Stories
Slash Boxes
Comments

SoylentNews is people

posted by martyb on Thursday January 28 2021, @04:57AM   Printer-friendly
from the ups-and-downs dept.

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 By the time you read this, that number may be horribly outdated, as the stock continues to bounce up and down with extreme volatility hour by hour (it dipped down as low as $61 and peaked as high as $159 on Friday).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)


Original Submission #1
Original Submission #2

 
This discussion has been archived. No new comments can be posted.
Display Options Threshold/Breakthrough Mark All as Read Mark All as Unread
The Fine Print: The following comments are owned by whoever posted them. We are not responsible for them in any way.
  • (Score: 0) by Anonymous Coward on Friday January 29 2021, @12:42AM (3 children)

    by Anonymous Coward on Friday January 29 2021, @12:42AM (#1106380)

    So I mostly understood everything you said (maybe years(?) ago) but I'm still confused. It still sounds like brokers / hedge funds are lending out more shares than they actually have. I don't understand how that can be legal.

  • (Score: 0) by Anonymous Coward on Friday January 29 2021, @02:01AM

    by Anonymous Coward on Friday January 29 2021, @02:01AM (#1106426)

    (and/or selling more shares than they have which sounds like it should be illegal).

  • (Score: 2) by Socrastotle on Friday January 29 2021, @05:33AM

    by Socrastotle (13446) on Friday January 29 2021, @05:33AM (#1106484) Journal

    It's not. It's called naked shorting. Now go report it to regulators who happen to be directly tied to the exact people doing said naked shorting.

    The masks are coming off right now. Any and all politicians who care at all about the little guy should be coming out seriously in favor of them right now. Everything the Redditors did was undoubtedly completely and 100% legal. Wallstreet put themselves into a corner with illegal (or at least prohibited by regulation) activity, and is now trying to crawl out of it with even more illegal activity including widespread collusion and efforts to manipulate the market in illegal ways.

    So far exactly two political figures (that I am aware of) have come out in support of the people. Ted Cruz and AOC.

  • (Score: 0) by Anonymous Coward on Saturday January 30 2021, @12:28PM

    by Anonymous Coward on Saturday January 30 2021, @12:28PM (#1106859)

    The brokers write options on their customer's shares (and even the relatively small brokerages have billions of dollars worth of assets at their disposal), which actually belong to them, these options are all for different date ranges, so they do some accounting magic and everything somehow adds up. Sometimes companies sell options on their own stock, and private individuals can write options on their own holdings as well (you have to be pretty well off to qualify to do this though). The options contracts themselves can be resold too.