76 upvotes, 7 direct replies (showing 7)
isn't there eventually going to be a chain reaction where people want to turn their stocks into money?
isn't everyone who jumps on the train late at continuous higher risk to lose out big?
Comment by BreazyStreet at 27/01/2021 at 10:31 UTC
75 upvotes, 2 direct replies
Yes, but there will be a net transfer of wealth from shorters to shareholders, due to the previously suppressed price.
Comment by rudyv8 at 27/01/2021 at 16:42 UTC
11 upvotes, 0 direct replies
yes and no
First there will be a surge of people who borrowed shares and immediately sold them. They need to return the shares they bought. There will be a MASSIVE price hike for less than 24 hours while these guys liquidate their grandmothers purses to pay back every last stock they shorted.
Once thats done, then yes the chain reaction has started and the price will tank like nobodys business.
Comment by Bloated_Hamster at 27/01/2021 at 16:20 UTC
10 upvotes, 0 direct replies
The idea is that the hedge fund will be forced to buy their stocks at super inflated prices and everyone who bought stock at like $70-$200 will profit when they sell once it jumps to like $500 or more a share and the Fund has to buy at that price.
Comment by [deleted] at 27/01/2021 at 19:07 UTC*
3 upvotes, 0 direct replies
That's actually an open question with this company. There are a lot of people who feel that this stock actually has real, long-term upside.
Their retail footprint looked like a drag at the start of Covid but now they also look like a scrappy upstart who is starting out a step ahead. They've got plans for that retail space that isn't dumb. They've got three new board members who have proven experience with making money online. They are in an industry that is growing year over year and has no end in sight.
Most importantly, they are transitioning from a business with a low multiple to a business with a high multiple. That is a rough, rule of thumb for how to value a stock. Take the company's sales, divide it by the number of shares, multiply it by a multiple based on their industry. Retail has a low multiple. Online, digital businesses, with sticky, digital consumers with digital footprints, have a much higher multiple.
I've seen credible analysis that said that even the price we saw yesterday and are seeing today isn't their top compared with what they could do over the next year or two. This short squeeze is just the opening volley in right-sizing the price on a stock that was hilariously undervalued for no good reason.
Comment by jstohler at 27/01/2021 at 12:57 UTC
6 upvotes, 1 direct replies
Yup. Eventually market reality will intrude, everyone will cash in, GME will return to ~$15/share and nothing will be learned.
Comment by whochoosessquirtle at 27/01/2021 at 20:27 UTC
0 upvotes, 0 direct replies
People are already cashing out.... Its a nice smug thought but it cant be proven either way without a giant poll. For all we know every share sold today was bought when it was at 10 bucks. Or 200. Or 0. or 300. Nothing is guaranteed except the fact that stocks arent bitcoin and you can cash out at any time without affecting the price unless you are a billionaire trader using theor desktop computer to put in orders. No billionaire does that though and they can easily unload billions outside the market
Comment by Axel-Adams at 27/01/2021 at 22:08 UTC
1 upvotes, 0 direct replies
Yes, but the Hedgefunds have already lost billions. This is literally capitalist wealth redistribution