You have probably heard about the GameStop, Reddit, and Melvin Capital stocks fiasco but for many of us this is foreign territory and you probably have no idea what is going on.

Let’s break it down, shall we…

Melvin Capital, in an attempt to short sell, has lost a lot of money. Short selling is when hedge funds prey on a company’s downfall. Investors will buy when the stock is high and then sell to others; when it is low, they buy it back for less than they sold it and give it back. They then keep the difference in the sales made.

When a Reddit group, r/WallStreetBets, found out a company called Melvin Capital was attempting to short sell GameStop, they began to invest. Their investment brought up GameStop’s stock by about 1,700%, which caused Melvin Capital and many other companies to lose a substantial amount of money.

Stock companies were short-selling other companies, like AMC, Blackberry, Koss Corp., and Express Inc. These stocks are going up and hedge funds are losing money.

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