The 6 wildest GameStop short squeeze revelations from Netflix's "Eat the Rich" documentary - Salon

Alvan Chow from "Eat the Rich: The GameStop Saga." (Netflix)

Alvan Chow, a retail investor and Redditor, prompted the GameStop short squeeze via his post on r/wallstreetbets. In the documentary, Chow said he first became interested in the GameStop drama after Ryan Cohen, the founder and CEO of the e-commerce company Chewy, invested in the dying brick-and-mortar store. Amid his research, Chow learned that GameStop's stock price rose 30% but on a more shocking note, around 140% of Gamestop shares were short, thus leading to the conditions for a short squeeze.

For a better perspective on the percentage, Bob Sloan, founder of the New York City-based software company S3 Partners, said, "The way we calculate it, anything 7 to 10% is kinda normal. Things start ticking around 20%, it gets on the watch list. Thirty, 40 or 50, that's very, very high."

When the stock price begins to rise in such a manner, short sellers may buy back their shares to assuage their losses. However, that can also drive the stock price up even higher, which is basically a recipe for disaster.

"A true short squeeze is a rare event. There are probably a hundred predicted for every one that occurs," said Chow. "There needs to be an unexpected positive event to start to drive the stock price higher. This could be a huge earning surprise or a takeover offer."

On Reddit, Chow wrote, "Sup gamblers. Feel bad about missing the gain train on Tesla? Fear not, something much greater and stupider is here. We're going to temporarily join forces with the Galactic Empire and hijack the Death Star. Our choice of weapon, GME."

  
Many members of WallStreetBets disagreed with Chow. But a handful of individuals also supported his manifesto, especially after they came across a man named Keith Gill — also known as Roaring Kitty on YouTube and u/DeepFuckingValue on Reddit — whose online analyses of the GameStop stock played a large role in the short squeeze. 

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The 6 wildest GameStop short squeeze revelations from Netflix's "Eat the Rich" documentary - Salon
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