The GameStop Short Squeeze: How a Struggling Retailer Hit $483 and Shook Wall Street

Record quarterly profit, and Cohen keeps buying Company

GameStop reported second-quarter operating income of $160.2 million, the highest in its history for that quarter, even as net sales fell 19% to $790.2 million. Collectibles, mostly trading cards, rose 57% to $356.3 million and are now 45.1% of sales. It held about $5.4 billion in cash, securities and digital assets, plus about 43.4 million eBay shares worth $4.9 billion, and raised its full-year adjusted EBITDA outlook to more than $650 million.

Ryan Cohen bought about 2.6 million more shares in September at between roughly $20 and $23.50, taking his direct stake to about 41 million shares. At around $23, the stock was worth about $92 in pre-split terms, still far below January 2021’s $483 high.

A $56 billion bid for eBay Company

Having built a stake of about 5% in eBay, GameStop offered $125 a share, about $56 billion, half in cash and half in GameStop stock, backed by a $20 billion financing commitment from TD Securities. That was several times GameStop’s own market value of about $12 billion. eBay’s board called the proposal ‘neither credible nor attractive’. Cohen vowed in July to keep pursuing eBay, withdrew a performance pay award so management could focus on the deal, and in August was reported by Bloomberg to be weighing a partnership instead. GameStop’s September results still called the acquisition ‘proposed’.

Bitcoin and billions in convertible debt Company

GameStop added bitcoin as a treasury reserve asset, raised $1.3 billion in zero-coupon convertible notes in March and announced on 28 May that it had bought 4,710 bitcoin, then worth about $500 million. In June it sold another $2.25 billion of convertible notes, upsized from $1.75 billion. In 2026 it retired about $1.4 billion of those notes, cutting debt to $2.8 billion.

T+1 settlement arrives Regulation

US share trades began settling one business day after the trade instead of two. Shorter settlement means a clearinghouse is exposed for less time, so it needs less margin from brokers in volatile markets. The SEC cited the January 2021 meme-stock episode when it adopted the rule; it is one of the few concrete regulatory changes that can be traced back to GameStop.

Roaring Kitty returns, and GameStop sells $3 billion of stock People

Keith Gill broke almost three years of silence with a meme on 12 May; GME rose 74% the next day. On 2 June he posted a screenshot showing about 5 million shares and 120,000 call options, worth about $116 million. GameStop used the frenzy to sell 45 million shares for $933 million in May and 75 million for $2.137 billion in June. On 7 June, the day of Gill’s first livestream since 2021, GameStop released results early and disclosed the second sale, and the stock fell about 39%.

Ryan Cohen becomes CEO; ‘Dumb Money’ hits cinemas People

Cohen, who had become chairman in June 2021, took over as chief executive, pursuing cost cuts and store closures rather than the e-commerce transformation investors had hoped for. The same month Hollywood released Dumb Money, with Paul Dano as Keith Gill, turning the episode into a mainstream underdog story.

Four-for-one stock split Market

GameStop split each share into four, paid as a stock dividend. Every 2021 price in this story is pre-split: the $483 high is about $120.75 on a split-adjusted chart and the $17.25 starting point about $4.31. Mixing the two is one of the most common mistakes in retellings.

Melvin Capital shuts down Market

Gabe Plotkin told clients he would wind down Melvin’s funds and return money, after a failed attempt to recover from the January 2021 losses and a further slump in 2022. The fund that had become the face of the losing side of the trade was gone 16 months later.

The SEC staff report Regulation

The SEC’s staff report on equity and options market conditions in early 2021 remains the most detailed official account. It found that buy-to-cover purchases by large short sellers were a small part of total buying, that there was no evidence of a gamma squeeze, and that it was ‘the positive sentiment, not the buying-to-cover, that sustained the weeks-long price appreciation’. It also concluded that hedge funds broadly were not significantly affected.

Why it matters: the most popular explanation of the episode, a mechanical squeeze of trapped shorts, was not what the regulator’s data showed.

