As of June 17, 2024, the most shorted stock was for, the American holographic technology services provider, MicroCloud Hologram Inc., with 66.64 percent of their total float having been shorted. This is a change from mid-January 2021, when video game retailed GameStop had an incredible 121.07 percent of their available shares in a short position. In effect this means that investors had 'borrowed' more shares (with a future promise to return them) than the total number of shares available for public trading. Owing to this behavior of professional investors, retail investors enacted a campaign to drive up the stock price of Gamestop, leading to losses of billions when investors had to repurchase the stock they had borrowed. At this time, a similar – but less effective – social media campaign was also carried out for the stock price of cinema operator AMC, and the price of silver. What is short selling? Short selling is essentially where an investor bets on a share price falling by: borrowing a number of shares selling these shares while the price is still high; purchasing the same number again once the price falls; then returning the borrowed shares at a profit. Of course, a profit will only be made if the share price does fall; should the share price rise the investor will then need to purchase the shares back at a higher price, and thus incur a loss. Short selling can lead to some very large profits in a short amount of time, with Tesla stock generating over one billion dollars in short sell profits during the first week of March 2020 alone, owing to the financial crash caused by the coronavirus (COVID-19) pandemic. However, owing to the short-term, opportunistic nature of short selling, these returns look less impressive when considered as net profits from short sell positions over the full year. The risks of short selling Short selling carries greater risks than traditional investments, and for this reason financial advisors often recommend against this strategy for ‘retail’ (i.e. non-professional) investors. The reason for this is that losses from short selling are potentially uncapped, whereas losses from traditional investments are limited to the initial cost. For example, if someone purchases 100 dollars of shares, the maximum they can lose is the 100 dollars the spent on those shares. However, say someone borrows 100 dollars of shares instead, betting on the price falling. If these shares are then sold for 100 dollars but the price subsequently rises, the losses could greatly exceed the initial investment should the price rise to, say, 500 dollars. The risks of short selling can be seen by looking again at Tesla, with the company causing the greatest losses over 2020 from short selling at over 40 billion U.S. dollars.

Stocks of video game retailer GameStop exploded in January 2021, effectively doubling in value on a daily basis. At the close of trading on January 27, GameStop Corporation's stock price reaching 86.88 U.S. dollars per share - or +134 percent compared to the day before. On December 30, 2020, the price was valued at 4.82 U.S. dollars per share. The cause of this dramatic increase is a concerted effort via social media to raise the value of the company's stock, intended to negatively affect professional investors planning to ‘short sell’ GameStop shares. As professional investors started moving away from GameStop the stock price began to fall, stabilizing at around 11-13 U.S. dollars in mid-February. However, stock prices unexpectedly doubled again on February 24, and continued to rise, reaching 66.25 U.S. dollars at the close of trade on March 10. The reasons for this second increase are not fully clear. At the close of trade on January 29, 2025, GameStop shares were trading at nearly 27.5 U.S. dollars. Who are GameStop? GameStop are a retailer of video games and associated merchandise headquartered in a suburbs of Dallas, Texas, but with stores throughout North America, Europe, Australia and New Zealand. As of February 2020 the group maintained just over 5,500 stores, variously under the GameStop, EB Games, ThinkGeek, and Micromania-Zing brands. The company's main revenue source in 2020 was hardware and accessories - a change from 2019, when software sales were the main source of revenue. While the company saw success in the decade up to 2016 (owing to the constant growth of the video game industry), GameStop experienced declining sales since because consumers increasingly purchased video games digitally. It is this continual decline, combined with the effect of the global coronavirus pandemic on traditional retail outlets, that led many institutional investors to see GameStop as a good opportunity for short selling. What is short selling? Short selling is where an investor effectively bets on a the price of a financial asset falling. To do this, an investor borrows shares (or some other asset) via an agreement that the same number of shares be returned at a future date. They can then sell the borrowed shares, and purchase the same number back once the price has fallen to make a profit. Obviously, this strategy only works when the share price does fall – otherwise the borrowed stocks need to be repurchased at a higher price, causing a loss. In the case of GameStop, a deliberate campaign was arranged via social media (particularly Reddit) for individuals to purchase GameStop shares, thus driving the price higher. As a result, some estimates place the loss to institutional investors in January 2021 alone at around 20 billion U.S. dollars. However, once many of these investors had 'closed out' their position by returning the shares they borrowed, demand for GameStop stock fell, leading to the price reduction seen early in early February. A similar dynamic was seen at the same time with the share price of U.S. cinema operator AMC.

The smooth functioning of the stock lending market is essential for enabling short selling and maintaining effective arbitrage. Yet, little is known about how this low-transparency market responds to acute disruptions such as short squeezes. Short selling plays a central role in price efficiency, without which prices would disproportionately reflect the beliefs of the optimist. Cheap access to shares from lending institutions facilitates this process. The January 2021 short squeeze – centered around GameStop but involving a wider array of highly shorted equities – created extreme market conditions. While regulatory and academic attention has largely been focused on the squeeze’s effect on price volatility and more visible metrics of market quality, the squeeze’s effects on the stock lending market have not been thoroughly explored. Through an OLS regression framework, this paper analyzes how borrowing costs behaved across the highly shorted segment of the market, as compared to the non-shorted, broader market segment. The results show that during the squeeze, borrow fees increased, but only in the highly shorted group. In the post-squeeze period, borrow fees fell significantly, but again only within the highly shorted group. The stability of control group metrics supports the idea that the observed effects were concentrated solely within highly shorted equities. These results contribute to the literature on short sale constraints, bringing further implications for inefficiencies beyond what the existing literature had shown. Furthermore, this paper provides evidence that the lending market distortions brought on by a short squeeze may persist beyond the event window, interfering with effective arbitrage.

Overall, this project was meant test the relationship between social media posts and their short-term effect on stock prices. We decided to use Reddit posts from financial specific subreddit communities like r/wallstreetbets, r/investing, and r/stocks to see the changes in the market associated with a variety of posts made by users. This idea came to light because of the GameStop short squeeze that showed the power of social media in the market. Typically, stock prices should purely represent the total present value of all the future value of the company, but the question we are asking is whether social media can impact that intrinsic value. Our research question was known from the start and it was do Reddit posts for or against a certain stock provide insight into how the market will move in a short window. To solve this problem, we selected five large tech companies including Apple, Tesla, Amazon, Microsoft, and Google. These companies would likely give us more data in the subreddits and would have less volatility day to day allowing us to simulate an experiment easier. They trade at very high values so a change from a Reddit post would have to be significant giving us proof that there is an effect.

Next, we had to choose our data sources for to have data to test with. First, we tried to locate the Reddit data using a Reddit API, but due to circumstances regarding Reddit requiring approval to use their data we switched to a Kaggle dataset that contained metadata from Reddit. For our second data set we had planned to use Yahoo Finance through yfinance, but due to the large amount of data we were pulling from this public API our IP address was temporarily blocked. This caused us to switch our second data to pull from Alpha Vantage. While this was a large switch in the public it was a minor roadblock and fixing the Finance pulling section allowed for everything else to continue to work in succession. Once we had both of our datasets programmatically pulled into our local vs code, we implemented a pipeline to clean, merge, and analyze all the data. At the end, we implement a Snakemake workflow to ensure the project was easily reproducible. To continue, we utilized Textblob to label our Reddit posts with a sentiment value of positive, negative, or neutral and provide us with a correlation value to analyze with. We then matched the time frame of each post with the stock data and computed any possible changes, found a correlation coefficient, and graphed our findings.

To conclude the data analysis, we found that there is relatively small or no correlation between the total companies, but Microsoft and Google do show stronger correlations when analyzed on their own. However, this may be due to other circumstances like why the post was made or if the market had other trends on those dates already. A larger analysis with more data from other social media platforms would be needed to conclude for our hypothesis that there is a strong correlation.

The emergence of free-to-play games and fifth-generation consoles has provided steady revenue within the video game industry. However, since 2020, current-generation consoles have reached the mature life cycle phase, and console sales are down as of 2024. Despite the continued popularity of mobile gaming and AAA franchises, many markets within the industry await next-generation releases and have expressed a willingness to hold off on purchasing many industry products in the meantime. Consequently, revenue growth has stalled over the past five years, decreasing at a CAGR of 2.2% to $109.4 billion through 2025. In 2025, however, revenue has increased 7.8% in 2025, as releases from Nintendo and Rockstar Games have generated more player interest. Despite operational challenges and a high-interest rate environment for much of the current period, the gaming industry has benefited from the continuous releases of popular games. Generating millions of viewers daily, streaming platforms and popular streaming celebrities continue to sustain interest in many industry offerings, boosting sales. Leading companies, such as Sony and Microsoft, continue to evolve and have made a series of acquisitions, which have consolidated the industry during the current period. They have also adopted AI to automate their operations and maintain profit levels as costs increase due to tariffs. Moving forward, gaming developers are projected to invest more of their resources in developing mobile games and games that leverage the latest AI, VR and cloud technology. Despite the absence of new console releases from most companies during much of the period, consumer demand will remain high in the short term, though evolving trade policy could threaten the industry's ability to meet consumer demand moving forward. Despite these challenges however, future innovation and the eventual release of next-generation consoles will lead to industry revenue increasing at a CAGR of 7.3% to $155.4 billion through 2030.