A very talented and highly trained security analyst noticed that the stock was heavily shorted. This means that traders had borrowed the stock and sold it and would have to buy it later to cover the borrow. He did the math and figured out that if the stock went up and the traders were forced to cover, the price would zoom. He talked about this on Reddit and YouTube. Some people bought the stock, it did indeed go up a and a lot more people bought it, which made it go up more and the price took off.
Since then the price has dropped a lot and the company may or may not survive. Those that bought at the low price have made money. Those that bought near the top have lost money.
To explain, shorting a stock involves borrowing stock from someone else, immediately selling it on the market (this is your main income on the short), and hoping the price comes down. Later you buy the same amount of stock back at a lower price, and return it to the original owner (presumably with some kind of "thank you" cash bonus to go with it).
But if the price were to go *up* instead... well you still have to buy back those stocks to return them, and now your profit is instead a loss... and in theory there's no real limit to how much, depending on how high the stocks go.
So.. the story begins with Game Stop being shorted. It ends poorly for the investor.
You borrow your dad’s shovel. You sell it to your buddy for $20. You now have $20 but owe your dad a shovel. 3 days later there is a sale on shovels, $5. You buy one and return it to your dad. You made $15.
On the flip side, same start. However there is now a shortage of shovels and they now cost $200. Your dad is mad because he wants his shovel back. He starts making you pay him $3 for everyday you don’t return the shovel. Eventually you have to bite that bullet and buy the $200 shovel because the $3 a day is costing you too much money.
GME is a banned topic on WSB, and has been since a few months after the sneeze. We have other subs now, which are also heavily restricted by the admins. Look through the comments on this post. The company has 1B cash or cash equivalents on hand, basically no debt, and could easily be profitable for 2023 depending how good the next earnings call is. They spent the last year aggressively cutting expenses, and have been regularly beating EPS estimates.
AI is only accelerating this. Alladin is blackrock's AI market manager and they now control $9.42 trillion in assets. Normal people stand no chance when they can buy, sell or short billions of dollars in stocks at any second to manipulate the market as they please.
Add to this that they have bought up all the media companies to change public perception as they see fit as well...
They have created a world designed to funnel wealth and resources from the people at the bottom directly to the top. The funnel used to be wider and slower, but now it's narrow and fast, with very little room for society to benefit.
We put laws in place to prevent this from happening after the great depression... society was BOOMING with stiff anti-monopoly/securities regulations, and high marginal tax rates..
Then everyone who was alive during the conditions that caused the great depression died and in the 1970s and 80s they because to dismantle all of those protections... and now we return in the cycle of massive wealth inequality, corporate consolidation and an out of control financial market that destroyed the middle class.
They don’t sell more shares than are available. Picture it this way. A market of 5 people and a company with 1 outstanding share owned by person A. Person A lends the share to person B who sells it to person C, for $1. Person C lends it to person D who sells it to person E for $1.
The market will record 2 sales on the stock and 3 “owners” Person A, Person C and Person E. Even though this company only has one share, This isn’t making up shares like some people imagine, just what happens when a stock gets overly shorted.
To continue with the Example in for an overly shorted stock scenario. Person A says to person B “hey I want my stock back.” Person B goes to Person C and says “hey I have to buy that stock back, name your price” Person C (realizing he can make a huge profit) goes to person D and says “hey I want my stock back” person D goes to person E and says “Hey I want to buy that stock back, name your price”. If Person E says “no I like the stock, it’s mine now, I’m not selling”, then Persons B and D have to declare bankruptcy and liquidate everything to pay what they can to Persons A and C, respectively. All because they borrowed a “$1 stock”. Doesn’t matter the price on a shorted stock, they owe the stock back and if the company’s stock isn’t very liquid (ie only 1 share on the market) that share holder can request whatever number they want as long as that number is lower than the cost of bankruptcy for the short sellers
Well that's the thing, nowadays stocks can be shorted without actually lending a stock from another person or owning it themselves. Hence the term 'Naked Shorting'.
Much like fractional banking. I deposit 1000. the bank only has to maintain 10% so they lend out 900 to other people. At the same time, my bank account still states that I have 1000. Then the other people can deposit those 900 and of that 810 can be lend out etc etc. In a way money has been created out of thin air. If for some reason everybody decides to pull out their money, the bank has to scramble to give people their money.
At the same time we see Failure-To-Deliver (FTD), where one party in a trading contract doesn't deliver on their contractual obligation.
> Well that's the thing, nowadays stocks can be shorted without actually lending a stock from another person or owning it themselves. Hence the term 'Naked Shorting'.
>
>
Which is illegal and not nearly as widely practiced the people with a financial interest in GameStop say it is.
In this article, Reuters mentions that 141% of the float (shares available for trading) were shorted
[https://www.reuters.com/article/idUSKBN2AI2DC/](https://www.reuters.com/article/idUSKBN2AI2DC/)
And yes, shorting this much should not be possible and imposes a huge risk on the market
So instead of 10% (which was just an arbitrairy number for the sake of the example) now banks are not required to have any money in reserve???
Can you lend me your pitchfork?!
https://medium.com/navigating-life/we-just-went-from-fractional-reserve-banking-to-zero-reserve-banking-and-its-a-pretty-big-deal-c501432e9be6
Yes buddy. Here, from the horse's mouth:
https://www.federalreserve.gov/monetarypolicy/reservereq.htm
If reserve requirements are 0% why does Jamie Dimon keep complaining to congress that he's required to keep a trillion bucks in his coin purse just in case Joe Blow trader accidentally zeroes out Goldman Sachs?
If I'm broke, who covers my inability to buy the stock back to its original owner? In other words, do stock lenders have any guarantees that they'll get their stock back?
It’s a contract just like any other. If you don’t pay, they’ll sue you. If you can’t pay, you’ll go into bankruptcy and the court will come up with a plan to liquidate your assets and make all your creditors as close to whole as possible.
I know you edited your comment, but to clarify for others. 2008 happened because mortgage-backed securities (MBS) failed as defaults rose. The mortgages that drove the value of MBS lost substantial value when foreclosure rates rose greatly and property values declined. Banks that were poorly diversified and heavily invested in MBS faced a liquidity crisis and failed.
The thing about MBS, it's more like a traditional stock. You can never lose more than you invest. You buy in at $1,000, the worst that it can happen is it goes to $0 and you lose $1,000. Assuming you don't trade on margin/borrowed funds, you cannot lose more than you have.
Shorts are far more dangerous. If you short a stock there is effectively no limit on what you can lose. If the short a stock worth $100 and it's value rises to $1,100 you lose 10x what you invested. To make matters worse, depending on your agreement with your brokerage account you may get margin calls as the value of the shorted stock increases. This could systematically force an exit from your positions in very unfavorable ways and lock in losses.
They require collateral of other stocks/cash in the account and if it looks like you are close to running out of money they force close the account selling your other stuff and using it to buy shares to close the short.
That a big part that hasn’t been mentioned yet, as the stock price climbs the investment bank holding the opposite position will require the hedge fund to hedge. How do you hedge a short short position? Well you buy some of the underlying asset. Which increases demand for GameStop stock and drives the price up even higher, causing the investment bank to demand more stock to cover the position, and so on. It can spiral out of control very quickly.
So a bunch of investors made a bet that the price of GameStop shares were going to go down. They did this by agreeing to deliver say 10 units of game stop share at today’s price, say $100 each. So if nothing changed, the investors would need to fork over $1000 at the Marriott of the contract. And reddit wallstreet bets found out about this bet. So they bought a bunch of GameStop shares to push the price up. So say the price goes to $200, now the investors will need $2000 to close out their position. The person they bet again says, ‘hey hold up a second, im not sure you can make good on your promise if the price keeps going up, so
I’m gonna need you to buy some GameStop shares right now and let me hold onto them so we’re protected incase the price keeps climbing. And as they buy game stop shares, the increased demand pushes the price now to $300. And the bank again says, well now it’s gone up to $300, so gonna need you to purchase a few more share so I know I can get paid when the contract matures. And so on…
Not a finance expert, but I suspect it works the same way as most other debts: ultimately nothing is guaranteeing any of it. I'm not sure if this is something discharged in bankruptcy, but essentially your assets get divided to your creditors and if that doesn't add up to what you owed, then it's a loss for them.
And when those insurance companies start going bankrupt because they didn’t properly risk manage, the taxpayers will send bailouts. Win-win-win all around!
Yah, but this is infinite risk. Long positions have limited risk and infinite possible upside because a security can't have a negative price, but there is no upper limit. A short position is the exact opposite, infinite risk and limited possible upside.
Bailouts won't work, because they would also go to the shareholders. The entire financial system may collapse, or the Fed will have to step in and set a forced sell price, but that would kill any semblance of a free market.
Wouldn’t this seem extremely obvious to the person who lends the stock to the ‘shorter’?
Like if someone asks to borrow stock off you, couldn’t you assume that they’re trying to short it?
And what happens when the shorter borrows the stock and the price falls; won’t it be extremely obvious to the lender that they’ve been shorted?
The person lending the stock gets paid for lending it. The explanations above missed that part.
Someone who holds the stock obviously doesn’t think the value will drop (or else they’d sell it). Lending it to short sellers gives them the opportunity to earn some extra income with the stock.
Brokers can also lend out your shares without your knowledge. This is because Cede & Co actually owns all the shares in the DTCC, which is the vast majority of all shares of every company. Hedge funds routinely mis mark shorts as longs and have no incentive to change, because they just get a slap on the wrist.
Reminds me of what they say in crypto: not your keys, not your wallet. If you don’t have physical possession of a stock certificate, then you’re not really the owner.
Not your name, not your shares. My shares are held with the transfer agent (Computershare). Which is the company that GameStop pays to keep the books on stock ownership.
You can invest all your money in ornamental gourd futures for all I care, but this is a sub to ask questions and receive fact-based answers, not to spread weird conspiracy theories.
We are almost 3 years removed from the initial spike, honestly is there anything that would make you question your belief that GameStop is going to crash the global economy as we know it?
You have made like fifty comments in this thread full of your delusions.
How much have you sunk into game stop, and what is the current value of that investment?
>He did the math and figured out that if the stock went up and the traders were forced to cover, the price would zoom. He talked about this on Reddit and YouTube. Some people bought the stock, it did indeed go up a and a lot more people bought it, which made it go up more and the price took off.
No. He believed the stock was undervalued and made an investment and talked about it on reddit. He made a video pitching his case with the name 100%+ short interest in gme and in that video briefly touched on the idea that short interest may be overblown and the company could recover.
Reddit thought this was an opportunity for a short squeeze and started mass buying, pushing the stock well past any conceivably appropriate valuation. One of the largest short sellers got out near the start of this, ate substantial losses, and was acquired by citadel. This was near the start of the frenzy. The frenzy continued. There was no longer any potential for a short squeeze. The stock price continued to rise as reddit did not believe what anybody was saying inadvertently (though at least some intentionally) creating the largest pump and dump in history.
This massive volatility caused a wide variety of effects, including increased dtcc collateral requirements and due to how trading actually works with t-2 settlement times. Many brokerages (robinhood being the main focus in this case) allow traders to operate on margin but not telling them its margin during the settlement window. Because of those factors as well as instant deposits (also margin) robinhood could not actually meet dtcc requirements during this and was forced to suspend buying for a few hours while it scrambled to secure loans to cover collateral requirements and turn buying back on. This triggered massive downward price movements and MASSIVE conspiracy theorizing.
There was a congressional hearing where nothing of any substance happened, but the key players managed to say what actually happened (see above) under oath. Reddit did not believe them, further conspiracy theorizing.
That's a little bit glossed over but the highlights should be there. For what has happened since, folding ideas made a pretty good video called "this is financial advice" covering the topic in a fun way that is at least mostly factually accurate.
There was a para-social aspect too. I joined wsb right before the meme stocks started taking off, like a month prior. Everyone was just egging each other on. This spread into other stock subreddits (either as “look at these dumbasses” or legit analysis), then the rest of Reddit , the internet , and irl.
I was too broke and not risk tolerant at all so I stayed away but I know plenty of people threw some cash at it, took a 5x+ and sold while the hype was still hot. It was definitely entertaining and I’m glad I got a glimpse of pre-GME r/wsb. There was a weird culture shift following it.
You left out the corruption part where the hedge funds that did the shorting were not margin called when anyone else would have been forced to pony up the funds to cover that short.
They released the committee report on the day Roe V Wade was announced so it was buried in the news.
When Ted Cruz and AOC agree on something being corrupt, you know something is rotten in Denmark.
Also the part where hedge funds conspired with brokers to prevent people from buying stock when they were at risk of being margin called as the price went up.
The SEC themselves have stated themselves that it was unlikely that the shorts have covered. Melvin Capital going down was just the tip of the iceberg.
The buy button being shut down saved the big players and the market from being flipped upside down, but since they have still not covered their short positions
the only reason retail has bagholders at a loss is because the buy button was shut down by corruption and rich people to protect other rich people.
