This article was updated on January 26. Gamestop's stock price continues to climb to record highs, thanks in part to a tweet from Elon Musk. To view this article, click here.

GameStop was really important to PC gamers a long time ago. I used to love rummaging through the bargain bins for software under $10, but the rise of Steam has long since put an end to that pleasure. It was a more gradual spiral down for consoles, but the company has struggled for years to shore up its declining business. This is reflected in its stock price, which has slowly settled from over $60 in 2008 to well below $10 since mid-2019. [But something very strange happened last week, when GameStop's stock suddenly soared to nearly $120 per share. That alone is strange enough for this company, which was supposed to be destined for a Blockbuster-like fate, but even stranger is the central role Reddit played in this event.

The wheels actually began turning on this matter last year. As Wired reported, GameStop's woes led some investors to "short-sell" the company. Short selling is a way for investors to make money if the stock price falls. Here's how it works: an investor borrows a large amount of a company's stock and then sells it. At that point, the investor has a large amount of cash and no shares, which he must eventually return because the shares were never actually his. When that time comes, they will have to buy back the number of shares they borrowed. Hopefully, you can buy them back at a lower price than you sold them for and make the difference. The risk, of course, is that the stock price will go up unexpectedly.

That's what happened here: GameStop's stock began to show signs of life last summer when Chewy co-founder Ryan Cohen bought a large stake in the company and began advocating a major shakeup. The stock price rose further when the company announced a major partnership and announced that it would incorporate Microsoft's technology into its back-end and front-end retail operations and serve as a distribution center for the Xbox All Access program.

"GameStop's extensive store base, focus on digital transformation in an omnichannel environment, and skilled gamer associates remain an important part of our gaming ecosystem, and we are pleased to strengthen our partnership We are pleased to strengthen our partnership," said Phil Spencer, head of Xbox, at the time.

The company's 2020 holiday shopping season results were also positive: total sales fell 3.1%, but same-store sales rose 4.8% and "e-commerce" increased 309%. This news was enough to send Gamestop's stock price even higher. Then, on January 19, as the stock hit the $40 mark, short-seller Citron Research posted the following warning.

"The WallStreetBets subreddits (mostly day traders) decided to mess with them and make some quick money," industry analyst and consultant Michael Futter told me. He also clarified that Subreddit's actions had nothing to do with propping up ailing companies out of a strange sense of nostalgia, or with video games in general. 'They're not interested in GameStop as a company. It literally could have been any company."

GameStop's stock price rose so quickly because a relatively large number of people suddenly wanted to buy a limited number of the company's shares, including traditional investors who wanted to ride the buzz, and short sellers who needed to cover loans that were called in, Futter said. The increased visibility brought about by the "reddit effect" further increased trading volume.

"Reddit definitely helped drive up the stock price," he said. Think of it like amplifying other kinds of trolling." They create a signal on top of the noise. That's because the Reddit story led to Gamestop, the most traded stock on the market on Friday, and without r/WallStreetBets, none of that would have happened."

The WallStreetBets subreddit is not a traditional source of investment advice. It is, in fact, pure Reddit, with insults, slurs, and "Took my dad's life savings and Yolo'd into BB [Blackberry], told him it's either retirement on a yacht or foodstamps for him" and threads like that abound. In fact, while making money is obviously a bonus, quite a few redditors seem to be putting the headaches of "serious" investors first. Citron's Andrew Left posted a video on YouTube in which he implies that some members of the subreddit are doing cute things like having pizza delivered to his house, signing him up for Tinder, and trying to "hack my Twitter account."

"So.

"So we're good. Hedge funds are competing with hedge funds. The thing is, they don't know how to compete with [WallStreetBets'] plan because it's based on positive sentiment, emojis, and buying stocks they were sure no one wanted anymore." But here we are.

GameStop's stock price has been bouncing back and forth between $65 and $80 after peaking at $144 earlier today. We have no idea how far the stock price will go from here, but even if it ends up at half of its current price, the stock is still much higher than it was at the start of this rally, and short sellers will be in a tough spot.

What is interesting is that all of this is simply market speculation, and GameStop itself has basically been on the sidelines all along. We have emailed the company for comment and will update if we hear back.

GameStop's stock rose again today, hitting a new high of $148. But it didn't end there: in after-hours trading, the share price exceeded $230, and the surge was largely due to Elon Musk, who shared his unique brand of market insight on Twitter, along with a link to the WallStreetBets subreddit:

Mask is not the only celebrity with deep pockets who has boarded the train called Gamestop. Chamath Palihapitiya, chairman of Virgin Galactic and founder of the venture capital firm Social Capital, is also now a shareholder in GAME.

While some wealthy individuals are clearly enjoying the chaos, others are sweating: according to Business Insider, losses from Gamestop's short sales in 2021, not even a month old, now stand at $5 billion. The Wall Street Journal reported yesterday that Melvin Capital Management needed to invest $2.75 billion to stabilize the company after taking huge losses on shorted stocks, including Gamestop.

A highly voted message on the WallStreetBets subreddit emphasized the more personal nature of Gamestop's management among private investors, and unless someone figures out a way to make this all illegal (which is not entirely out of the question), the same thing again will happen, he modestly suggested.

"Remember the scene in The Sopranos when Tony's wife emotionally manipulated him into calling her to buy 5,000 shares of Webonics stock? Institutional investors and hedge funds want us stuck in that world," redditor benaffleks wrote. 'They fear the future. They are afraid because so much information is now available for free. There are no fees for trading. There is a large community that openly discusses stocks and trading. We can think and make our own decisions.

While GameStop appears to be the priority at the moment, the subreddit is reportedly looking at AMC, Bed Bath and Beyond, and Blackberry as well.

Update: On January 27, the morning after Musk's tweet, GameStop began trading at a surprising $350 per share. It then fell quickly and sank to around $250, but has since rallied to the $350 level and is holding steady as of 12:00 PM. We'll see where it goes from here.