Redditors Drive up Gamestop Stock Prices, causing Hedge Fund Short Sellers Billions in Losses
- Thread starter GURPS
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jrt_ms1995
Well-Known Member
Big Tech Bites Back: Robinhood Suspends Trading, Discord Bans ‘WallStreetBets’ Over GameStock Surge
Robinhood, the free stock trading app that Reddit traders used to buy shares of GameStop, resulting in an intense stock surge, has banned trading the retailer’s shares, as well as shares of several other companies targeted by r/WallStreetBets, halting GameStop’s meteoric rise.
Discord, an independent VoIP and instant messaging service largely used by gamers, also banned members of r/WallStreetBets for “hate speech” after the group migrated to Discord servers following a brief Reddit outage.
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As the Daily Wire reported earlier Thursday, the GameStop stock surge was orchestrated by Redditors looking to send a message to Wall Street hedge fund managers engaging in short selling. “GameStop started in January valued at $17.25 and had been heavily “shorted,” meaning many Wall Street hedge-fund short-sellers expected the firm to collapse and the value to plunge with it,” Daily Wire noted.
So far, the Redditors are succeeding, according to CNBC. “Hedge fund Melvin Capital closed out its short position in GameStop on Tuesday after taking huge losses as a target of the army of retail investors. Citadel and Point72 have infused close to $3 billion into [Melvin Capital] to shore up its finances.”
Trading services and government regulators, though, have been vocal over their concern for “market volatility” related to the stock surge, and Wall Street’s hedge fund bankers seem to be panicking, based on social media posts decrying Robin Hood’s democratization of the stock-trading process.
In at least two cases, it appears so-called “Big Tech” forces are firing back, though it’s not immediately clear whether their actions are at the behest of either government or Wall Street forces.
Robinhood, the free stock trading app that Reddit traders used to buy shares of GameStop, resulting in an intense stock surge, has banned trading the retailer’s shares, as well as shares of several other companies targeted by r/WallStreetBets, halting GameStop’s meteoric rise.
Discord, an independent VoIP and instant messaging service largely used by gamers, also banned members of r/WallStreetBets for “hate speech” after the group migrated to Discord servers following a brief Reddit outage.
[clip]
As the Daily Wire reported earlier Thursday, the GameStop stock surge was orchestrated by Redditors looking to send a message to Wall Street hedge fund managers engaging in short selling. “GameStop started in January valued at $17.25 and had been heavily “shorted,” meaning many Wall Street hedge-fund short-sellers expected the firm to collapse and the value to plunge with it,” Daily Wire noted.
So far, the Redditors are succeeding, according to CNBC. “Hedge fund Melvin Capital closed out its short position in GameStop on Tuesday after taking huge losses as a target of the army of retail investors. Citadel and Point72 have infused close to $3 billion into [Melvin Capital] to shore up its finances.”
Trading services and government regulators, though, have been vocal over their concern for “market volatility” related to the stock surge, and Wall Street’s hedge fund bankers seem to be panicking, based on social media posts decrying Robin Hood’s democratization of the stock-trading process.
In at least two cases, it appears so-called “Big Tech” forces are firing back, though it’s not immediately clear whether their actions are at the behest of either government or Wall Street forces.
GameStop’s Massive Surge Creates A New Billionaire As Reddit Traders Bet Against Wall Street
According to regulatory filings, Cohen—the founder and former CEO of Chewy, a booming e-commerce firm focused on pet supplies–spent about $76 million buying up more than 9 million GameStop shares at the tail-end of last year as he mounted an effort to restructure the Grapevine, Texas-based firm.
"Unfortunately, it is evident that GameStop currently lacks the mindset, resources and plan needed to become a dominant sector player," Cohen said in a public letter to GameStop's board of directors in November, blasting the stock's dismal performance at the time—it was down 85% over the prior five years. "GameStop needs to evolve into a technology company that delights gamers and delivers exceptional digital experiences–not remain a video game retailer that overprioritizes its brick-and-mortar footprint and stumbles around the online ecosystem."
It’s unlikely that Cohen, or anyone for that matter, could have predicted what would play out over the next couple of months. GameStop shares are up more than 800% since his declaration, and the value of Cohen's stake has skyrocketed to about $825 million. Tack that onto the proceeds Cohen received from PetSmart's $3.4 billion acquisition of Chewy in 2017, and Forbes estimates the 35-year-old is worth about $1 billion. A spokesperson for Cohen said he was not available for an interview at press time.
According to regulatory filings, Cohen—the founder and former CEO of Chewy, a booming e-commerce firm focused on pet supplies–spent about $76 million buying up more than 9 million GameStop shares at the tail-end of last year as he mounted an effort to restructure the Grapevine, Texas-based firm.
"Unfortunately, it is evident that GameStop currently lacks the mindset, resources and plan needed to become a dominant sector player," Cohen said in a public letter to GameStop's board of directors in November, blasting the stock's dismal performance at the time—it was down 85% over the prior five years. "GameStop needs to evolve into a technology company that delights gamers and delivers exceptional digital experiences–not remain a video game retailer that overprioritizes its brick-and-mortar footprint and stumbles around the online ecosystem."
It’s unlikely that Cohen, or anyone for that matter, could have predicted what would play out over the next couple of months. GameStop shares are up more than 800% since his declaration, and the value of Cohen's stake has skyrocketed to about $825 million. Tack that onto the proceeds Cohen received from PetSmart's $3.4 billion acquisition of Chewy in 2017, and Forbes estimates the 35-year-old is worth about $1 billion. A spokesperson for Cohen said he was not available for an interview at press time.