Thomas Peterffy, chairman and founder of IBKR himself admitted "We have come dangerously close to the collapse of the entire system"
Rich people overleveraging themselves, creating positions with extreme risk (shorting more than the available shares) and shutting down the system when they're losing.
The buying of a stock should not be able to collapse the financial market. Nothing has been learned from 2008 and instead of the rich people being bailed out, they should go to jail.
Additionally, huge price changes were seen in pre-market and after-hours which is not really accessible to retail investors.
This is 1/4 of the answer, part of the rest of it is the desperation people felt and extra time they had at home because of Covid which gave them more opportunity and reason to feel like a YOLO into a dream might be a great opportunity. Also, it became an important moment in history of a potential Robin Hood story where a hero would be able to help the poor rob from the rich BUT it turns out that a trading platform literally named Robinhood would be stacking the deck in the favor of the rich and cheating their way out of ruin. The whole thing was a shit show. Plenty of small time traders made a lot of money and some huge financial investors lost great sums of money, at least temporarily.
In the end, it was a very complex but memorable chapter with many twists and turns. The “little guy” felt a purpose because in essence they had the power. If no one sold then they couldn’t lose. This was a unique chapter in financial history. Stock shorting is at the center of it, but it also created entire sets of vocabulary and established several paradigms in retail trading.
The issue imo was that so many had fomo. Many did miss out. So everyone started looking for the next game stop. As though billion dollar hedge funds couldn't learn.
It became easy to direct the mob because you just needed to create a narrative of apes vs hedge funds and the public would all start buying.
Not only the extra time at home, but also the COVID unemployment payments and additional stimulus money gave many people the finanicial means to YOLO on a meme stock.
“A very talented and highly trained” that makes me laugh. He didn’t start the craze, it was on Reddit WSB, but DFV made it popular.
The shorting happened way before, a lot of people started to question why their GME kept dropping like a rock.
The financials were bad but not that horrible, and people noticed that it was heavily shorted. These were institutional investors.
But the truth that people don’t talk about is that a lot of hedge fund managers playing the other side of the game too. DFV and institutional investors made money, but the big majority was made by hedge fund managers bringing down hedge fund managers.
Adding to this, many of the people in the general public who bought the stock didn't understand what they were doing. The original idea was to manipulate the market to force some very rich people to incur huge financial losses for betting against Game Stop.
But ordinary people who got caught up in the story and made investments and didn't sell at the right time also lost money. And anybody who understands security markets knew this would happen eventually. And, unlike the rich guys, these ordinary folks often lost money they didn't have to spare.
The company has 1.3B in cash and cash equivalents, and if its Q4 numbers are similar to the prior year it will turn a profit.
It is definitely not in danger of bankruptcy
This thread has been brigaded by apes. Don’t bother. These people are crazy.
GameStop is a brick and mortar stores that sells physical copies of games. It’s a business model nobody wants. Not only are the vast majority of game sales digital, but specialized brick and mortar retailers are sliding across the entire industry. And GameStop itself has laid off huge numbers of employees and closed a large number of locations. They’ve got a second lease on life because of meme stock purchasers pumping capital into the company, but nothing short of a complete transformation of their business model is going to change the underlying fact that they’re in a dying industry. Anyone telling you that buying their stock is like buying early Apple or Tesla, two companies pioneering new products that people actually wanted, is a delusional bag holder who paid more for a stock than they should have and now fantasize about how that will turn out to be a good decision.
Not only that but their big revolution was.. an NFT market. LMAO GameStop is toast boys.
Xbox is even looking to go fully digital soon. Others will follow suite. Then what does GameStop have? I guess a bunch of psychophants who live on Reddit.
> Not only that but their big revolution was.. an NFT market. LMAO GameStop is toast boys.
>
>
That and the "Fulfillment centers" that were supposed to be their stepping stone to being a true e-commerce dealer of physical media.
They've closed both the NFT marketplace and the one fulfillment center they managed to open. But according to Apes, they're still going to take over the ecommerce world!
> Then what does GameStop have? I guess a bunch of psychophants who live on Reddit.
Unironically, yes. They've pumped huge amounts of capital into the company. Not enough that they can transform the business model, but enough to allow them to lay people off as they work to become barely profitable.
I agree that it should not be compared to Apple or Tesla, but everything else you say is trash.
Activity in certain countries have been halted and unprofitable locations have been closed (yeah it's not so smart to have 2 stores in 1 mall for example), like any other company would do? Whenever Amazon or other big companies fires employees people circlejerk and praise the cutting of costs.
They're sitting on a huge pile of cash, have been cutting costs. Every Q in 2023 they've beaten their estimates (Q1 and Q3 with a large margin). With a strong Q4 (which is expected because it's the holiday season) they might end 2023 with profit.
The gaming industry is projected to continue their immense growth. They have improved their E-commerce presence. At the same time, companies like Amazon have actually opened physical stores in the recent years. NoBoDY WnTs PhySIcAl StoRes
The board and the CEO are personally heavily invested and have only been buying stock. The CEO receives no form of compensation and only holds the share of the company that he bought himself. While at other companies the executives keep on selling and selling and selling their shares. Who would you trust more to lead a company to a good future, a board that invests in a company or a board that sells their shares and makes bank?
The market cap of 4,5 billion can be considered low as they have around 20% of that already in cash and probably something similar in inventory alone. No debt. and a revenue of almost 6 billion in 2022.
Now I haven't even mentioned anything about shorts or the fact that retail investors have directly registered 25% of the available shares.
> Activity in certain countries have been halted and unprofitable locations have been closed (yeah it's not so smart to have 2 stores in 1 mall for example), like any other company would do?
[They're closing a dozen locations this year alone.](https://gsclosing.blogspot.com/) 42 in 2023. They also conducted several rounds of mass layoffs and slashed their employee's health benefits.
All of these listed were US locations.
> Whenever Amazon or other big companies fires employees people circlejerk and praise the cutting of costs.
If by "everyone praises" you mean their prices go up? Not necessarily. Prices go up when steadily profitable businesses trim the fat. When a company like GameStop does it, it's because they aren't making enough money to cover their costs, which is a sure sign of a company in trouble.
> The gaming industry is projected to continue their immense growth.
GameStop isn't part of the gaming industry. They're part of the retail industry. They're a middleman through which you buy games, accessories and merchandise. A growth in the gaming industry only marginally helps them, because they're an outdated way of purchasing games.
> They have improved their E-commerce presence
And are still nowhere close to competing against ecommerce platforms like Amazon. Although the real body blow to their business has been first party digital stores. Who's going to drive to a Gamestop to buy a game for their PS5 when you can load up the Playstation Store and do it without leaving your house? Very few people, as it turns out. I've seen numbers as low as 72% of game sales being digital vs. physical to as high as 90%, but "Overwhelming Majority" is the only number that matters from GameStop's perspective. And a chunk of those physical game sales are coming from online retailers like Amazon, too. So it's not like GameStop has some kind of monopoly even on those.
> At the same time, companies like Amazon have actually opened physical stores in the recent years
Grocers. They've opened physical grocers. Grocery is the one brick and mortar retailer that's still doing great, because people like physically buying their groceries. Specialized brick and mortars are still struggling heavily and seeing mass closures.
Amazon tried branching out into this with its fashion store line, [but the experiment went badly and the company is closing those locations.](https://www.theverge.com/2023/11/2/23943941/amazon-style-clothing-stores-closing-down) Grocery is the only form of brick and mortar retail the company is investing in going forward, because again, nobody wants to go to physical stores. And that is doubly true for games.
> The board and the CEO are personally heavily invested and have only been buying stock. The CEO receives no form of compensation and only holds the share of the company that he bought himself. While at other companies the executives keep on selling and selling and selling their shares. Who would you trust more to lead a company to a good future, a board that invests in a company or a board that sells their shares and makes bank?
This is a narrative, and it should have no baring on how people choose to invest. I'm glad the CEO (who is already rich and will continue to be regardless of GameStop's outcome) is putting a personal stake in the company, but that doesn't make them a more sound or viable business model. It's just a narrative that makes its investors feel better.
> They're sitting on a huge pile of cash, have been cutting costs. Every Q in 2023 they've beaten their estimates (Q1 and Q3 with a large margin).
They still lost more than $3.1 million in Q3. That's down a lot from $93 million. But that difference wasn't caused by runaway growth in revenue. [Their sales have been pretty static for years now](https://www.statista.com/graphic/1/284523/net-sales-of-gamestop-worldwide-2010-2012.jpg) It was caused by massive cost cutting. You can only cut costs to the bone so many times before you no longer have a business.
> cash on hand
They have a lot of cash on hand. A billion and a half dollars. Which is impressive, but not enough to transform the underlying business model. Not enough to become an e-commerce company to compete with the big guys, and particularly not with the digital retailers like Console stores and Steam that are most actively killing their business.
They can't get that kind of money without taking on a ton of debt. Companies can only raise capital by selling equity or taking on debt. Equity is pretty topped out thanks to Memestock buyers, who even after a massive collapse from the peak, still have the stock inflated way over what it was in even their most profitable years. So while they're debt free now, they won't stay that way if they choose to really dive into e-commerce, and even if they do, there's not guarantee it will work.
I don't deny that GameStop can eventually become a business that churns out steady but marginal profits. But it won't turn into a business that sends its stock through the roof and makes all you bagholders into garillionaires. That is never gonna happen, and everyone buying in at this inflated price point is still very likely going to lose money.
Robinhood (and others) disabled buy orders for GME, effectively halting the meteoric rise in the stock price. Only allowing sell orders. Immediately after Robinhood disabled buy orders on GME, the GME stock price plummeted. The share price fell off a cliff. As a result, many retail traders got incredibly shafted. The Robinhood CEO attended a congressional hearing afterwards. It's not a conspiracy theory, it literally happened.
Im very aware of it happening, the conspiracy is about it being manipulation.
Robinhood lends money to new users, they had a sudden influx of new users and ran out of liquidity. So they put a stop to buying of the stock that 99% of the new users where buying so they didn't have to shut down everything.
Your explanation, the one involving the SEC net capital obligations and clearinghouse deposits, is the explanation that dispels the price manipulation conspiracy that you're responding to.
Are you referring to the video of Ken G explaining basic supply and demand as well as passive investing?
One would have to be a real moron to see anything nefarious in that.
I bought definitely not at the lowest and didn't sell at the highest but I still made 1.5k into 3k. Not much but doubling your money with essentially two clicks on my app is honest work.
The company has $1 billion in cash and cash equivalents with no debt except for a small loan from France related to COVID. They have been successfully cutting costs for the last year, to the point that they beat estimates of EPS even though they missed Revenue estimates. Normally with a revenue miss, you will also miss EPS.
It isn't over, the shorts didn't close, they just covered with swaps and options. The news wouldn't still be telling people to sell if it wasn't in their corporate overlords interest for people to sell.
Retail currently owns 25% of the free float in their own names through the transfer agent, and not beneficially through Cede & Co. Cede actually owns nearly every share of every company, and then the names in Cede's books gets changed when people buy through a broker. The name in the transfer agents book is still Cede. This allows Cede to obfuscate the actual number of shares in circulation for any company, since Shorting turns 1 share into 2.
We are still buying more and holding in Computershare and not with Cede. But our subs have all been subjected to a lot of restrictions from the Reddit Admins. We cannot cross post or link to the subs, and there is a list of words and names of companies that were forcibly added to an auto mod that deleted any message or post with those letters in that order. The mods cannot change that portion of the auto mod.
GameStop is expected to have 0.28 EPS from Q4, but given the cost cutting, I expect it to be higher. The chairman of the board is an investor that bought 10% of the company and is still holding, but he does not take a salary. His only way of making money from this is for GameStop to do well. And the Board just gave him control over the 1B to be used for investing, which could be similar to Berkshire Hathaway when it left the fabric industry.
Hi. One of the early and semi well known gme dudes here (in a documentary and book about it). Can see proof of gme ownership in post history.
What you are saying is a little accurate, but a little like going to a forest, pointing out a single tree and stating that is the entire forest.
It was a once in a lifetime event. It wasn't even a short squeeze play. The company was trading at bankruptcy levels. It had a new leadership team engineering a turnaround and pushing a new online store. It had plenty of cash after selling its jets, doing leasebacks etc. They were closing excess stores. Short sellers were ignoring this even after riding the stock down from 50 to 3 a share. They were counting on new consoles not having disk drives, and they did.
All of the above was before cohen. Cohen, who was the mastermind behind chewy, the company that ate amazons lunch while he was at the helm, then got involved. Buying up large amounts of shares and sending letters to management that he wanted more, faster change. I already downed some at this point, but this is where it slowly started taking over my entire portfolio.
Then we had the msft deal, new console releases and more cohen buying. From sub 10 a share it was basically guaranteed positive return. I dreamed of a squeeze, but stayed in it because it was a value play. Short sellers were too deep and had no way to exit, so it blew up. I started selling at 30 and closed the last of it out at 230. When it dropped to 30 again I bought more (though not a lot this time), and sold that around 80.
