Comment by [deleted] on 27/01/2021 at 03:58 UTC

704 upvotes, 11 direct replies (showing 11)

View submission: /r/wallstreetbets is making international news for counter-investing Wall Street firms that want to see GameStop's stock collapse. The palpable excitement is off the charts.

Never thought a stock war would occur between a internet community and shady hedge fund companies over a crappy gaming distributor. How the fuck does that happen lol?

Replies

Comment by Thekrispywhale at 27/01/2021 at 04:32 UTC

509 upvotes, 2 direct replies

2020 energy but with the 2021 flare

Comment by VirgilHasRisen at 27/01/2021 at 15:57 UTC

12 upvotes, 0 direct replies

Because the narrative that it's just WSB doing this is false they got the idea from other hedgefunds that are doing the same thing. WSB is just an interesting angle for the story.

Comment by moeburn at 27/01/2021 at 15:16 UTC

7 upvotes, 2 direct replies

I am very skeptical this is an organic result of internet community meme investing.

• The vast majority of recent purchases of GME stock, of purchases driving up its price, are in the millions to tens of millions of dollars range. This isn't some Bernie Sanders style "millions of people all pitching in a few dollars" scenario.

• WSB and Reddit are prime targets for market manipulation

• It's very easy to buy upvotes on Reddit and very hard to get caught.

• It all reads like bot propaganda; the repetitive "diamond hands" emojis, the "The big rich Wall Street fat cats don't want you to have money or power!" posts, etc

I'm no hedge fund manager, I barely understand half of these words. But even I can understand how easy it would be to manipulate the market and nudge it in one direction or the other by buying a few botfarms and pushing posts about a particular stock to the top. And I could improve my margins by making that a stock everyone else is betting against.

Any time I see any post on WSB that isn't some generic meme post but is actually talking about a specific stock, that's what I'm pretty sure is happening. Someone is manipulating that subreddit to manipulate the market.

Look at Tesla - Elon Musk just tweeted in support of the Gamestop meme stock. You don't think he would throw a few dollars behind a few bot accounts telling everyone to buy Tesla stock?

Comment by InFearn0 at 27/01/2021 at 17:45 UTC*

2 upvotes, 0 direct replies

How the fuck does that happen lol?

A company over-shorted the stock (promised way too many shares at a price way lower than the current price). Doing this can scare stock holders into selling because "What do these short sellers' know that I don't?"

The more short sales available, the easier it is to squeeze the short sellers. The higher the volume, the easier it is to squeeze, and the more likely a squeeze is successful.

A squeeze is when a short seller has to pay more to make good on a short sale then the price they promised to charge for the share.

The issue is that Melvin offered short sales that would require 40% more shares than were floating around. At that point, it is basically a guarantee that Melvin would have to scramble to make good. Assuming they could buy 100% of floating shares to make good, they would have to then buy back 40% of them to make on the outstanding short sales.

Now, it is unlikely they can buy 100% of the floating shares, so really they probably have to buy 30%, pass it out, then buy it back. Then they have to keep repeating the cycle of buying and delivering until they make good.

So really they set up a situation where there is very little risk for people pumping the stock price.

WSB's advantage here is that it is a sub of over 2 million people, so if they want, they could each pony up $40 and then collectively they have an easy $40 million to play with, which is a lot if a stock's price is low to begin with. And if they mess up and lose that $40, oh well, it is $40 bucks each from people that can probably afford it.

• But there are some members that seem to have way more than $40 to throw away.*

Comment by ThomasVetRecruiter at 27/01/2021 at 21:37 UTC

2 upvotes, 2 direct replies

I don't really care about sticking it to hedge funds, but those who got in early made lots of money.

I started with a small amount and I've pretty much taken everything I own and put it into Gamestop stock. Got nervous today and sold but ended up more than tripling my money.

A lot of lives changed drastically because of this, I basically just paid off my home, student loans, and all my debt and I'm back where I started with my original nest egg.

Comment by [deleted] at 27/01/2021 at 14:09 UTC

1 upvotes, 2 direct replies

Is Melvin particularly shady? I think shorting GameStop in general is a pretty rational move considering it’s been a dead company for a decade

Comment by bumpkin_Yeeter at 27/01/2021 at 20:51 UTC

1 upvotes, 0 direct replies

A lot of bored young people who prbly lost their jobs during the pandemic, are riddled with debt, and grew up watching the 2008 crisis destroy their family and others all while the orchestrators of said crash got of scott free? Ya that could breed bitterness and determination.

Comment by Gingevere at 27/01/2021 at 21:00 UTC

1 upvotes, 0 direct replies

How the fuck does that happen lol?

Very simplified version:

• A short is when you borrow someone's stock and sell it today, with the promise that in the future you will return it (plus interest) in the future. So anyone who shorts a stock 1) Has to buy it in the future. 2) Is betting that the future price will be lower.
• A bunch of hedge funds thought that the pandemic would kill GameStop. So they shorted it. HARD. The total quantity of shares shorted was 140+% of all shares of GameStop in existence. They all loudly announce they're shorting GameStop stock to generate bad PR for GameStop and drive the stock price down.
• GameStop releases their profit report, they actually did better than expected over the pandemic.
• A billionaire and the WSB community realize that the GameStop price won't be going down. These hedge funds won't be able to buy GameStop shares for less than they already sold them for, and those shorts gaining interest. The hedge funds are going to have to take a loss buying back those shares and they are going to take a bigger loss the longer it takes for them to do it. They're going to have to buy 140% of all the GameStop stock which exists. This creates MASSIVE demand for the stock.
• WSB buy up GameStop stock to create a massive shortage to meet this massive demand. This is called a "short squeeze". It has a name because hedge funds do this to each other and at-home investors all the time.
• The price of GameStop stock spikes. Hedge funds are desperately trying to buy GameStop stock to give back to the people they borrowed from before they accrue more interest or the price spikes even higher.
• Hedge funds lose billions and a few hedge have had to be bailed out by other private funds.
• Now funds are trying to lobby the government to do something like making discussion of short sales illegal on social media. Outlawing the exact fuckery they regularly employ to enrich themselves.

TLDR; Hedge funds try to fuck the market and in stead get fucked, now they're trying to make it illegal for them to lose money.

Comment by cruskie at 27/01/2021 at 21:17 UTC

1 upvotes, 0 direct replies

Gamestop- Power to the Players.

Comment by No_name_Johnson at 27/01/2021 at 23:53 UTC

1 upvotes, 0 direct replies

In the last month we had the ‘My Pillow’ guy meet with the (former) POTUS to discuss A) invoking the insurrection act and B) replace the CIA director with a Trump loyalist. These are weird times.

Comment by SnooAvocados899 at 28/01/2021 at 01:43 UTC

1 upvotes, 0 direct replies

2020 energy but the people are properly fighting back my guy