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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 By the time you read this, that number may be horribly outdated, as the stock continues to bounce up and down with extreme volatility hour by hour (it dipped down as low as $61 and peaked as high as $159 on Friday).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: 4, Informative) by Grishnakh on Thursday January 28 2021, @06:20AM
And if you buy ANY stock based on what I, an anonymous Grouch Marx wannabe, tells you; well you're a dumbass,
Not necessarily.
Instead, a bunch of redit jackasses noticed what they were doing, countered their play (at approximately $500 each, against billionaires) and won the bet.
Exactly! And it's hilarious. $500 is not a lot to bet on something like this. If I buy up $500 of some shitty stock like GameStop, and I end up having to sell it for $250, oh well. That's not going to affect my finances in a significant way. But if an army of people like me all do the same thing, we get what we're seeing with GameStop and these "Wall Street jerkoffs" as you put it. I can afford to lose a few hundred $ on a silly bet. Can they afford to lose, well, an infinite amount of money (since the losses from short selling are potentially infinite)? That one firm has already lost over 12B!
All these rich wall street assholes that have been preaching the free market for years suddenly think we need regulation.
Seems to me they need to just ban short selling: it's risky, and the whole strategy seems to be to artificially drive the stock price down. According to Wikipedia, "Research indicates that banning short selling is ineffective and has negative effects on markets. Nevertheless short selling is subject to criticism and periodically faces hostility from society and policymakers." Also, "Short sellers were blamed for the Wall Street Crash of 1929. Regulations governing short selling were implemented in the United States in 1929 and in 1940.[citation needed] Political fallout from the 1929 crash led Congress to enact a law banning short sellers from selling shares during a downtick; this was known as the uptick rule and was in effect until 3 July 2007, when it was removed by the Securities and Exchange Commission."
It seems simple to me: it either needs to be banned, or curtailed by renewing the regulations that were stupidly removed in 2007. It also appears that this practice is banned in many Europeans nations.