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If like many Americans, you were struggling to make sense of what was going on with GameStop and the stock market, Trevor Noah has the perfect explainer.
The comedian used a scene from 2015’s comedy-drama “The Big Short,”based on the book about investors betting against the housing market, to break down the reason behind GameStop’s unprecedented stock surge earlier that day during Wednesday’s “Daily Show.”
In the movie, Margot Robbie sips a glass of champagne in a bubble bath while explaining the stock market. In the “Daily Show” bit, Noah superimposed his face over Robbie’s body to explain what happened with GameStop.
“Basically there’s a group of people on Reddit who don’t use the stock market to invest – they use it to gamble. And yeah, that’s what a lot of serious investors do too, but these guys on Reddit are a lot more honest about it and they love to troll the people who aren’t,” Noah said.
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Noah then explained the premise of GameStop – a store that sells video games, but has struggled recently with more video games being downloaded online instead of purchased in-store.
“These investors decided to short GameStop, which means to bet against it, but the Redditors are gamers who have a semi-ironic love for the store. So they started making memes encouraging each other to punish the serious people by buying worthless GameStop stocks,” he said.
Noah said the increase in Redditors buying stocks cause GameStop to succeed, but not “really of course, not as a business.”
“But come on, stocks are never real. The serious people have already lost $5 billion and some giant hedge funds have gone bankrupt,” he said, ending his explainer with “Got it? Good.”
GameStop stock plunges, but overall stock market delivers gains after Wednesday’s losses
On Thursday morning, the struggling video game retailer was trading above $450 a share, more than double its close of $147 on Tuesday. At the start of 2021, shares of GameStop closed at $17.25 on Jan. 4. Since then, shares have surged more than 1,000% this year alone, compared with just a 1% rise in the S&P 500, the broader benchmark for most mutual funds.
The primary reason for the surge? Noah is right: smaller investors who have banded together in places like Reddit, under the subreddit r/WallStreetBets.
And it’s not just GameStop. Shares of AMC Entertainment jumped more than 230% Wednesday as the Twitter trend #SaveAMC spread amid concerns the movie theater chain might file for bankruptcy due to the COVID-19 pandemic keeping moviegoers away.
Contributing: Brett Molina
GameStop was a place to buy video games. Now smaller investors have turned its stock into a battle royale
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