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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 By the time you read this, that number may be horribly outdated, as the stock continues to bounce up and down with extreme volatility hour by hour (it dipped down as low as $61 and peaked as high as $159 on Friday).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: 1, Interesting) by Anonymous Coward on Thursday January 28 2021, @06:27AM (4 children)
https://themerkle.com/top-3-altcoin-pumpers-in-history/ [themerkle.com]
People really think this is just a bunch of people buying one share at a time? Defeating big bad Wall Street? Those people will get out last for sure.
(Score: 0) by Anonymous Coward on Thursday January 28 2021, @07:55AM (2 children)
If I had a billion to spare I might prop up the share price at a loss just for the lulz. Are you telling me there's not a billionare out there that likes the lulz?
(Score: -1, Troll) by Anonymous Coward on Thursday January 28 2021, @08:48AM (1 child)
More likely it is to make money or achieve some political goal. Already we see all the usual suspects coming out with "bla, bla this is why we need more government meddling".
(Score: 1, Insightful) by Anonymous Coward on Thursday January 28 2021, @03:44PM
Usual suspects.... you mean the hedge funds?
(Score: 2) by Socrastotle on Friday January 29 2021, @05:08AM
Yes, it is. WallStreetBets is viewed by millions. And when this game first started Gamestop was around $20-$40. It has about 55 million outstanding shares. That was a total market cap of $1-$2 billion. This was small enough for a mid-sized number of small stakes investors to completely dominate the market and push the price up, which is exactly what happened. It's the neat thing about widespread finance. It turns out the 'smart money' on Wallstreet really isn't exactly smart. All they have going for them is:
1) Obscene amounts of money, letting them play these sort of games with a limited number of individuals instead of relying on the coordination of millions.
2) Corrupt financial systems letting them do things average traders cannot. See: nuked shorting.
3) Corrupt governmental systems that bail them out when their gambles backfire.
(Score: 3, Informative) by istartedi on Thursday January 28 2021, @07:51AM (3 children)
This story moved too fast for a lot of media. The reddit "private" thing was actually brief. The stock plunged and recovered a lot after hours. The old MSM local news even reported on this story and got it wrong, saying that the reddit forum was still shut down. Soylent could have done better I suppose, but a lot of people including myself got caught by this and/or we thought it was censored when it really wasn't ( I posted some things to that effect other places and had to retract).
Longtime users say that WSB routinely goes private to clean out troll accounts, and they were hit with a lot of new trolls recently because of this.
As for the whole deal with the short interest remaining at 140%, I haven't been able to find real-time short interest either--just the lame old fortnightly numbers that everybody always quotes. Presumably, naked shorts could settle in cash based on something like the market price at close or something else spelled out in a contract somewhere--I really don't know because I don't do that kind of thing; I'm just speculating so take it with a grain of salt.
This story isn't over yet, and I think it'll continue to move fast so editors might want to hover over the "update" button. It's going to be an interesting two days, and maybe even weekend.
Appended to the end of comments you post. Max: 120 chars.
(Score: 0) by Anonymous Coward on Thursday January 28 2021, @07:58AM (1 child)
I am going to go with $16,000 at the peak. Yeah I should buy at $350 if I believe that, but this is pure gambling and I don't enjoy gambling. Much.
(Score: 2) by FatPhil on Thursday January 28 2021, @08:58AM
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 0) by Anonymous Coward on Thursday January 28 2021, @09:47AM
"and they were hit with a lot of new trolls recently because of this."
There is good money to be made running a server farm of bots shitposting millions of entries. Pretty sure a few have been tried out around here.
(Score: -1, Flamebait) by Anonymous Coward on Thursday January 28 2021, @10:44AM (1 child)
Trump is somehow behind this, the WSB discord had to be closed for hate speech.
(Score: 0) by Anonymous Coward on Thursday January 28 2021, @01:14PM
Obviously [babylonbee.com]
(Score: 2, Informative) by khallow on Thursday January 28 2021, @12:39PM
(Score: 3, Interesting) by Tokolosh on Thursday January 28 2021, @03:26PM (14 children)
Robinhood bars users from buying GameStop stock, infuriating its users
https://finance.yahoo.com/news/robinhood-bars-users-from-buying-game-stop-stock-infuriating-its-users-144007484.html [yahoo.com]
(Score: 0) by Anonymous Coward on Thursday January 28 2021, @04:40PM
The losses must be astronomical for them to let the peasants see the contempt. Or some compliance jackass got spooked that they would be party to market manipulation, so they did actual market manipulation to cover their ass.
(Score: 0) by Anonymous Coward on Thursday January 28 2021, @06:03PM
Oh, they decided to do the obvious thing. I thought they would let small investors keep some chump change and tell boomers that they lost their pensions because "millenials did it" not hedge funds incompetence, and then arrest and put small investors into private prisons and/or take their profits as fines for some white collar crimes that are not crimes when we do it.
(Score: 3, Informative) by Socrastotle on Thursday January 28 2021, @06:42PM (10 children)
It's not just Robinhood - it's Robinhood, Interactive Brokers, Ameritrade, and more.
The masks are coming off.
(Score: 0) by Anonymous Coward on Thursday January 28 2021, @07:19PM (8 children)
I'm an Ameritrade customer and I began typing in a buy order for Gamestop to see what would happen. It didn't look like I was going to be prevented, but I'm not a little fish and wouldn't have purchased on margin.
