New top story from Time: So, Uh, What’s Up With GameStop’s Stock?

When a company that most people have written off more or less for dead suddenly sees its stock price skyrocket by nearly 180% for no apparent reason, it’s the kind of thing that catches one’s attention. And so it is with gaming retailer GameStop, a dying relic of the pre-Internet era when people had to drive to the mall to get the latest Call of Duty, rather than download it directly to their console or pre-order a physical disk for mail delivery.

What’s happening with GameStop’s stock is, in part, a story of some pretty boring market mechanics. But it’s also a tale of mysterious savants whipping up the masses into a stock-buying frenzy for fun and profit—one that will no doubt end in outrageous profits for some, but tears for many others, while exposing fundamental issues with how companies are valued along the way.

Here’s the TL;DR:

When you buy stock in a company, you’re (typically) making a bet that something will happen that leads that company’s stock to grow in value—it puts out a popular new product, it makes a big executive hire, it reports a great quarter, and so on. But if you think a company is going to tank, you can “short” that firm—basically, you borrow a number of shares in that company and immediately sell them in the hopes that you can then buy the same number of shares again later for a lower price, give those shares back to the lender, and pocket the difference.

As a business, GameStop, which primarily sells video games and gaming consoles, has been on a slow decline for some time. Not only does high-speed Internet make it possible for gamers to download the latest titles directly to their consoles, but it’s also a heavily mall-based business, and malls, are, well, not doing great. GameStop has held on in part thanks to a focus on selling used games (which are cheaper, and which you can’t simply download) and because of high demand for the new PlayStation 5 and Xbox Series X/S consoles. That Ryan Cohen, co-founder of e-commerce darling Chewy, joined the board this month is also reason for optimism. But overall, GameStop is running out of extra lives, its batteries are dying, and its parents are telling it to go to bed because it’s got school in the morning.

The seeming inevitability of GameStop’s demise made it an obvious target for short sellers. But shorting a stock is typically far riskier than owning one. A stock’s floor is $0, so if you buy a $20 share and the stock totally plummets, you’re out $20. But a stock’s value is theoretically limitless, and thus so are the potential losses facing short sellers.

Short sellers have a way to defend against this: if their target suddenly skyrockets in value, they may be decide to buy the shares back at a slightly higher price rather than risk a bigger loss—if you short Tesla at $20 and it hits $30, you may decide to eat the $10 loss rather than risk an even worse fate. But when a huge number of people are shorting a particular stock that suddenly takes off, it can trigger a “short squeeze,” wherein the demand from short sellers seeking to buy shares drives up demand, reduces supply and further increases the price in a vicious cycle that benefits those who were long on the stock—meaning, those who owned it, rather than those shorting it. Indeed, a staggering 138% of GameStop’s available shares were being shorted last week, per CNBC, making it the most-shorted stock on U.S. markets.

Which brings us to Reddit, and more specifically, r/WallStreetBets, a half-fascinating, half-terrifying forum for meme-fueled day-traders that bills itself as “4chan with a Bloomberg terminal.” The short version of the story is this: influential r/WallStreetBets users realized that, with so many people (institutions, really) shorting GameStop, it could be possible to rally enough people together to buy up a bunch of GameStop stock, thereby increasing its value enough to trigger a short squeeze, blasting the stock into the upper mesosphere to the benefit of those who bought in as part of the early rally. And that’s exactly what’s happening.

There’s a distinctly Reddit flavor to the whole affair: the r/WallStreetBets community, which has more than 2 million subscribers, has turned GameStop into a meme stock—it has value because a small number of people decided it would be fun (and potentially profitable) to pretend it had value, other people wanted in on the fun (and profit), and suddenly it had real value. Value is weird!

But unlike most Internet memes, there’s real money to be had here: some users are claiming massive overnight gains as GameStop’s stock continues to defy typical market physics. Community pressure to hold for more gains, rather than sell—which could reduce the stock’s value—is intense. “IM NOT SELLING THIS UNTIL AT LEAST $1000+ GME,” reads one of the subreddit’s most popular posts, from a user who has claimed to make nearly $300,000 in the scheme so far. “BUCKLE THE FUCK UP”

There’s a Robin Hood element to the entire bizarre affair: from the outside, it looks like a bunch of Internet-savvy everymen are beating establishment Wall Street short sellers at their own game of finding and exploiting an opportunity. With income inequality at an all-time high, it’s easy to root for the apparent little guys who have found a way to win in a marketplace that often benefits big-time institutional traders, not people like u/dumbledoreRothIRA, the user who posted the $300k claim. And these people absolutely flipped two giant middle fingers to the idea that fundamentals need have anything to do with valuation, an important lesson as the market continues to heat up despite the ongoing pandemic.

Of course, u/dumbledoreRothIRA also had nearly $50,000 to sink into GameStop stock, based on his post. It’s possible that’s a drop in the bucket for them, and this entire bizarre event is mostly being orchestrated, or at least driven, by wealthy day traders who found a novel way to rally an army of Redditors into triggering a short squeeze for their benefit—a sort of Qanon with more of a focus on profit, and less on unfounded global conspiracies. On the other hand, it’s just as likely, and perhaps more terrifying, that u/dumbledoreRothIRA’s GameStop investment is their entire life savings, and when this whole thing inevitably blows up, they may lose everything, as many of those involved almost definitely will.