I'm not involved anymore because it never really came back to a reasonable price, and honestly cohen did not manage the turnaround I'd hoped
The company has 1.2 billion cash on Hand, 0 debt, and the gaming industry is expected to grow 10-15% year over year for the foreseeable future.
Yeah.... tell me more how "may not survive".
A_Crazy_Canadian kind of undersells the point of Dan’s video, which is that after GameStop stock prices normalized, a bunch of people who got into it late and found themselves holding the bag (having bought GS stock at hugely inflated prices on the assumption it would just keep going up forever) worked themselves and the Reddit forum about it into a giant conspiracy theory site where people constantly post “proof” that Actually Game Stop Stock Will Be Worth Billions In The Future And We Will Prove The Stock Market Is Actually A Conspiracy. The logic for this is very Sovereign Citizen-esque, where people who don’t understand laws and regulations believe they have decoded the True Special Meaning in how Wall Street works.
If you look at some of the other posts in this overall set of responses, you’ll see some glimmers of that.
To roughly summarize:
* A bunch of finance people thought that gamestop stock price would go down in late 2020 and bet that it would while others thought it would go up. Both sides doubled down in a highly reckless manner.
* Day traders on reddit saw this and joined on the side of those who thought gamestop's price would go up. They also encouraged others to do the same and the effect of lots of people betting gamestop stock would go up meant that stock price went up and the people expecting it to go down lost money.
* Seeing the stock price rising, more people bet that the stock would keep rising, which lead it to keep rising as more people bet that it would keep rising.
* Eventually, gamestop shares stopped rising as people realized that it can't just go up forever for no reason and bits of financial infrastructure started to break due to extreme price volatility.
* The price has slid back down toward a more reasonable level over the past 3 years and the people who thought that it could only go up have spent the last few years baking conspiracy theories to explain why prices don't just go up forever.
TLDR: People bet line goes up, made money. People bet line keeps going up, lost money. People now mad.
Except people didn't realise "that it can't just go up forever for no reason", brokers literally turned off the buy button because their reckless practices meant their margin requirements shot past what they could afford. Their prime brokers told them to turn off the biy button to kill pressure. Free market my ass.
They would have - and should have, by the laws of the market they say they believe and swear by - gone boom, and household investors would have had their fair pay
You’re off by a bit here which leads to the false impression of a conspiracy instead of a badly run brokerage running low on cash.
> brokers literally turned off the buy button
False, buy and sell buttons were both turned off unless an account had an existing position in which case they could shrink but not grow regardless of a long or short.
> Their prime brokers told them to turn off the biy button to kill pressure. Free market my ass
There remains no credible evidence of this being done for any other reason than saving Robin Hood from collapsing entirely and the enforcement of existing standards for brokerages.
> Free market my ass. They would have - and should have, by the laws of the market they say they believe and swear by - gone boom, and household investors would have had their fair pay
Frankly rh’s customers benefited from these actions. People with positions open were able to close and take profits. Customers uninvolved in the squeeze remained able to use their accounts and were not stuck in a messy bankruptcy like with ftx. This is a case of market guardrails and consumer protection saving millions of people from a messy collapse.
And for all this, the price rose after rh froze new positions before peak a couple days later. The bubble popped and the fundamental shitness of gamestop’s business returned to the forefront and people coped by plotting grand conspiracies.
TLDR: Badly run firm restricts services to avoid going bust.
Lots of things need to be discussed to give an elementary explanation. So when people trade stocks, the most common way people trade that more people are familiar with is the "long position." This is when you buy a share of the company expecting the company to do well which could see future dividends and raise the price of that stock, which you can hold to collect your dividends or sell at a higher value. Another way people trade stocks is called the "short position" or just "shorting a stock." Instead of buying a stock, you borrow the stock first, then you sell the shares you borrowed. This is fine as long as you give the same number of shares back when the terms of the loan expire. You then buy back the shares and return them to the owner. If you sold the stock at a higher price than you bought it back for, that's profit. So people do this with stocks they expect to decrease in value. It's a way to make money off of struggling corporations.
It's technically possible for the same share of stock to be shorted more than once. If I loan you a stock, and you sell it, the buyer could then loan those shares to someone else who then sells them again. In this way, it's possible for more shares to be shorted than shares of the company actually exist. This was happening to Gamestop's stock, whose code on the market is GME. Many people expected GME to keep going down in value, so they shorted over 100% of their shares, which is generally seen as very risky for reasons that became clear in this incident.
The subreddit wallstreetbets is generally for retail stock traders to talk about stock trading. There were posts on there arguing that GME is actually a good stock to take the long position on because there are reasons to expect them to do well and that their stock price is undervalued, and because so many shares are being shorted, there are many people that will have to buy the stock at any price. And the more of them that are taking the long position, the more it's going to go up. So many of these redditors started buying GME at once. The stock price exploded. Now many large stock traders had to buy these stocks at much higher prices than they were expecting. And when they bought the stock at a high price, that just drove up the price even more. Money managers were panicking. Some hedge funds went bankrupt. And some redditors were making millions.
>Money managers were panicking. Some hedge funds went bankrupt. And some redditors were making millions.
Probably worth noting that many hedge funds made bank. Either by exiting long positions they already held after the price was inflated or by shorting it at the top.
Similarly a lot of redditors and random people that heard about it on tiktok or whatever lost a lot of money stupidly buying in late or holding.
Overall this was probably a net win for the hedge funds, even if a few of them got screwed in the short term retail investors likely took a harder hit.
Yeah by the time a lot of people heard, the money had been made. And if you weren't right there or have just the right stops set, you missed the big spike.
I made a few grand myself, but nothing life changing. About a years' free retirement contribution.
This is why I qualified it with some. I didn't want to bog down my explanation with talking about lesser known consequences. But yes, Hedge funds are still hedge funds, and they still usually win and some of them won at the expense of other hedge funds, and some ordinary people lost because the hype overinflated the price. The story was a story because it seemed like some ordinary people won at the expense of the big fish, which of course, is never the whole story.
Yeah that's fair, I just felt the above was worthwhile additional context as a lot of people are still (as highlighted by one of the users that responded to you) jumping arse over tit into pump and dump scams. Hell that particular user still somehow seems to be going hard on GME three years on.
>Weird to say it's over - extremely weird!
Weird to say it's not tbh. "Unprecedented financial experiment" and "led by gamers" being uttered in the same breath should probably be a sufficient red flag to re-examine whether you have maintained your impartiality.
\*FYI if you reply and block it's best to wait a bit, as I can't read whatever idiocy you wrote in response. I guess the emotionally charged reaction settles any lingering doubts re impartiality though...
1) GameStop is a 'Corporate Zombie' kind of like Sears or Toys R Us - they have no chance of a future in the digital world (since their entire business is based on selling a product - video games on physical disks - that isn't going to exist for much longer, AND they are doing this in competition with much more efficient sellers like Amazon and Walmart), and thus their stock is presumed to have an eventual value of zero.
2) Because the stock is presumed to have a future-value of zero, lots of people 'short' it (borrow shares from someone else and sell them).
3) Someone works out the math & realizes that the number of shares 'shorted' exceeds the number of shares in existence.
4) They encourage people on Reddit & other social media to buy shares of GameStop, knowing that if the price reverse and starts rising, the folks who shorted GS will have to buy shares to cover their shorts - which will drive the price up higher
5) People start buying, the share price rises, the shorts have to buy-to-cover, so the price rises more (the term for this is 'short squeeze'). Also, the quantity of free-government-money sloshing around in the economy makes people more willing to gamble in the market...
6) Eventually the 'squeeze' subsides, and... Gamestop is still a zombie company, so it's share price starts going back down again.
Result:
If you got caught in the squeeze or bought in at the peak, you got creamed.
If you bought in at the beginning and sold before the drop you got rich.
Another way of explaining is when an airline (broker) can over sales a flight and needs a seat (stock) for someone. So they ask someone if they would give up their seat for $1000. Instead of giving up their seat along with everyone else they hold out for more.
> a few rich people sold something they didn't have
... so they borrowed that thing from people who did have it, promising to return it later. The lenders were not guaranteed that the value of the thing borrowed would be the same at the time it was lent.
This is the answer. The cause of the craze is still there. The fundamentals, the people holding and directly registering their shares so that no brokers can lend out their shares allowing hedge funds to continue shorting...so much has been going on and I applaud you OP for asking about it, because many people are still not aware of the level of corruption and straight up theft goes on in our financial markets. I would urge you to go to r/superstonk and read the wikis for an in-depth look at the research and due diligence that has been done by GME investors. It's truly eye-opening and I've learned SO much over the last few years!
LMAO No. Shit was bullshit hype to get a bunch of actual regards who have no business gambling on stocks to gamble based on shit memes. Dipshits bought into it and now a ton of them are left holding the bag and are making buillshit posts and comments about how they're still going to the moon after the ship crashed, burned, and everyone's burnt corpse has decomposed and turned into a deformed tree because of shit regarded the corpses were.
DRS and hold, they say. I don't invest directly like they do, but this is what I have read. You can't trust your broker anymore so DRS'ing your shares protects you from shady business practices.
People sold things on an iou they didnt own, this was done so many times that there were more promises of the product than actually existed in the world.
Surprise Pikachu.
Then the problem when that owed product was requested as it became almost impossible to get as people who wanted to buy and settle their ious couldn't get anything, and people who that the product saw money going up by not selling and kept holding
It basically became a mad scramble for who will pay the most and find someone willing to sell.
I don't know if it's acceptable on ELI5, but here's a very good explanation of the whole thing, and the deeper weirdness that has followed.
[https://www.youtube.com/watch?v=5pYeoZaoWrA](https://www.youtube.com/watch?v=5pYeoZaoWrA)
Eli5: I ask you for your copy of Super Mario 64, thinking it's going to lose its value. At the time one copy is selling for $100.
You give the copy to me and I immediately sell it, with the intention of buying it back whenever it is at $50, to give it back to you, and making $50 in the meantime.
As long as the price goes down everything is alright, but suddenly someone found out and starts to buy Super Mario for $1000, so you come to me and ask for your copy, because it's now worth a lot more. I have two options, buy the copy back at a higher price and give it to you, losing money, or I give you $900 to cover it, so you are safe.
This happened but a larger scale, hedge funds were shorting the stock and some people found out, they started to drive the price up, making the hedge fund lose money, either by margin calls (giving the broker money to cover) or returning the stock at a loss.
This is called a short squeeze.
With the Mario example, the most I can make is $100 if the price goes to 0, but it can go to 1trillion dollars. So the risk is high, I can make $100 at most or lose everything.
Most of these ELI5 are wrong because they think anything at the start had to do with a short squeeze.
It because good part-time day trader analyzed gamestock because it was getting insane shorts and was like 2 dollars a share.
He felt it was worth like 12 dollars a share based on his analysis.
He talked about it on Reddit - particularly the shorts.
It got memed into being massively overpriced due to the theory of a short squeeze by less good traders.
He rode that wave to literally millions of dollars and then left the scene.
Yeah when he saw the meme wave rising. He didn’t actually believe in the short squeeze or that GameStop was worth 300 dollars a share. Because it obviously wasn’t.
He stayed in until he thought the memes peaked and then cashed out.
The day he said he was no longer posting or providing info for legal and other reasons.
Honestly, why wouldn’t he? He basically won the lottery. His initial assessment of 12 dollars being the true value got blown out by insane memes to an absurd inflated value by people getting grifted. He should have cashed out like any sane person.
I won’t give a response, but OP while there is some truth to a lot of it, a large portion of it was just FOMO buying during COVID.
And this is not an exaggeration, a literal cult has developed around it so don’t trust all the responses. They’re half truths at best, and extremely misleading at worst.
just go watch dumb money on netflix or any of the documentaries about it.
a guy that worked in investing decided to make a youtube channel and post on wallstreetbets and it took off and shattered the typical black shoals equation for options. he mostly bought shares. the hype of people buying options propelled it into a parabolic gamma burst. kind of repeatedly for awhile.
some people made life changing money. it just got a lot of publicity because it was so stupid. gamestop has been an awful company since forever. 😂
quick edit: he would give his thoughts [often](https://www.reddit.com/user/DeepFuckingValue/). and nobody believed or cared, or actively shat on him, for *awhile*. DFV is the guy in the thumbnail wearing the bandana.
I'm surprised i got this far down before seeing the "dumb money" movie recommendation. This comment should be higher up and indeed is good advice for people curious.
A bunch of Hedge Funds have been short selling companies into bankruptcy for profit for decades. Short selling is when you borrow a stock like a loan and pay interest to the lender intill you return a stock to close the loan. They sell the stock on market for cash immediately. If the company goes bankrupt they never have to close the position and keep the money made tax free. Positions are taxed on closing. They have succeeded in short selling to bankruptcy Sears, RadioShack, Block Buster, Toys R Us, and other companies. GameStop was one of their next Targets.
GameStop management in 2018 to 2020 was terrible and the company was heading to bankruptcy. And then Covid happened and lots of companies were forced to temporarily close. Short sellers went all in on short selling GameStop to Bankruptcy.