Robinhood goes public Market

Robinhood listed six months after the restrictions, reserving a large slice of its IPO for its own customers. The shares fell 8% on the first day. Its prospectus disclosed that purchase limits on some stocks had lasted from 28 January to 5 February 2021, and that it faced about 50 proposed class actions over them.

GameStop cashes in Company

Unlike most companies caught in a squeeze, GameStop turned it into money: it sold new shares at prices it could not have dreamed of a year earlier, used the proceeds to pay off debt, and ended 2021 with more than $1 billion in cash. Ryan Cohen became chairman in June.

‘Game Stopped?’: the Congressional hearing Regulation

Robinhood’s Vladimir Tenev, Citadel’s Ken Griffin, Melvin’s Gabe Plotkin, Reddit’s Steve Huffman, Keith Gill and Cato Institute scholar Jennifer Schulp testified by video. Tenev said Robinhood did not restrict trading at the request of hedge funds; Griffin denied that Citadel had asked it to. Gill’s opening statement summed up his thesis: ‘I like the stock.’

The collapse, and the rebound Market

GME fell more than 86% from the 28 January intraday high to the close at the end of the first week of February, and closed at $40.59 on 19 February. It was still more than double its early-January price, and it bounced back above $100 by the end of the month. Buyers at $300 to $400 had nonetheless lost most of their money.

$483, and the buy button disappears Market

GME hit $483 in the morning, then fell as Robinhood, Interactive Brokers and other retail brokers stopped customers opening new positions in GME, AMC and several other meme stocks. Before dawn Robinhood’s clearing broker had been told by the National Securities Clearing Corporation that it had a deposit deficit of about $3 billion. The NSCC waived an excess-capital charge and Robinhood met the remaining requirement of about $1.4 billion; it then raised $3.4 billion from investors over the following days.

Why it matters: for millions of new investors, the market’s normally invisible plumbing became the story.

$347.51: a 1,600% rise in 11 trading days Market

GME closed at $347.51, up $199.53 in a day and more than 1,600% from its 11 January close. Melvin Capital said it had closed its GameStop short. Across the market the frenzy spread: Koss rose 480% that day, AMC 301% and Naked Brand 252%, all bigger single-day gains than any GameStop managed. The NSCC made intraday margin calls of $6.9 billion on 36 clearing members.

Citadel and Point72 rescue Melvin; ‘Gamestonk!!’ Market

Melvin Capital, down about 30% in three weeks and heading for a 53% January loss, took $2.75 billion from Citadel and Point72. On the evening of 26 January Elon Musk tweeted ‘Gamestonk!!’ with a link to r/wallstreetbets, whose membership was surging past several million.

$43 to $72 in three hours Market

The SEC report records GME rising from $43 to $72, a 71% jump, in about three hours on 22 January, the day of the highest share volume of the month. It closed at $65.01. Options trading by individual investors rose nearly tenfold from the day before, to $563 million.

The first big jump Market

GME rose 57% in a day as trading volume jumped twentyfold. The number of accounts trading the stock rose more than sixfold in a day, from 9,220 to 60,515, according to data from the Consolidated Audit Trail.

Ryan Cohen joins the board People

GameStop agreed to appoint Cohen, Alan Attwood and Jim Grube to its board after pressure from Cohen’s RC Ventures, which owned about 13% of the company. The stock touched $20.65, about 17% above the previous close, as investors bet on an e-commerce turnaround led by the man who had built Chewy.

Short interest near 100% all year Market

Short interest hovered around 100% of the public float for most of the year, and in the second quarter it cost more than 100% a year to borrow GME shares to short them. The pandemic shut stores while digital downloads grew. Ryan Cohen disclosed a stake of almost 10% in August, and Reddit users noted GME’s 84% short-interest ratio as early as April.

The thesis starts on Reddit People

Michael Burry, famous for betting against US housing before 2008, disclosed a stake in GameStop and urged it to buy back shares. In September Keith Gill posted his GME position on r/wallstreetbets and began updating it regularly; his long YouTube streams as Roaring Kitty argued the market had written the company off too early.