You’ve likely heard about the Gamestop Corp (NYSE: GME) saga. I didn’t want to write a post on it but I realised that there is one glaring misconception among Reddit investors that should be addressed.
Many users within the Wallstreet Bets group in Reddit have mentioned that they want to save Gamestop from short sellers.
It’s as if they believe that pumping up the share price of Gamestop will somehow save or help the company.
I appreciate the noble thought, but the concept that driving a company’s share price higher will help it is not how stocks work.
What’s really going on
The stock price is simply the last traded price of the company’s stock. It is the amount that the latest buyer paid to purchase the stock from the previous stock owner.
Buying and selling shares on the stock exchange does not in any way impact the underlying business fundamentals of the company.