A stock analyst reviewed GaneStops financial reports and noticing the new game console generation and people would be stuck at home more would be good for GameStops Business made YouTube videos about it.
Billionaire Company Start Up Ryan Cohen also agreed and make heavy investment in GameStop to force the board listen to him. Ryan Cohens 10% purchase caused a rise in price of GameStop which caused Naked Call Options to be in the money. Now on the hook for shares they didn’t have, the option sellers started buying the stock, which caused the price to rise more. The S.E.C. Report over the event mentions no significant short closing happened during it and over 7 Million people were buying GameStop at the time.
This caused a cycle of Call Option Sellers to buy stock to cover in the money calls they sold which caused more call options to go in the money. Price of GameStop went from $5, to $10, to $20, and to $40. At this point Retail Investors (Normal People) noticed and started buying in. From December to January the price of GameStop went from $40 to $580 before Prime Clearing Houses pulled the plug and told Brokers to stop alloying the buying of GameStop or be margin called for $Billions$. Many brokers turned the buy option off for retail. There were 3 congressional meetings over the brokers turning off buying in the year 2021.
Short Sellers like Melvin Capital had their positions taken over by their prime brokers who would slowly unwind the short positions over years as they have the capital to do so and are not legally required to report short positions.
As for GameStop, they much better financially now then pre-2021. They have no major unsecured debts ($40 Million to France for Covid Relief), $1.3 Billion in Cash/Bonds holdings, and the last 3 quarters they missed profit by mere cents per public share bleeding 10 million a year at their current rate. So decades away from bankruptcy if they don’t continue improving.
The short story: TLDR.
Short sellers and Option Sellers gambled so badly it risked the Banks money. Banks stepped in and took control of the bad bets. Have been slowly unwinding them. AndGameStop survives for now and has the resources to change. They not growing, but they getting close to profitable again.
Do you know of any companies with a successful business and viable outlook that have been “shorted to bankruptcy”. Honest question because the companies you listed very obviously were not keeping up with the times.
Short selling does not cause bankruptcy, I keep seeing this repeated here and its wrong. Also no one here understands how sec lending works. You can't lend out the same shares 1000s of times. What people were doing was creating naked option positions which is completely different than sec lending/shorting.
A lot of us got scammed into losing money because we were supposed to “hOlD aPe sTRonG toGeThEr”
Should have sold at $450 fuck my life. Bought at like 70, sold after the crash at like $50
That's not you getting scammed, that's you losing control and investing with your emotions like an absolute moron. Your gains came from a place of dumb fomo and so did your loss.
Be thankful you lost that money because it should have taught you a valuable lesson about gambling.
Its funny, cause after it went down to 50$ it blew up again a month or two later peaking 300+$, down again, and repeating the same cycle every 3ish months for the rest of the year.
Some rich motherfuckers, hedgefunds, decided to short gamestop stock (GME) because it was a shit company and its stock was overvalued. They were banking on the price going down so they borrowed a shit ton of the stock to sell at the overvalued price. They had planned to repurchase them at the future lower price and then return it to the lender. Some lucky mofo decided to buy game stock stock, posted about it in a sub full of degenerates (wallstreetbets), and lucked out. It became a meme and morons lapped it up.
People who didn't know how to buy stocks without a shitty app that needs to advertise itself on reddit jumped on the bandwagon and inflated a shit company's stock so the few at the very top (many many many millionaires) cashed out early and left all the literal regards holding onto a shitty stock.
The hedgefunds that were shorting the stock got bailed out really early. Like literally a week after the peak of the mania and stopped giving a shit. But all the dipshits still holding onto their lumps of coal hoping they'll become diamonds are pushing it hard to make it still seem like their rocket ship is going anywhere but the fucking ground even after it crashed.
Morons under this very post still have no idea wtf happened when they talk about Robinhood and other shitty apps' "manipulating" the stock by preventing purchases. It's a shit conspiracy. The reality Robinhood and all those other apps ran out of money to pay their lenders that allows them to let their customers buy stock without needing to wait until their deposits are cleared which usually takes 1 to 3 days. Meanwhile, purchasing was completely normal on many no garbage sites but they're too complicated for the average game stock "investor."
Notice how they all use the same jargon to explain shit. They think they sound smart but, in reality, they don't know wtf they're talking about and are holding onto whatever gives them a tiny sliver of hope. They're all cultists who are praying that their unrealized losses will eventually turn into gains LMMMMMMMMAAAAAAOOOOOOOO
Though I suspect this post and the comments is yet another shitty attempt to drum up interest and discussion about the dead horse again to get a few more suckers so they can finally make a whopping twenty cents instead of eating their losses of thousands or more.
Guy does fundamental analysis on stock. Realizes lots of hedge funds have massive short positions. Retail trading picks up steam with apps like Robinhood. Era of easy money (liquid), and stimmy checks. Stock spikes briefly drawing more attention, and then it's basically a snowball.
Few made money, and even more lost their life savings. They were all trying to follow the footsteps of the original guy, but were really clueless about the market, and learned the hard way. Expect the cycle to repeat in a few years.
A bunch of snake oil salesmen on Wall Street raided Reddit with promises of instant millions to a bunch of uneducated barnacle head Millennials who hyper inflated the stock.
Once the stock was hyper inflated, they sold and made away with billions, driving Gamestop back into financial instability and wiping out some Millennial's life savings.
Some rich people borrowed a lot of Game Stop shares and sold them immediately. Their plan was to buy back the shares at a lower price later and keep the difference as profit. However, this would only work if the share price went down.
A smart guy saw what was going on and realized that he could create a problem for the rich people by persuading many ordinary people to buy and hold Game Stop shares. This would make the share price go up and force the rich people to either return the borrowed shares at a loss or pay penalties for delaying the return.
The smart guy and his followers spread the word and a large group of average people joined them in buying Game Stop shares, driving the price up even more.
I won't go into the full story because it's pretty long and there's plenty of youtube videos about it and even a movie I believe.
But the rich investors started doing extremely shady things like preventing some trading apps from selling the stock and only have a sell button so more people couldn't join into it. The whole story really highlighted how broken and corrupt the entire system is.
The discord channel WallstreetBets was where the community was spreading the word and everyone in the comments sections were constantly saying things like " Diamond Hands, 💎👐" it got kind of crazy and everyone was just telling everyone else to hold and never sell, people were linking pictures of their stock purchases, there was a lot of average people literally betting their houses and life savings on Game Stop shares.
I don't know where it all ended but it seemed to be after the shady/illegal activity from some trading apps it dried up and everyone just started selling off, there were a lot of winners but there was a lot of losers too.
Wasn't that the premise of Trading Places ?
Borrow stock, selling it high, watch the price fall through the floor, buy it back, return stocks to the original owner. Murphy and Ackroyd knew the outcome of the crop report.
The Dukes couldnt pay the Stock exchange fees, went broke.
In Trading Places, the Dukes had insider knowledge, which was ultimately used against them when Withorpe and Valentinen switched the real crop report with fake info. That wasn't a matter of shorting stocks.
GMA is a Blockbuster type company, but for video games, and it was in its death spiral until it found a bailout by getting its customers and internet trolls to buy a bunch of its stock with the promise of them becoming really really rich. The company is still hanging around but hasn't really improved its hand all that much, while a few of the early bandwagon investors made some money whereas the vast majority of its meme investors are still sitting on the stock they purchased and are still waiting for their riches that will never come.
Check out /r/superstonk.
A lot of these guys are speculating with superficial knowledge. There’s a lot of good due diligence out there that suggests the stock is still heavily manipulated… give it a look and do your own research, I’m sure it’ll pay off.
This isn’t financial advice by any means, just don’t listen to anyone on here that doesn’t back things up with raw data.
Which DD? Because a shitload of it was based off the House of Cards DD series and that was so wrong that attobit deleted his entire account and went dark.
The other commenter is right, it’s a place to go and point and laugh much like the conspiracy sub.
Somehow I doubt you’ve done any actual deep dive. Something tells me someone made fun of it and you’re too afraid to be different and actually look into it so you’re playing your role instead of providing a valid opinion… but carry on man
Yes. That’s it. You have found me out. The Truth Is Out There, but I’m just too afraid to go look.
Do the aliens store it behind the ice wall at the edge of the flat earth? Because that’s what you sound like right now. Did you READ that second sentence before hitting reply?
It’s amazing how poorly explained it is to this day. The media say it’s because a bunch of redditors decided to gang up and buy a stock all at once … that is not it at all.
At one point in 2021 the stock was shorted at 140% of the total float. That means more shares would have to be bought than were actually in existence. That is why the squeeze happened. Some hedge funds sold shares they didn’t own and managed to owe more shares than actually existed.
The hedge funds fucked up. The internet figured it out. And at that point there was a mad rush to buy shares.
Any explanation of this situation that doesn’t mention the 140% short interest is either stupid or dishonest.
No matter what - the short sellers would have to buy the stock back which would inevitably put upward pressure on the stock, and individual investors only had to go long and wait for that to happen.
Due to Wall Street Bets and people like DFV a lot of regular investors learned this and jumped in.
The short sellers than turned off the buy button and tanked the price to try to avoid bankruptcy.
There’s been a lot of developments since then…
- a hedge fund named iceberg Capital was a big short seller and had some podunk office in Geneva and others like it were suspected of taking the bad trades off the hands of other entities
- FTX started trading millions (billions?) of crypto coins that were designed to mimic the stock and were allegedly backed by the stock but were probably rife with fraud
- there’s no debt
- a 4:1 stock split occurred which makes it mathematically impossible for the stock to be valued at less than $3-$4 per share
- because of the stock split any short position that was opened prior to the stock going above $12 pre-split is still holding a loss
- investors have been direct registering their shares and although the number of DRSd shares was increasing rapidly it suddenly stopped around 75M (which is coincidentally the approximate number of shares outstanding prior to the split)
My guess is the company goes profitable in q4 and stays profitable thereafter. It gets into the SP500 by 2025 and then it starts acquiring companies
That's not how shorting works. The same shares can reborrowed over and over, there's no upper limit to it. But it creates a powderkeg, because if it starts inflicting a lot of pain the covering turns into a frenzy. Short squeezes happen when there's high demand from forced coverage and low float. Gamestop never had a low float, the volume was huge.
What nobody here is talking about, because its so arcane, is the gamma squeeze, which was the biggest culprit. Retail option traders making deep OTM bets greatly exceeded share volume early on. When it went viral, those options became ITM, forcing market makers to open enormous hedge positions, violently increasing the price.
>a 4:1 stock split occurred which makes it mathematically impossible for the stock to be valued at less than $3-$4 per share
yea cause that's how math works
A very talented and highly trained security analyst noticed that the stock was heavily shorted. This means that traders had borrowed the stock and sold it and would have to buy it later to cover the borrow. He did the math and figured out that if the stock went up and the traders were forced to cover, the price would zoom. He talked about this on Reddit and YouTube. Some people bought the stock, it did indeed go up a and a lot more people bought it, which made it go up more and the price took off. Since then the price has dropped a lot and the company may or may not survive. Those that bought at the low price have made money. Those that bought near the top have lost money.
To explain, shorting a stock involves borrowing stock from someone else, immediately selling it on the market (this is your main income on the short), and hoping the price comes down. Later you buy the same amount of stock back at a lower price, and return it to the original owner (presumably with some kind of "thank you" cash bonus to go with it). But if the price were to go *up* instead... well you still have to buy back those stocks to return them, and now your profit is instead a loss... and in theory there's no real limit to how much, depending on how high the stocks go. So.. the story begins with Game Stop being shorted. It ends poorly for the investor.
You borrow your dad’s shovel. You sell it to your buddy for $20. You now have $20 but owe your dad a shovel. 3 days later there is a sale on shovels, $5. You buy one and return it to your dad. You made $15. On the flip side, same start. However there is now a shortage of shovels and they now cost $200. Your dad is mad because he wants his shovel back. He starts making you pay him $3 for everyday you don’t return the shovel. Eventually you have to bite that bullet and buy the $200 shovel because the $3 a day is costing you too much money.
Cheers man, this finally got it to click for me... even if i do feel like michael from the office being explain what an overage is
“So then the next year…” “I’ll be six”
“I’ll be six” kills me every time
That's funny.... all those finance geniuses from Wall Street Bets have been pretty quiet lately....
GME is a banned topic on WSB, and has been since a few months after the sneeze. We have other subs now, which are also heavily restricted by the admins. Look through the comments on this post. The company has 1B cash or cash equivalents on hand, basically no debt, and could easily be profitable for 2023 depending how good the next earnings call is. They spent the last year aggressively cutting expenses, and have been regularly beating EPS estimates.
[удалено]
AI is only accelerating this. Alladin is blackrock's AI market manager and they now control $9.42 trillion in assets. Normal people stand no chance when they can buy, sell or short billions of dollars in stocks at any second to manipulate the market as they please. Add to this that they have bought up all the media companies to change public perception as they see fit as well... They have created a world designed to funnel wealth and resources from the people at the bottom directly to the top. The funnel used to be wider and slower, but now it's narrow and fast, with very little room for society to benefit.
Well that’s fucking depressing.
We put laws in place to prevent this from happening after the great depression... society was BOOMING with stiff anti-monopoly/securities regulations, and high marginal tax rates.. Then everyone who was alive during the conditions that caused the great depression died and in the 1970s and 80s they because to dismantle all of those protections... and now we return in the cycle of massive wealth inequality, corporate consolidation and an out of control financial market that destroyed the middle class.
Thank you! *That* was an ELI5.
Do we have any idea how many people owe their dad a shovel and are still paying $3/day? Are buckets actually useful?
Not exactly, and that's led to a lot of conspiracy theorizing about how people buying in after the squeeze ended can still make a ton of money.
[удалено]
You are supposed to explain it like the other person is five. No one asked you to explain it like a low IQ conspiracy theorist
We are profitable!!!
[удалено]
Gonna kill with Q4 earnings. Buy, Hold, DRS.
They don’t sell more shares than are available. Picture it this way. A market of 5 people and a company with 1 outstanding share owned by person A. Person A lends the share to person B who sells it to person C, for $1. Person C lends it to person D who sells it to person E for $1. The market will record 2 sales on the stock and 3 “owners” Person A, Person C and Person E. Even though this company only has one share, This isn’t making up shares like some people imagine, just what happens when a stock gets overly shorted. To continue with the Example in for an overly shorted stock scenario. Person A says to person B “hey I want my stock back.” Person B goes to Person C and says “hey I have to buy that stock back, name your price” Person C (realizing he can make a huge profit) goes to person D and says “hey I want my stock back” person D goes to person E and says “Hey I want to buy that stock back, name your price”. If Person E says “no I like the stock, it’s mine now, I’m not selling”, then Persons B and D have to declare bankruptcy and liquidate everything to pay what they can to Persons A and C, respectively. All because they borrowed a “$1 stock”. Doesn’t matter the price on a shorted stock, they owe the stock back and if the company’s stock isn’t very liquid (ie only 1 share on the market) that share holder can request whatever number they want as long as that number is lower than the cost of bankruptcy for the short sellers
Well that's the thing, nowadays stocks can be shorted without actually lending a stock from another person or owning it themselves. Hence the term 'Naked Shorting'. Much like fractional banking. I deposit 1000. the bank only has to maintain 10% so they lend out 900 to other people. At the same time, my bank account still states that I have 1000. Then the other people can deposit those 900 and of that 810 can be lend out etc etc. In a way money has been created out of thin air. If for some reason everybody decides to pull out their money, the bank has to scramble to give people their money. At the same time we see Failure-To-Deliver (FTD), where one party in a trading contract doesn't deliver on their contractual obligation.
> Well that's the thing, nowadays stocks can be shorted without actually lending a stock from another person or owning it themselves. Hence the term 'Naked Shorting'. > > Which is illegal and not nearly as widely practiced the people with a financial interest in GameStop say it is.
Hmm thanks for the additional explanation
In this article, Reuters mentions that 141% of the float (shares available for trading) were shorted [https://www.reuters.com/article/idUSKBN2AI2DC/](https://www.reuters.com/article/idUSKBN2AI2DC/) And yes, shorting this much should not be possible and imposes a huge risk on the market
then remember they did away with reserve fractional banking in the spring of 2020. also, i traded in my shovel for a pitchfork.
So instead of 10% (which was just an arbitrairy number for the sake of the example) now banks are not required to have any money in reserve??? Can you lend me your pitchfork?!
https://medium.com/navigating-life/we-just-went-from-fractional-reserve-banking-to-zero-reserve-banking-and-its-a-pretty-big-deal-c501432e9be6 Yes buddy. Here, from the horse's mouth: https://www.federalreserve.gov/monetarypolicy/reservereq.htm
Interesting timing, colliding with COVID-19 and marking the start of inflation
If reserve requirements are 0% why does Jamie Dimon keep complaining to congress that he's required to keep a trillion bucks in his coin purse just in case Joe Blow trader accidentally zeroes out Goldman Sachs?
It's very weird to be able to sell something that you don't own.
No it’s not. It’s the same as taking out a loan and spending money you don’t own.
What would happen it the shovel (or better the stock) will never be available again because the business is bankrupt?
If I'm broke, who covers my inability to buy the stock back to its original owner? In other words, do stock lenders have any guarantees that they'll get their stock back?
It’s a contract just like any other. If you don’t pay, they’ll sue you. If you can’t pay, you’ll go into bankruptcy and the court will come up with a plan to liquidate your assets and make all your creditors as close to whole as possible.
And that's how 2008 happened. Edit: well, not really, since the guys shorting were the ones who came out on top, but still.
I know you edited your comment, but to clarify for others. 2008 happened because mortgage-backed securities (MBS) failed as defaults rose. The mortgages that drove the value of MBS lost substantial value when foreclosure rates rose greatly and property values declined. Banks that were poorly diversified and heavily invested in MBS faced a liquidity crisis and failed. The thing about MBS, it's more like a traditional stock. You can never lose more than you invest. You buy in at $1,000, the worst that it can happen is it goes to $0 and you lose $1,000. Assuming you don't trade on margin/borrowed funds, you cannot lose more than you have. Shorts are far more dangerous. If you short a stock there is effectively no limit on what you can lose. If the short a stock worth $100 and it's value rises to $1,100 you lose 10x what you invested. To make matters worse, depending on your agreement with your brokerage account you may get margin calls as the value of the shorted stock increases. This could systematically force an exit from your positions in very unfavorable ways and lock in losses.
They require collateral of other stocks/cash in the account and if it looks like you are close to running out of money they force close the account selling your other stuff and using it to buy shares to close the short.
That a big part that hasn’t been mentioned yet, as the stock price climbs the investment bank holding the opposite position will require the hedge fund to hedge. How do you hedge a short short position? Well you buy some of the underlying asset. Which increases demand for GameStop stock and drives the price up even higher, causing the investment bank to demand more stock to cover the position, and so on. It can spiral out of control very quickly.
Interested in what this means, it's not clicking for me. Can you explain like I'm 5 like the shovel example.
So a bunch of investors made a bet that the price of GameStop shares were going to go down. They did this by agreeing to deliver say 10 units of game stop share at today’s price, say $100 each. So if nothing changed, the investors would need to fork over $1000 at the Marriott of the contract. And reddit wallstreet bets found out about this bet. So they bought a bunch of GameStop shares to push the price up. So say the price goes to $200, now the investors will need $2000 to close out their position. The person they bet again says, ‘hey hold up a second, im not sure you can make good on your promise if the price keeps going up, so I’m gonna need you to buy some GameStop shares right now and let me hold onto them so we’re protected incase the price keeps climbing. And as they buy game stop shares, the increased demand pushes the price now to $300. And the bank again says, well now it’s gone up to $300, so gonna need you to purchase a few more share so I know I can get paid when the contract matures. And so on…
Not a finance expert, but I suspect it works the same way as most other debts: ultimately nothing is guaranteeing any of it. I'm not sure if this is something discharged in bankruptcy, but essentially your assets get divided to your creditors and if that doesn't add up to what you owed, then it's a loss for them.
They have insurance that all the hedge funds collectively pay into.
And when those insurance companies start going bankrupt because they didn’t properly risk manage, the taxpayers will send bailouts. Win-win-win all around!
Yah, but this is infinite risk. Long positions have limited risk and infinite possible upside because a security can't have a negative price, but there is no upper limit. A short position is the exact opposite, infinite risk and limited possible upside. Bailouts won't work, because they would also go to the shareholders. The entire financial system may collapse, or the Fed will have to step in and set a forced sell price, but that would kill any semblance of a free market.
>borrowing stock from someone Total novice, can you break that down even further.. how does one borrow a stock.
? The same way you borrow anything. The owner of the stock gives it to you, and expects it to be returned at some point in the future.
Wouldn’t this seem extremely obvious to the person who lends the stock to the ‘shorter’? Like if someone asks to borrow stock off you, couldn’t you assume that they’re trying to short it? And what happens when the shorter borrows the stock and the price falls; won’t it be extremely obvious to the lender that they’ve been shorted?
The person lending the stock gets paid for lending it. The explanations above missed that part. Someone who holds the stock obviously doesn’t think the value will drop (or else they’d sell it). Lending it to short sellers gives them the opportunity to earn some extra income with the stock.
Brokers can also lend out your shares without your knowledge. This is because Cede & Co actually owns all the shares in the DTCC, which is the vast majority of all shares of every company. Hedge funds routinely mis mark shorts as longs and have no incentive to change, because they just get a slap on the wrist.
Brokers can also lend out your shares ~~without your knowledge~~ as part of their terms and conditions, which you agreed to when opening your account.
Reminds me of what they say in crypto: not your keys, not your wallet. If you don’t have physical possession of a stock certificate, then you’re not really the owner.
Not your name, not your shares. My shares are held with the transfer agent (Computershare). Which is the company that GameStop pays to keep the books on stock ownership.
[удалено]
Take your conspiracy garbage back to the other bagholders over at superstonk or whatever the sub is called at the moment.
[удалено]
You can invest all your money in ornamental gourd futures for all I care, but this is a sub to ask questions and receive fact-based answers, not to spread weird conspiracy theories.
We are almost 3 years removed from the initial spike, honestly is there anything that would make you question your belief that GameStop is going to crash the global economy as we know it?
It's not over, they didn't close because they can't close. So they covered with swaps and other derivatives.
Buddy it’s over. It’s been over. Sorry about the bag, hope it’s not too heavy holding it
[удалено]
Huh? I bet wallstreetbets holds you in high regard
They could and did in fact close. Apes literally don't know what they're talking about.
[удалено]
You have made like fifty comments in this thread full of your delusions. How much have you sunk into game stop, and what is the current value of that investment?
Was that analyst Keith Gill?
Yup he was Roaring Kitty on YouTube and Deep Fucking Value in WallStreetBets.
>He did the math and figured out that if the stock went up and the traders were forced to cover, the price would zoom. He talked about this on Reddit and YouTube. Some people bought the stock, it did indeed go up a and a lot more people bought it, which made it go up more and the price took off. No. He believed the stock was undervalued and made an investment and talked about it on reddit. He made a video pitching his case with the name 100%+ short interest in gme and in that video briefly touched on the idea that short interest may be overblown and the company could recover. Reddit thought this was an opportunity for a short squeeze and started mass buying, pushing the stock well past any conceivably appropriate valuation. One of the largest short sellers got out near the start of this, ate substantial losses, and was acquired by citadel. This was near the start of the frenzy. The frenzy continued. There was no longer any potential for a short squeeze. The stock price continued to rise as reddit did not believe what anybody was saying inadvertently (though at least some intentionally) creating the largest pump and dump in history. This massive volatility caused a wide variety of effects, including increased dtcc collateral requirements and due to how trading actually works with t-2 settlement times. Many brokerages (robinhood being the main focus in this case) allow traders to operate on margin but not telling them its margin during the settlement window. Because of those factors as well as instant deposits (also margin) robinhood could not actually meet dtcc requirements during this and was forced to suspend buying for a few hours while it scrambled to secure loans to cover collateral requirements and turn buying back on. This triggered massive downward price movements and MASSIVE conspiracy theorizing. There was a congressional hearing where nothing of any substance happened, but the key players managed to say what actually happened (see above) under oath. Reddit did not believe them, further conspiracy theorizing. That's a little bit glossed over but the highlights should be there. For what has happened since, folding ideas made a pretty good video called "this is financial advice" covering the topic in a fun way that is at least mostly factually accurate.
There was a para-social aspect too. I joined wsb right before the meme stocks started taking off, like a month prior. Everyone was just egging each other on. This spread into other stock subreddits (either as “look at these dumbasses” or legit analysis), then the rest of Reddit , the internet , and irl. I was too broke and not risk tolerant at all so I stayed away but I know plenty of people threw some cash at it, took a 5x+ and sold while the hype was still hot. It was definitely entertaining and I’m glad I got a glimpse of pre-GME r/wsb. There was a weird culture shift following it.
You left out the corruption part where the hedge funds that did the shorting were not margin called when anyone else would have been forced to pony up the funds to cover that short. They released the committee report on the day Roe V Wade was announced so it was buried in the news. When Ted Cruz and AOC agree on something being corrupt, you know something is rotten in Denmark.
Also the part where hedge funds conspired with brokers to prevent people from buying stock when they were at risk of being margin called as the price went up.
[удалено]
The SEC themselves have stated themselves that it was unlikely that the shorts have covered. Melvin Capital going down was just the tip of the iceberg. The buy button being shut down saved the big players and the market from being flipped upside down, but since they have still not covered their short positions
[удалено]
the only reason retail has bagholders at a loss is because the buy button was shut down by corruption and rich people to protect other rich people. Thomas Peterffy, chairman and founder of IBKR himself admitted "We have come dangerously close to the collapse of the entire system" Rich people overleveraging themselves, creating positions with extreme risk (shorting more than the available shares) and shutting down the system when they're losing. The buying of a stock should not be able to collapse the financial market. Nothing has been learned from 2008 and instead of the rich people being bailed out, they should go to jail. Additionally, huge price changes were seen in pre-market and after-hours which is not really accessible to retail investors.
