SoylentNews is people
SoylentNews
The Complete Moron’s Guide to GameStop’s Stock Roller Coaster
The Complete Moron’s Guide to GameStop’s Stock Roller Coaster:
Last week, an epic short squeeze had driven GameStop stock up to $40 a share, a roughly 1,500 percent increase from its low point nine months ago. Little did anyone know at the time that this would only be the beginning of the story.
As I write this, GameStop's stock price is hovering around $350, up another 775 percent or so since I wrote about this situation eight days ago. By the time you read this, that number may be horribly outdated, as the stock continues to bounce up and down with extreme volatility hour by hour (it dipped down as low as $61 and peaked as high as $159 on Friday).
The current stock price now gives the company a market cap of about $26 billion.
On the surface, that means the market currently thinks GameStop is worth more than twice as much now (during a potentially existential threat to brick and mortar game sales) as it was during the height of the Wii boom in late 2007, when console game downloads were barely a thing.
Also at: Business Insider.
Melvin Capital, Hedge Fund Targeted by Reddit Board, Closes out of GameStop Short Position
Melvin Capital, hedge fund targeted by Reddit board, closes out of GameStop short position:
Melvin Capital closed out its short position in GameStop on Tuesday afternoon after taking a huge loss, the hedge fund's manager told CNBC's Andrew Ross Sorkin.
GameStop, hedge funds' most-hated stock, was targeted by an army of retail investors who marshaled forces against short sellers in online chat rooms. In the Reddit forum "wallstreetbets" with more than 2 million subscribers, rookie investors encouraged each other to pile into GameStop's shares and call options, creating massive short squeezes in the stock.
CNBC could not confirm the amount of losses Melvin Capital took on the short position. Citadel and Point72 have infused close to $3 billion into Gabe Plotkin's hedge fund to shore up its finances. On Wednesday's "Squawk Box," Sorkin said Plotkin told him that speculation about a bankruptcy filing is false.
GameStop shares have soared more than 400% this week alone to $347.51 apiece, driving its January gains to 685%. The stock was worth just $6 four months ago.
Reddit's WallStreetBets is locked as AMC, GameStop stocks fall after-hours
For the past week, Reddit's WallStreetBets community has been the center of an epic war between large Wall Street investors and small scale social media betters. Now, it's been locked, and spooked investors appear to be dumping their shares.
Shares of GameStop and AMC dropped dramatically in after-hours trading shortly after Reddit's community was made only viewable through an invite.
See also: Reddit traders cause Wall Street havoc by buying GameStop
GameStop and Elon Musk send Reddit and Robinhood to the top of the App Store charts
'Dumb Money' Is on GameStop, and It's Beating Wall Street at Its Own Game (archive)
(Score: 5, Interesting) by Socrastotle on Thursday January 28 2021, @05:47AM (4 children)
Just to be clear. This was something more specific than an arbitrary pump to screw the shorts. Somebody noticed that Wallstreet had gotten particularly greedy with Gamestop. More than 140% of their outstanding shares, due to the legally dubious magic of naked shorting, had been shorted.
And for those that don't know what short selling is. There are several forms of it, but the gist is this. I *borrow* a stock from Joe for some fee. That stock is currently worth $10. I go immediately sell the stock. A couple of months later the stock is at $1. I buy the stock for $1. I return that stock to Joe. I've now made $9 minus the fee/interest I paid to borrow it. So you make money when the stock drops. But the catch is that when the stock goes up, your losses are potentially infinite. When the stock hits $20, I've lost 100% of what I invested. When the stock hits $110 I've lost 1000% of what I invested. And there is no max.
So somebody noticed that more shares of Gamestop had been shorted than existed. They told some people and everybody started buying up the stock. That stock has now gone up like 1000% in price. The short-sellers now need to not only buy some stock, but buy 140% of the total number of outstanding shares in order to cover their shorts. A good analog given in the WallStreetBets subreddit was this: Imagine I sold you 10 cars. But then I only show up with 6. And then I ask you how much to buy 4 of those cars from you, so I can finish my delivery? And so when the shorts look to buy the stock to cover their shorts, it's going to go skyrocketing dramatically higher. And then once the stock is in lala land, the guys who went long on it can finally sell (if they so see fit) and make an absurdly large amount of money on it.
Basically these guys just fucked over Wallstreet, using their own means and methods, a million times harder than Occupy Wallstreet, or any other protest against wealth inequality ever could have. And Wallstreet is freaking out. Because if they can't get some corruption going for them, this is going to bankrupt hedge funds and other big money types left and right.
(Score: 0) by Anonymous Coward on Thursday January 28 2021, @07:57AM
Now let's see WSB vs Legatus:
https://gawker.com/5050016/how-legatus-brought-down-wall-street [gawker.com]
(Score: 0) by Anonymous Coward on Thursday January 28 2021, @01:19PM
Correct.
A retard writes, [medium.com] Speccy writeup [spectator.us] or covered on YT by Louis Rossmann, here [youtube.com] and here [youtube.com] and here. [youtube.com]
(Score: 2) by Phoenix666 on Thursday January 28 2021, @02:26PM (1 child)
That's a beautiful thing. But the fix is always in. DC will step right in to bail them out using our tax dollars. What would be especially funny is if China used this moment to stop buying US treasuries in order to double fuck DC.
Washington DC delenda est.
(Score: 0) by Anonymous Coward on Friday January 29 2021, @10:17AM
https://twitter.com/tedcruz/status/1354833603943931905 [twitter.com]
There is no love for Hedge Funds in DC