? From the operation short-squeeze, Combined in social media groups, small shareholders were able to leverage the company's shares.

This is not the first time that small shareholders have given a short squeeze em hedge funds using company stocks and options. 

But what is a short squeeze?

For those who are not familiar with these English financial market terminologies, the shorts This is when shares are sold or rented because they do not make a profit. However, they expect to make a profit when they have to deliver the papers to whom they were sold. 

Using a very practical example. It would be as if your neighbor, knowing that you were going to the market, asked you to buy her a dozen bananas. 

However, knowing that prices at the market drop after two in the afternoon, when you make an agreement with her in the morning, you say that a dozen costs 10 reais, but intending to only go in the late afternoon. This is because you know that at this time it will cost you 5 and not 10 reais. 

Here in Brazil, this operation is called going short. In other words, you sell a share without having it, believing that the price will fall, and then buy it and pass it on to whoever you sold it to. 

This way, you sell more expensively, because, trusting in its possible devaluation, you will buy cheaper.

The Sardine Revolt

What happened in the case of Gamestop was that the group from Wall Street Bets, a group that calls itself “the degenerates”, decided to enter the stock market game and go short. 

This group of small investors, the so-called sardines, began selling shares in the store and leveraging operations by borrowing money to do so. Which, consequently, caused the share price to begin to rise. 

This operation took the great hedge funds, the sharks, to buy the shares of their sold operations, which caused a domino effect. 

In other words, this scheme ended up increasing stock prices even further. American financial market. These large funds that were short lost billions of dollars, while sardine investors made millions of dollars overnight. Continue following the Our site!