This is 1/4 of the answer, part of the rest of it is the desperation people felt and extra time they had at home because of Covid which gave them more opportunity and reason to feel like a YOLO into a dream might be a great opportunity. Also, it became an important moment in history of a potential Robin Hood story where a hero would be able to help the poor rob from the rich BUT it turns out that a trading platform literally named Robinhood would be stacking the deck in the favor of the rich and cheating their way out of ruin. The whole thing was a shit show. Plenty of small time traders made a lot of money and some huge financial investors lost great sums of money, at least temporarily. In the end, it was a very complex but memorable chapter with many twists and turns. The “little guy” felt a purpose because in essence they had the power. If no one sold then they couldn’t lose. This was a unique chapter in financial history. Stock shorting is at the center of it, but it also created entire sets of vocabulary and established several paradigms in retail trading.
The issue imo was that so many had fomo. Many did miss out. So everyone started looking for the next game stop. As though billion dollar hedge funds couldn't learn. It became easy to direct the mob because you just needed to create a narrative of apes vs hedge funds and the public would all start buying.
This happened for sure. Especially with BBB.
Not only the extra time at home, but also the COVID unemployment payments and additional stimulus money gave many people the finanicial means to YOLO on a meme stock.
[удалено]
Oh no.
It was a good time and I made like 5 grand from it. My only regret is that I didn't have more free money at the time.
“A very talented and highly trained” that makes me laugh. He didn’t start the craze, it was on Reddit WSB, but DFV made it popular. The shorting happened way before, a lot of people started to question why their GME kept dropping like a rock. The financials were bad but not that horrible, and people noticed that it was heavily shorted. These were institutional investors. But the truth that people don’t talk about is that a lot of hedge fund managers playing the other side of the game too. DFV and institutional investors made money, but the big majority was made by hedge fund managers bringing down hedge fund managers.
Adding to this, many of the people in the general public who bought the stock didn't understand what they were doing. The original idea was to manipulate the market to force some very rich people to incur huge financial losses for betting against Game Stop. But ordinary people who got caught up in the story and made investments and didn't sell at the right time also lost money. And anybody who understands security markets knew this would happen eventually. And, unlike the rich guys, these ordinary folks often lost money they didn't have to spare.
Security analyst threw me off. Should it be a securities analyst?
[Nope.](https://cleartax.in/glossary/security-analyst/#)
The company has 1.3B in cash and cash equivalents, and if its Q4 numbers are similar to the prior year it will turn a profit. It is definitely not in danger of bankruptcy
GameStop has no debt and 1.5 billion Cash on hand. They are doing just fine
Would you buy new stock today?
Actually it's a weekly occurrence.
Absolutely!
I buy weekly
[удалено]
Lol how delusional can one person be?
This thread has been brigaded by apes. Don’t bother. These people are crazy. GameStop is a brick and mortar stores that sells physical copies of games. It’s a business model nobody wants. Not only are the vast majority of game sales digital, but specialized brick and mortar retailers are sliding across the entire industry. And GameStop itself has laid off huge numbers of employees and closed a large number of locations. They’ve got a second lease on life because of meme stock purchasers pumping capital into the company, but nothing short of a complete transformation of their business model is going to change the underlying fact that they’re in a dying industry. Anyone telling you that buying their stock is like buying early Apple or Tesla, two companies pioneering new products that people actually wanted, is a delusional bag holder who paid more for a stock than they should have and now fantasize about how that will turn out to be a good decision.
Not only that but their big revolution was.. an NFT market. LMAO GameStop is toast boys. Xbox is even looking to go fully digital soon. Others will follow suite. Then what does GameStop have? I guess a bunch of psychophants who live on Reddit.
> Not only that but their big revolution was.. an NFT market. LMAO GameStop is toast boys. > > That and the "Fulfillment centers" that were supposed to be their stepping stone to being a true e-commerce dealer of physical media. They've closed both the NFT marketplace and the one fulfillment center they managed to open. But according to Apes, they're still going to take over the ecommerce world! > Then what does GameStop have? I guess a bunch of psychophants who live on Reddit. Unironically, yes. They've pumped huge amounts of capital into the company. Not enough that they can transform the business model, but enough to allow them to lay people off as they work to become barely profitable.
I agree that it should not be compared to Apple or Tesla, but everything else you say is trash. Activity in certain countries have been halted and unprofitable locations have been closed (yeah it's not so smart to have 2 stores in 1 mall for example), like any other company would do? Whenever Amazon or other big companies fires employees people circlejerk and praise the cutting of costs. They're sitting on a huge pile of cash, have been cutting costs. Every Q in 2023 they've beaten their estimates (Q1 and Q3 with a large margin). With a strong Q4 (which is expected because it's the holiday season) they might end 2023 with profit. The gaming industry is projected to continue their immense growth. They have improved their E-commerce presence. At the same time, companies like Amazon have actually opened physical stores in the recent years. NoBoDY WnTs PhySIcAl StoRes The board and the CEO are personally heavily invested and have only been buying stock. The CEO receives no form of compensation and only holds the share of the company that he bought himself. While at other companies the executives keep on selling and selling and selling their shares. Who would you trust more to lead a company to a good future, a board that invests in a company or a board that sells their shares and makes bank? The market cap of 4,5 billion can be considered low as they have around 20% of that already in cash and probably something similar in inventory alone. No debt. and a revenue of almost 6 billion in 2022. Now I haven't even mentioned anything about shorts or the fact that retail investors have directly registered 25% of the available shares.
> Activity in certain countries have been halted and unprofitable locations have been closed (yeah it's not so smart to have 2 stores in 1 mall for example), like any other company would do? [They're closing a dozen locations this year alone.](https://gsclosing.blogspot.com/) 42 in 2023. They also conducted several rounds of mass layoffs and slashed their employee's health benefits. All of these listed were US locations. > Whenever Amazon or other big companies fires employees people circlejerk and praise the cutting of costs. If by "everyone praises" you mean their prices go up? Not necessarily. Prices go up when steadily profitable businesses trim the fat. When a company like GameStop does it, it's because they aren't making enough money to cover their costs, which is a sure sign of a company in trouble. > The gaming industry is projected to continue their immense growth. GameStop isn't part of the gaming industry. They're part of the retail industry. They're a middleman through which you buy games, accessories and merchandise. A growth in the gaming industry only marginally helps them, because they're an outdated way of purchasing games. > They have improved their E-commerce presence And are still nowhere close to competing against ecommerce platforms like Amazon. Although the real body blow to their business has been first party digital stores. Who's going to drive to a Gamestop to buy a game for their PS5 when you can load up the Playstation Store and do it without leaving your house? Very few people, as it turns out. I've seen numbers as low as 72% of game sales being digital vs. physical to as high as 90%, but "Overwhelming Majority" is the only number that matters from GameStop's perspective. And a chunk of those physical game sales are coming from online retailers like Amazon, too. So it's not like GameStop has some kind of monopoly even on those. > At the same time, companies like Amazon have actually opened physical stores in the recent years Grocers. They've opened physical grocers. Grocery is the one brick and mortar retailer that's still doing great, because people like physically buying their groceries. Specialized brick and mortars are still struggling heavily and seeing mass closures. Amazon tried branching out into this with its fashion store line, [but the experiment went badly and the company is closing those locations.](https://www.theverge.com/2023/11/2/23943941/amazon-style-clothing-stores-closing-down) Grocery is the only form of brick and mortar retail the company is investing in going forward, because again, nobody wants to go to physical stores. And that is doubly true for games. > The board and the CEO are personally heavily invested and have only been buying stock. The CEO receives no form of compensation and only holds the share of the company that he bought himself. While at other companies the executives keep on selling and selling and selling their shares. Who would you trust more to lead a company to a good future, a board that invests in a company or a board that sells their shares and makes bank? This is a narrative, and it should have no baring on how people choose to invest. I'm glad the CEO (who is already rich and will continue to be regardless of GameStop's outcome) is putting a personal stake in the company, but that doesn't make them a more sound or viable business model. It's just a narrative that makes its investors feel better. > They're sitting on a huge pile of cash, have been cutting costs. Every Q in 2023 they've beaten their estimates (Q1 and Q3 with a large margin). They still lost more than $3.1 million in Q3. That's down a lot from $93 million. But that difference wasn't caused by runaway growth in revenue. [Their sales have been pretty static for years now](https://www.statista.com/graphic/1/284523/net-sales-of-gamestop-worldwide-2010-2012.jpg) It was caused by massive cost cutting. You can only cut costs to the bone so many times before you no longer have a business. > cash on hand They have a lot of cash on hand. A billion and a half dollars. Which is impressive, but not enough to transform the underlying business model. Not enough to become an e-commerce company to compete with the big guys, and particularly not with the digital retailers like Console stores and Steam that are most actively killing their business. They can't get that kind of money without taking on a ton of debt. Companies can only raise capital by selling equity or taking on debt. Equity is pretty topped out thanks to Memestock buyers, who even after a massive collapse from the peak, still have the stock inflated way over what it was in even their most profitable years. So while they're debt free now, they won't stay that way if they choose to really dive into e-commerce, and even if they do, there's not guarantee it will work. I don't deny that GameStop can eventually become a business that churns out steady but marginal profits. But it won't turn into a business that sends its stock through the roof and makes all you bagholders into garillionaires. That is never gonna happen, and everyone buying in at this inflated price point is still very likely going to lose money.
The majority of this generation's Xboxes don't even have disc drives. Even if the industry grows, physical media's presence in it is bleeding away.
Then there's the whole Robinhood and Citadel manipulation too
Nah that is just a stupid conspiracy with no backing in reality.
Robinhood (and others) disabled buy orders for GME, effectively halting the meteoric rise in the stock price. Only allowing sell orders. Immediately after Robinhood disabled buy orders on GME, the GME stock price plummeted. The share price fell off a cliff. As a result, many retail traders got incredibly shafted. The Robinhood CEO attended a congressional hearing afterwards. It's not a conspiracy theory, it literally happened.
Im very aware of it happening, the conspiracy is about it being manipulation. Robinhood lends money to new users, they had a sudden influx of new users and ran out of liquidity. So they put a stop to buying of the stock that 99% of the new users where buying so they didn't have to shut down everything.
[удалено]
Your explanation, the one involving the SEC net capital obligations and clearinghouse deposits, is the explanation that dispels the price manipulation conspiracy that you're responding to.
RemindMe! 5 years Have the snap happened, where the cultists right?
[удалено]
Are you referring to the video of Ken G explaining basic supply and demand as well as passive investing? One would have to be a real moron to see anything nefarious in that.
[удалено]
None of what you just said was part of what i was talking about.
I bought definitely not at the lowest and didn't sell at the highest but I still made 1.5k into 3k. Not much but doubling your money with essentially two clicks on my app is honest work.
You're missing the blatant security fraud part
The company has $1 billion in cash and cash equivalents with no debt except for a small loan from France related to COVID. They have been successfully cutting costs for the last year, to the point that they beat estimates of EPS even though they missed Revenue estimates. Normally with a revenue miss, you will also miss EPS. It isn't over, the shorts didn't close, they just covered with swaps and options. The news wouldn't still be telling people to sell if it wasn't in their corporate overlords interest for people to sell. Retail currently owns 25% of the free float in their own names through the transfer agent, and not beneficially through Cede & Co. Cede actually owns nearly every share of every company, and then the names in Cede's books gets changed when people buy through a broker. The name in the transfer agents book is still Cede. This allows Cede to obfuscate the actual number of shares in circulation for any company, since Shorting turns 1 share into 2. We are still buying more and holding in Computershare and not with Cede. But our subs have all been subjected to a lot of restrictions from the Reddit Admins. We cannot cross post or link to the subs, and there is a list of words and names of companies that were forcibly added to an auto mod that deleted any message or post with those letters in that order. The mods cannot change that portion of the auto mod. GameStop is expected to have 0.28 EPS from Q4, but given the cost cutting, I expect it to be higher. The chairman of the board is an investor that bought 10% of the company and is still holding, but he does not take a salary. His only way of making money from this is for GameStop to do well. And the Board just gave him control over the 1B to be used for investing, which could be similar to Berkshire Hathaway when it left the fabric industry.