Do you have citations that everybody is prevented from buying Gamestop? I would agree with the brokers that the current irrationally high valuation of Gamestop doesn't make for good collateral if buying on margin.
(Score: 0) by Anonymous Coward on Thursday January 28 2021, @07:22PM (2 children)
https://www.newsweek.com/robinhood-stops-gamestop-amc-stock-trading-1565122 [newsweek.com]
(Score: 0) by Anonymous Coward on Thursday January 28 2021, @07:38PM (1 child)
I know one can't be picky with journalism in these times, but that article is nothing but a glorified twitter post without any depth nor detail.
(Score: 0) by Anonymous Coward on Thursday January 28 2021, @08:12PM
LOL - here's the deets [zerohedge.com] - citadel and point72 invested $2.75B into Melvin to cover their shorts. So not only did RH stop trading, there's a bigger story behind it.
(Score: 2) by Socrastotle on Thursday January 28 2021, @07:57PM (4 children)
Sure thing [googlethatforyou.com].
Zerohedge [zerohedge.com] is also providing real-time updates with lots more information.
(Score: 0) by Anonymous Coward on Thursday January 28 2021, @08:33PM (3 children)
I just placed an order without any problems on Ameritrade. They put up a flag for "special margin requirements", which shows this stock has a 100% maintenance requirement.
So no one with cash is prevented from buying here, and Ameritrade is within their rights to not accept GME as collateral.
(Score: 0) by Anonymous Coward on Thursday January 28 2021, @10:21PM (2 children)
RH not so [bbc.co.uk]
(Score: 0) by Anonymous Coward on Thursday January 28 2021, @10:36PM (1 child)
Does nobody learn reading comprehension anymore? "Curbs", "restricts" doesn't mean "bans".
(Score: 0) by Anonymous Coward on Thursday January 28 2021, @10:59PM
So what does it mean? [twitter.com]
(Score: 1, Funny) by Anonymous Coward on Thursday January 28 2021, @08:19PM
Let's gooooo! [twitter.com]
(Score: 2) by c0lo on Friday January 29 2021, @01:17AM
https://twitter.com/joemccann/status/1354796185983152130 [twitter.com] - that's a whole thread of how the thing progresses
---
Notable: https://twitter.com/joemccann/status/1354862036669272064 [twitter.com]
and https://twitter.com/joemccann/status/1354862038086864899 [twitter.com]
https://www.youtube.com/watch?v=aoFiw2jMy-0 https://soylentnews.org/~MichaelDavidCrawford
(Score: 2) by BananaPhone on Thursday January 28 2021, @04:36PM
Did the Billionaires hire DOS crooks to punish the Reddit investors?
Reddit is almost dead as a website.
(Score: 3, Informative) by edinlinux on Thursday January 28 2021, @09:20PM (4 children)
I have been watching this with fascination (I have no positions long or short in any of this, and don't plan to). r/wallstreetbets has the whole lowdown.
So what finally happened this morning, is that the billionaires convince most of the major brokers this morning to restrict retail traders from buying shares (even with cash), but allowing them to sell (they just greyed out the 'buy' button on their apps / webpages for GME shares).
This caused a crash in the price (since everyone could only 'sell' and no one could 'buy' (except the hedge funds trying to unwind their shorts...they were not restricted by the brokers).
How was this possible? Well, the billionaires and their hedge funds control orderflow and market making for many of these retail brokers.. So they just dictated it to them. But isn't that illegal?
Well, yes, but the hedge funds and billionaires were going to lose billions from this. The class lawsuits against the brokers (Robinhood in particular) for restricting trading and payments to politicians to sweep this under the rug will cost much less than this.
So yes, corruption..
the market is not free, and there is no way to win :-)
(Score: 2) by edinlinux on Thursday January 28 2021, @09:26PM
BTW, I have no insider knowledge on this, it is a summary of what is on wallstreetbets this morning. A lot of the screenshots posted and writeups are very convincing however..
(Score: 0) by Anonymous Coward on Thursday January 28 2021, @09:57PM (2 children)
Now there are reports that Robinhood is taking Gamestop stocks out of users' accounts without the user's permission and selling the stock.
This sort of thing is what can happen when the actual legal owner of the stock is the brokerage, and individuals just have an account with the brokerage where "their" stocks are allocated. All brokerages do this unless the individual insists that the stock be transferred to their name.
Yet again proving the old adage: "If you don't hold it, you don't own it."
(Score: 2) by Socrastotle on Friday January 29 2021, @05:18AM (1 child)
This is true, and it's also true that Robinhood was also selling the stock at rock bottom prices in obvious collusion with the short interests. However, there is an asterisk here. This was only doing to accounts that were buying Gamestop on margin. In their fine print they're within their rights to force close any position being traded on margin.
So it's bad, an it's obvious collusion, but it's not illegal - likely unlike their decision to ban buy (but allowing selling) of GME.
(Score: 2) by darkfeline on Friday January 29 2021, @10:45AM
>So it's bad, an it's obvious collusion, but it's not illegal
It may make them legally liable if juries/courts can be convinced that it was done in bad faith.
Join the SDF Public Access UNIX System today!
(Score: 2) by Socrastotle on Friday January 29 2021, @08:53AM
3 words I never thought I'd say, but this [reddit.com] shit's hilarious: