WXYZ: Matthew Roling on GameStop stock
It’s a week that will go down in the history books for Wall Street. Shares of the video game retailer Gamestop skyrocketed, gaining more than 1,700% percent this month. Matthew Roling, an adjunct professor of finance at the Mike Ilitch School of Business at Wayne State University can explain. “With a short, you’re basically borrowing shares in a company expecting that they’re going to decline in value," Roling said. "When they decline in value, you can pay back what you borrowed with less money making a profit.” As the Reddit investors poured money into the stock, it drove up demand and the price, which would in turn force the short sellers to buy it back at a loss. “The community on Reddit, a lot of them really have their heels dug in,” Roling said. "There’s enough people holding onto the shares right now that the prices continue to escalate. This stock is not worth 300 dollars," Roling said. "One way or the other it’s going to come back down to Earth and someone is going to be left holding the bag.”