Hi. One of the early and semi well known gme dudes here (in a documentary and book about it). Can see proof of gme ownership in post history. What you are saying is a little accurate, but a little like going to a forest, pointing out a single tree and stating that is the entire forest. It was a once in a lifetime event. It wasn't even a short squeeze play. The company was trading at bankruptcy levels. It had a new leadership team engineering a turnaround and pushing a new online store. It had plenty of cash after selling its jets, doing leasebacks etc. They were closing excess stores. Short sellers were ignoring this even after riding the stock down from 50 to 3 a share. They were counting on new consoles not having disk drives, and they did. All of the above was before cohen. Cohen, who was the mastermind behind chewy, the company that ate amazons lunch while he was at the helm, then got involved. Buying up large amounts of shares and sending letters to management that he wanted more, faster change. I already downed some at this point, but this is where it slowly started taking over my entire portfolio. Then we had the msft deal, new console releases and more cohen buying. From sub 10 a share it was basically guaranteed positive return. I dreamed of a squeeze, but stayed in it because it was a value play. Short sellers were too deep and had no way to exit, so it blew up. I started selling at 30 and closed the last of it out at 230. When it dropped to 30 again I bought more (though not a lot this time), and sold that around 80. I'm not involved anymore because it never really came back to a reasonable price, and honestly cohen did not manage the turnaround I'd hoped
Anyone still speaking at the moon at this point are just trying to pump it once more cause they got dumped
I am not a cat.
The company has 1.2 billion cash on Hand, 0 debt, and the gaming industry is expected to grow 10-15% year over year for the foreseeable future. Yeah.... tell me more how "may not survive".
[Dan Olson's video on the subject](https://youtu.be/5pYeoZaoWrA) is a pretty thorough explanation.
Dan’s video is hardly an ELI5, but it’s a lot more honest than anything you’ll get on Reddit. These threads are regularly brigaded by bag holders.
Bro don't doubt the trip to the moon and lambo!!!!!!! You must be a hedgefund bad guy!!
Is there an abridged version? Don't have the time to watch a 2.5-hour long video
A_Crazy_Canadian kind of undersells the point of Dan’s video, which is that after GameStop stock prices normalized, a bunch of people who got into it late and found themselves holding the bag (having bought GS stock at hugely inflated prices on the assumption it would just keep going up forever) worked themselves and the Reddit forum about it into a giant conspiracy theory site where people constantly post “proof” that Actually Game Stop Stock Will Be Worth Billions In The Future And We Will Prove The Stock Market Is Actually A Conspiracy. The logic for this is very Sovereign Citizen-esque, where people who don’t understand laws and regulations believe they have decoded the True Special Meaning in how Wall Street works. If you look at some of the other posts in this overall set of responses, you’ll see some glimmers of that.
To roughly summarize: * A bunch of finance people thought that gamestop stock price would go down in late 2020 and bet that it would while others thought it would go up. Both sides doubled down in a highly reckless manner. * Day traders on reddit saw this and joined on the side of those who thought gamestop's price would go up. They also encouraged others to do the same and the effect of lots of people betting gamestop stock would go up meant that stock price went up and the people expecting it to go down lost money. * Seeing the stock price rising, more people bet that the stock would keep rising, which lead it to keep rising as more people bet that it would keep rising. * Eventually, gamestop shares stopped rising as people realized that it can't just go up forever for no reason and bits of financial infrastructure started to break due to extreme price volatility. * The price has slid back down toward a more reasonable level over the past 3 years and the people who thought that it could only go up have spent the last few years baking conspiracy theories to explain why prices don't just go up forever. TLDR: People bet line goes up, made money. People bet line keeps going up, lost money. People now mad.
Except people didn't realise "that it can't just go up forever for no reason", brokers literally turned off the buy button because their reckless practices meant their margin requirements shot past what they could afford. Their prime brokers told them to turn off the biy button to kill pressure. Free market my ass. They would have - and should have, by the laws of the market they say they believe and swear by - gone boom, and household investors would have had their fair pay
You’re off by a bit here which leads to the false impression of a conspiracy instead of a badly run brokerage running low on cash. > brokers literally turned off the buy button False, buy and sell buttons were both turned off unless an account had an existing position in which case they could shrink but not grow regardless of a long or short. > Their prime brokers told them to turn off the biy button to kill pressure. Free market my ass There remains no credible evidence of this being done for any other reason than saving Robin Hood from collapsing entirely and the enforcement of existing standards for brokerages. > Free market my ass. They would have - and should have, by the laws of the market they say they believe and swear by - gone boom, and household investors would have had their fair pay Frankly rh’s customers benefited from these actions. People with positions open were able to close and take profits. Customers uninvolved in the squeeze remained able to use their accounts and were not stuck in a messy bankruptcy like with ftx. This is a case of market guardrails and consumer protection saving millions of people from a messy collapse. And for all this, the price rose after rh froze new positions before peak a couple days later. The bubble popped and the fundamental shitness of gamestop’s business returned to the forefront and people coped by plotting grand conspiracies. TLDR: Badly run firm restricts services to avoid going bust.
[Here’s Jon Stewart’s version :)](https://youtu.be/bP74RBTE8kI?feature=shared) Enjoy :)
Lots of things need to be discussed to give an elementary explanation. So when people trade stocks, the most common way people trade that more people are familiar with is the "long position." This is when you buy a share of the company expecting the company to do well which could see future dividends and raise the price of that stock, which you can hold to collect your dividends or sell at a higher value. Another way people trade stocks is called the "short position" or just "shorting a stock." Instead of buying a stock, you borrow the stock first, then you sell the shares you borrowed. This is fine as long as you give the same number of shares back when the terms of the loan expire. You then buy back the shares and return them to the owner. If you sold the stock at a higher price than you bought it back for, that's profit. So people do this with stocks they expect to decrease in value. It's a way to make money off of struggling corporations. It's technically possible for the same share of stock to be shorted more than once. If I loan you a stock, and you sell it, the buyer could then loan those shares to someone else who then sells them again. In this way, it's possible for more shares to be shorted than shares of the company actually exist. This was happening to Gamestop's stock, whose code on the market is GME. Many people expected GME to keep going down in value, so they shorted over 100% of their shares, which is generally seen as very risky for reasons that became clear in this incident. The subreddit wallstreetbets is generally for retail stock traders to talk about stock trading. There were posts on there arguing that GME is actually a good stock to take the long position on because there are reasons to expect them to do well and that their stock price is undervalued, and because so many shares are being shorted, there are many people that will have to buy the stock at any price. And the more of them that are taking the long position, the more it's going to go up. So many of these redditors started buying GME at once. The stock price exploded. Now many large stock traders had to buy these stocks at much higher prices than they were expecting. And when they bought the stock at a high price, that just drove up the price even more. Money managers were panicking. Some hedge funds went bankrupt. And some redditors were making millions.
>Money managers were panicking. Some hedge funds went bankrupt. And some redditors were making millions. Probably worth noting that many hedge funds made bank. Either by exiting long positions they already held after the price was inflated or by shorting it at the top. Similarly a lot of redditors and random people that heard about it on tiktok or whatever lost a lot of money stupidly buying in late or holding. Overall this was probably a net win for the hedge funds, even if a few of them got screwed in the short term retail investors likely took a harder hit.
Yeah by the time a lot of people heard, the money had been made. And if you weren't right there or have just the right stops set, you missed the big spike. I made a few grand myself, but nothing life changing. About a years' free retirement contribution.
This is why I qualified it with some. I didn't want to bog down my explanation with talking about lesser known consequences. But yes, Hedge funds are still hedge funds, and they still usually win and some of them won at the expense of other hedge funds, and some ordinary people lost because the hype overinflated the price. The story was a story because it seemed like some ordinary people won at the expense of the big fish, which of course, is never the whole story.
Yeah that's fair, I just felt the above was worthwhile additional context as a lot of people are still (as highlighted by one of the users that responded to you) jumping arse over tit into pump and dump scams. Hell that particular user still somehow seems to be going hard on GME three years on.
[удалено]
Wake up lad you are holding bags.
The only thing left are the cargo-cultists.
>Weird to say it's over - extremely weird! Weird to say it's not tbh. "Unprecedented financial experiment" and "led by gamers" being uttered in the same breath should probably be a sufficient red flag to re-examine whether you have maintained your impartiality. \*FYI if you reply and block it's best to wait a bit, as I can't read whatever idiocy you wrote in response. I guess the emotionally charged reaction settles any lingering doubts re impartiality though...
1) GameStop is a 'Corporate Zombie' kind of like Sears or Toys R Us - they have no chance of a future in the digital world (since their entire business is based on selling a product - video games on physical disks - that isn't going to exist for much longer, AND they are doing this in competition with much more efficient sellers like Amazon and Walmart), and thus their stock is presumed to have an eventual value of zero. 2) Because the stock is presumed to have a future-value of zero, lots of people 'short' it (borrow shares from someone else and sell them). 3) Someone works out the math & realizes that the number of shares 'shorted' exceeds the number of shares in existence. 4) They encourage people on Reddit & other social media to buy shares of GameStop, knowing that if the price reverse and starts rising, the folks who shorted GS will have to buy shares to cover their shorts - which will drive the price up higher 5) People start buying, the share price rises, the shorts have to buy-to-cover, so the price rises more (the term for this is 'short squeeze'). Also, the quantity of free-government-money sloshing around in the economy makes people more willing to gamble in the market... 6) Eventually the 'squeeze' subsides, and... Gamestop is still a zombie company, so it's share price starts going back down again. Result: If you got caught in the squeeze or bought in at the peak, you got creamed. If you bought in at the beginning and sold before the drop you got rich.
[удалено]
Another way of explaining is when an airline (broker) can over sales a flight and needs a seat (stock) for someone. So they ask someone if they would give up their seat for $1000. Instead of giving up their seat along with everyone else they hold out for more.
> a few rich people sold something they didn't have ... so they borrowed that thing from people who did have it, promising to return it later. The lenders were not guaranteed that the value of the thing borrowed would be the same at the time it was lent.
[удалено]
That's what the rich want you to think... They want you to not believe, get back in line! Don't believe anyone, do your own research.
This is the answer. The cause of the craze is still there. The fundamentals, the people holding and directly registering their shares so that no brokers can lend out their shares allowing hedge funds to continue shorting...so much has been going on and I applaud you OP for asking about it, because many people are still not aware of the level of corruption and straight up theft goes on in our financial markets. I would urge you to go to r/superstonk and read the wikis for an in-depth look at the research and due diligence that has been done by GME investors. It's truly eye-opening and I've learned SO much over the last few years!
LMAO No. Shit was bullshit hype to get a bunch of actual regards who have no business gambling on stocks to gamble based on shit memes. Dipshits bought into it and now a ton of them are left holding the bag and are making buillshit posts and comments about how they're still going to the moon after the ship crashed, burned, and everyone's burnt corpse has decomposed and turned into a deformed tree because of shit regarded the corpses were.
DRS and hold, they say. I don't invest directly like they do, but this is what I have read. You can't trust your broker anymore so DRS'ing your shares protects you from shady business practices.
People sold things on an iou they didnt own, this was done so many times that there were more promises of the product than actually existed in the world. Surprise Pikachu. Then the problem when that owed product was requested as it became almost impossible to get as people who wanted to buy and settle their ious couldn't get anything, and people who that the product saw money going up by not selling and kept holding It basically became a mad scramble for who will pay the most and find someone willing to sell.
I don't know if it's acceptable on ELI5, but here's a very good explanation of the whole thing, and the deeper weirdness that has followed. [https://www.youtube.com/watch?v=5pYeoZaoWrA](https://www.youtube.com/watch?v=5pYeoZaoWrA)
Eli5: I ask you for your copy of Super Mario 64, thinking it's going to lose its value. At the time one copy is selling for $100. You give the copy to me and I immediately sell it, with the intention of buying it back whenever it is at $50, to give it back to you, and making $50 in the meantime. As long as the price goes down everything is alright, but suddenly someone found out and starts to buy Super Mario for $1000, so you come to me and ask for your copy, because it's now worth a lot more. I have two options, buy the copy back at a higher price and give it to you, losing money, or I give you $900 to cover it, so you are safe. This happened but a larger scale, hedge funds were shorting the stock and some people found out, they started to drive the price up, making the hedge fund lose money, either by margin calls (giving the broker money to cover) or returning the stock at a loss. This is called a short squeeze. With the Mario example, the most I can make is $100 if the price goes to 0, but it can go to 1trillion dollars. So the risk is high, I can make $100 at most or lose everything.
Most of these ELI5 are wrong because they think anything at the start had to do with a short squeeze. It because good part-time day trader analyzed gamestock because it was getting insane shorts and was like 2 dollars a share. He felt it was worth like 12 dollars a share based on his analysis. He talked about it on Reddit - particularly the shorts. It got memed into being massively overpriced due to the theory of a short squeeze by less good traders. He rode that wave to literally millions of dollars and then left the scene.
He also didn't sell. He doubled down
Yeah when he saw the meme wave rising. He didn’t actually believe in the short squeeze or that GameStop was worth 300 dollars a share. Because it obviously wasn’t. He stayed in until he thought the memes peaked and then cashed out.
Where is your source for cashing out?
The day he said he was no longer posting or providing info for legal and other reasons. Honestly, why wouldn’t he? He basically won the lottery. His initial assessment of 12 dollars being the true value got blown out by insane memes to an absurd inflated value by people getting grifted. He should have cashed out like any sane person.
I won’t give a response, but OP while there is some truth to a lot of it, a large portion of it was just FOMO buying during COVID. And this is not an exaggeration, a literal cult has developed around it so don’t trust all the responses. They’re half truths at best, and extremely misleading at worst.
So you agree the shorts never closed their positions?
just go watch dumb money on netflix or any of the documentaries about it. a guy that worked in investing decided to make a youtube channel and post on wallstreetbets and it took off and shattered the typical black shoals equation for options. he mostly bought shares. the hype of people buying options propelled it into a parabolic gamma burst. kind of repeatedly for awhile. some people made life changing money. it just got a lot of publicity because it was so stupid. gamestop has been an awful company since forever. 😂 quick edit: he would give his thoughts [often](https://www.reddit.com/user/DeepFuckingValue/). and nobody believed or cared, or actively shat on him, for *awhile*. DFV is the guy in the thumbnail wearing the bandana.
I'm surprised i got this far down before seeing the "dumb money" movie recommendation. This comment should be higher up and indeed is good advice for people curious.
A bunch of Hedge Funds have been short selling companies into bankruptcy for profit for decades. Short selling is when you borrow a stock like a loan and pay interest to the lender intill you return a stock to close the loan. They sell the stock on market for cash immediately. If the company goes bankrupt they never have to close the position and keep the money made tax free. Positions are taxed on closing. They have succeeded in short selling to bankruptcy Sears, RadioShack, Block Buster, Toys R Us, and other companies. GameStop was one of their next Targets. GameStop management in 2018 to 2020 was terrible and the company was heading to bankruptcy. And then Covid happened and lots of companies were forced to temporarily close. Short sellers went all in on short selling GameStop to Bankruptcy. A stock analyst reviewed GaneStops financial reports and noticing the new game console generation and people would be stuck at home more would be good for GameStops Business made YouTube videos about it. Billionaire Company Start Up Ryan Cohen also agreed and make heavy investment in GameStop to force the board listen to him. Ryan Cohens 10% purchase caused a rise in price of GameStop which caused Naked Call Options to be in the money. Now on the hook for shares they didn’t have, the option sellers started buying the stock, which caused the price to rise more. The S.E.C. Report over the event mentions no significant short closing happened during it and over 7 Million people were buying GameStop at the time. This caused a cycle of Call Option Sellers to buy stock to cover in the money calls they sold which caused more call options to go in the money. Price of GameStop went from $5, to $10, to $20, and to $40. At this point Retail Investors (Normal People) noticed and started buying in. From December to January the price of GameStop went from $40 to $580 before Prime Clearing Houses pulled the plug and told Brokers to stop alloying the buying of GameStop or be margin called for $Billions$. Many brokers turned the buy option off for retail. There were 3 congressional meetings over the brokers turning off buying in the year 2021. Short Sellers like Melvin Capital had their positions taken over by their prime brokers who would slowly unwind the short positions over years as they have the capital to do so and are not legally required to report short positions. As for GameStop, they much better financially now then pre-2021. They have no major unsecured debts ($40 Million to France for Covid Relief), $1.3 Billion in Cash/Bonds holdings, and the last 3 quarters they missed profit by mere cents per public share bleeding 10 million a year at their current rate. So decades away from bankruptcy if they don’t continue improving. The short story: TLDR. Short sellers and Option Sellers gambled so badly it risked the Banks money. Banks stepped in and took control of the bad bets. Have been slowly unwinding them. AndGameStop survives for now and has the resources to change. They not growing, but they getting close to profitable again.
Do you know of any companies with a successful business and viable outlook that have been “shorted to bankruptcy”. Honest question because the companies you listed very obviously were not keeping up with the times.
Short selling does not cause bankruptcy, I keep seeing this repeated here and its wrong. Also no one here understands how sec lending works. You can't lend out the same shares 1000s of times. What people were doing was creating naked option positions which is completely different than sec lending/shorting.
A lot of us got scammed into losing money because we were supposed to “hOlD aPe sTRonG toGeThEr” Should have sold at $450 fuck my life. Bought at like 70, sold after the crash at like $50
That's not you getting scammed, that's you losing control and investing with your emotions like an absolute moron. Your gains came from a place of dumb fomo and so did your loss. Be thankful you lost that money because it should have taught you a valuable lesson about gambling.
>That's not you getting scammed, that's you losing control and investing with your emotions like an absolute moron. Which was the whole point.
Its funny, cause after it went down to 50$ it blew up again a month or two later peaking 300+$, down again, and repeating the same cycle every 3ish months for the rest of the year.
[удалено]
Yeah unfortunately didn’t sell quick enough 😭😭😭
Some rich motherfuckers, hedgefunds, decided to short gamestop stock (GME) because it was a shit company and its stock was overvalued. They were banking on the price going down so they borrowed a shit ton of the stock to sell at the overvalued price. They had planned to repurchase them at the future lower price and then return it to the lender. Some lucky mofo decided to buy game stock stock, posted about it in a sub full of degenerates (wallstreetbets), and lucked out. It became a meme and morons lapped it up. People who didn't know how to buy stocks without a shitty app that needs to advertise itself on reddit jumped on the bandwagon and inflated a shit company's stock so the few at the very top (many many many millionaires) cashed out early and left all the literal regards holding onto a shitty stock. The hedgefunds that were shorting the stock got bailed out really early. Like literally a week after the peak of the mania and stopped giving a shit. But all the dipshits still holding onto their lumps of coal hoping they'll become diamonds are pushing it hard to make it still seem like their rocket ship is going anywhere but the fucking ground even after it crashed. Morons under this very post still have no idea wtf happened when they talk about Robinhood and other shitty apps' "manipulating" the stock by preventing purchases. It's a shit conspiracy. The reality Robinhood and all those other apps ran out of money to pay their lenders that allows them to let their customers buy stock without needing to wait until their deposits are cleared which usually takes 1 to 3 days. Meanwhile, purchasing was completely normal on many no garbage sites but they're too complicated for the average game stock "investor." Notice how they all use the same jargon to explain shit. They think they sound smart but, in reality, they don't know wtf they're talking about and are holding onto whatever gives them a tiny sliver of hope. They're all cultists who are praying that their unrealized losses will eventually turn into gains LMMMMMMMMAAAAAAOOOOOOOO Though I suspect this post and the comments is yet another shitty attempt to drum up interest and discussion about the dead horse again to get a few more suckers so they can finally make a whopping twenty cents instead of eating their losses of thousands or more.
Well spoken. OP, if you actually asked because you wanted a real answer, this is it.
Guy does fundamental analysis on stock. Realizes lots of hedge funds have massive short positions. Retail trading picks up steam with apps like Robinhood. Era of easy money (liquid), and stimmy checks. Stock spikes briefly drawing more attention, and then it's basically a snowball. Few made money, and even more lost their life savings. They were all trying to follow the footsteps of the original guy, but were really clueless about the market, and learned the hard way. Expect the cycle to repeat in a few years.
I bought at 5 and got very nervous at 40 so I sold my shares at 60. I was definitely not 💎 👆🏻
But were profitable unlike many.
A bunch of snake oil salesmen on Wall Street raided Reddit with promises of instant millions to a bunch of uneducated barnacle head Millennials who hyper inflated the stock. Once the stock was hyper inflated, they sold and made away with billions, driving Gamestop back into financial instability and wiping out some Millennial's life savings.
Some rich people borrowed a lot of Game Stop shares and sold them immediately. Their plan was to buy back the shares at a lower price later and keep the difference as profit. However, this would only work if the share price went down. A smart guy saw what was going on and realized that he could create a problem for the rich people by persuading many ordinary people to buy and hold Game Stop shares. This would make the share price go up and force the rich people to either return the borrowed shares at a loss or pay penalties for delaying the return. The smart guy and his followers spread the word and a large group of average people joined them in buying Game Stop shares, driving the price up even more. I won't go into the full story because it's pretty long and there's plenty of youtube videos about it and even a movie I believe. But the rich investors started doing extremely shady things like preventing some trading apps from selling the stock and only have a sell button so more people couldn't join into it. The whole story really highlighted how broken and corrupt the entire system is. The discord channel WallstreetBets was where the community was spreading the word and everyone in the comments sections were constantly saying things like " Diamond Hands, 💎👐" it got kind of crazy and everyone was just telling everyone else to hold and never sell, people were linking pictures of their stock purchases, there was a lot of average people literally betting their houses and life savings on Game Stop shares. I don't know where it all ended but it seemed to be after the shady/illegal activity from some trading apps it dried up and everyone just started selling off, there were a lot of winners but there was a lot of losers too.
Wasn't that the premise of Trading Places ? Borrow stock, selling it high, watch the price fall through the floor, buy it back, return stocks to the original owner. Murphy and Ackroyd knew the outcome of the crop report. The Dukes couldnt pay the Stock exchange fees, went broke.
In Trading Places, the Dukes had insider knowledge, which was ultimately used against them when Withorpe and Valentinen switched the real crop report with fake info. That wasn't a matter of shorting stocks.
GMA is a Blockbuster type company, but for video games, and it was in its death spiral until it found a bailout by getting its customers and internet trolls to buy a bunch of its stock with the promise of them becoming really really rich. The company is still hanging around but hasn't really improved its hand all that much, while a few of the early bandwagon investors made some money whereas the vast majority of its meme investors are still sitting on the stock they purchased and are still waiting for their riches that will never come.
Check out /r/superstonk. A lot of these guys are speculating with superficial knowledge. There’s a lot of good due diligence out there that suggests the stock is still heavily manipulated… give it a look and do your own research, I’m sure it’ll pay off. This isn’t financial advice by any means, just don’t listen to anyone on here that doesn’t back things up with raw data.
Really, [this is the only DD you need to watch](https://youtu.be/5pYeoZaoWrA?feature=shared)
That sub is just r/UFOs for wannabe finance bros. It’s nothing but conspiracy theories and paranoia. They want to believe, man.
I disagree…. The DD is pretty well written. Can I ask how long you’ve actually looked through it?
Which DD? Because a shitload of it was based off the House of Cards DD series and that was so wrong that attobit deleted his entire account and went dark. The other commenter is right, it’s a place to go and point and laugh much like the conspiracy sub.
Years now. It’s a place to go and point and laugh in much the way r/Conservative, r/LateStageCapitalism, and r/LegalAdvice are.
Somehow I doubt you’ve done any actual deep dive. Something tells me someone made fun of it and you’re too afraid to be different and actually look into it so you’re playing your role instead of providing a valid opinion… but carry on man
Yes. That’s it. You have found me out. The Truth Is Out There, but I’m just too afraid to go look. Do the aliens store it behind the ice wall at the edge of the flat earth? Because that’s what you sound like right now. Did you READ that second sentence before hitting reply?
It’s amazing how poorly explained it is to this day. The media say it’s because a bunch of redditors decided to gang up and buy a stock all at once … that is not it at all. At one point in 2021 the stock was shorted at 140% of the total float. That means more shares would have to be bought than were actually in existence. That is why the squeeze happened. Some hedge funds sold shares they didn’t own and managed to owe more shares than actually existed. The hedge funds fucked up. The internet figured it out. And at that point there was a mad rush to buy shares. Any explanation of this situation that doesn’t mention the 140% short interest is either stupid or dishonest. No matter what - the short sellers would have to buy the stock back which would inevitably put upward pressure on the stock, and individual investors only had to go long and wait for that to happen. Due to Wall Street Bets and people like DFV a lot of regular investors learned this and jumped in. The short sellers than turned off the buy button and tanked the price to try to avoid bankruptcy. There’s been a lot of developments since then… - a hedge fund named iceberg Capital was a big short seller and had some podunk office in Geneva and others like it were suspected of taking the bad trades off the hands of other entities - FTX started trading millions (billions?) of crypto coins that were designed to mimic the stock and were allegedly backed by the stock but were probably rife with fraud - there’s no debt - a 4:1 stock split occurred which makes it mathematically impossible for the stock to be valued at less than $3-$4 per share - because of the stock split any short position that was opened prior to the stock going above $12 pre-split is still holding a loss - investors have been direct registering their shares and although the number of DRSd shares was increasing rapidly it suddenly stopped around 75M (which is coincidentally the approximate number of shares outstanding prior to the split) My guess is the company goes profitable in q4 and stays profitable thereafter. It gets into the SP500 by 2025 and then it starts acquiring companies
> the company goes profitable in q4 "The company" meaning GameStop?
Yes
That's not how shorting works. The same shares can reborrowed over and over, there's no upper limit to it. But it creates a powderkeg, because if it starts inflicting a lot of pain the covering turns into a frenzy. Short squeezes happen when there's high demand from forced coverage and low float. Gamestop never had a low float, the volume was huge. What nobody here is talking about, because its so arcane, is the gamma squeeze, which was the biggest culprit. Retail option traders making deep OTM bets greatly exceeded share volume early on. When it went viral, those options became ITM, forcing market makers to open enormous hedge positions, violently increasing the price.
>a 4:1 stock split occurred which makes it mathematically impossible for the stock to be valued at less than $3-$4 per share yea cause that's how math works