Tilted
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Yeah, I know there was a lot of short interest. But how was that picking on GameStop? Do you think shorting the stock was unjustified? And what effect do you think the short interest had on the company itself?
There were a lot of bets, by Wall Street, against GameStop. But there were also a lot of bets, by Wall Street, on GameStop. The latter are paying off now. But at whose expense? Other than the former, of course.
Personally .... shorting is bull sht market manipulation and should be illegal .... borrowing stock to sell with a promise to replace it later ... who are you Whimpy looking for a Hamburger
Crushing the company as the stock value is zeroed so these *******s can make a profit
from what I have heard is these hedge funds engage in selling a stock back and forth to make it appear there is a run on selling, causing other stock holders to sell further driving the price down ... then the hedge funds buy the depressed stock and clean up
Tilted
..
Shorting is an important function for healthy equity markets. But as I indicated before, it can also be abused. In and of itself it isn't market manipulation though, of course, it can be used in ways that amount to market manipulation. So can going long on stocks. What we're seeing now with GameStop is market manipulation. It may or may not be coordinated market manipulation in certain regards, but it is market manipulation. That is, unless you think all the people buying GME are doing so because they think $300 (or $200 or $400) is a fair market price for the stock. It isn't. The stock is being bought for other reasons - e.g., as suggested, to cause a short squeeze and hurt certain short sellers or as part of a pump and dump.
That said, we're talking about this specific instance of short selling. Some instances of short selling might be market manipulation or meant to crush a particular company. But what about the GameSpot short selling we've been referring to? I'm asking how you think it was hurting GameSpot? How was it crushing the company?
It was hurting existing GameStop shareholders, sure. Those shareholders would, for the most part, be what is often referred to as Wall Street. We're talking about large asset managers. I'm not going to dig through every 13G filed for GameStop to get the most up to date information available for each asset manager, so I'll use the information reported in GameStop's 14A in April. As of then, three of the largest asset managers in the world - Fidelity, BlackRock, and Vanguard - beneficially owned 50% of GameStop. A fourth asset manager among the largest, State Street, owned 6%. Dimensional Fund Advisors, a smaller but still pretty large asset manager, owned another 11%. Must Asset Management, which I hadn't heard of but which is apparently a Korean hedge fund, owned another 5%. The point is, GameStop was owned by hedge funds and other asset managers. So that's who would have been hurt by the short sellers - those asset managers and the people or entities which they managed assets for.
But the company itself? That's what I'm asking about. As I've said, it wasn't trying to raise capital in the equity markets. It was actually doing the reverse, buying back shares. In what way were short sellers crushing GameSpot, rather than GameSpot's (largely Wall Street) shareholders?
So whatever happened with Reddit and GameStop, the little guy retail investors were hurting the big guys (who were short selling) in order to what? Protect the even bigger guys?
This is a squeeze, not a pump and dump. The reason it dropped so much today is because the idiot hedge funds doubled down and went from a 140% float to a freakin 250% float. They were rapid firing trades to each other back and forth to make it seem like a ton of people were selling, which caused the price to drop.
Tmw/Monday is when this gets real. Like, really real
Tmw/Monday is when this gets real. Like, really real
PeoplesElbow
Well-Known Member
Puts expiring in a month with a $100 strike price...
With shorting there is no limit in how much you can lose, most you can lose with puts is their cost.
With shorting there is no limit in how much you can lose, most you can lose with puts is their cost.
Louise
Well-Known Member
They won’t be explaining it to Biden. He is Obama’s puppet. And, Obama will lay low, as the traitor he is; not to mention he wasn’t born in the USA. The person we should be going after is another traitor, Susan Rice.
GameStop Politics: Democrats’ Hubris And Abusiveness Will Lead To Their Own Short Squeeze
It’s hard, if not impossible, to have sympathy for the billionaire short sellers. The Wall Street Journal has a pretty good report on the ugly short-selling industry, and how the intimidation of online mobs we see in politics have targeted them and their families.
Which got me thinking about the significance of GameStop in this political environment.
It could serve as something of an inspiraction and outline for how to push back against the political equivalent of the short-selling hedge fund billionaires — the smug, aggressive, and abusive Democrats, liberal media, and leftist activists who feel invulnerable to challenge, who brag about how they are going to purge the deplorables from public life, deprive them of the ability to earn a living, cancel them from life and the internet. They are ascendant, taunting people, trying to criminalize political opposition to the party that controls both Houses of Congress, the presidency, higher education, increasingly elemenary and secondary education, the entertainment industry, and Big Tech.
Whatever other elements there end up being in this story, it is sure that the short-selling hedge fund billionaires didn’t see it coming. A bunch of people organizing under the radar stuck it to them.
I think there’s some political equivalent here. I don’t know what it looks like yet, but there’s only so long the rapid destruction of jobs and the economy and political persecution can continue without the political equivalent of a short squeeze on Democrats.
It’s hard, if not impossible, to have sympathy for the billionaire short sellers. The Wall Street Journal has a pretty good report on the ugly short-selling industry, and how the intimidation of online mobs we see in politics have targeted them and their families.
Which got me thinking about the significance of GameStop in this political environment.
It could serve as something of an inspiraction and outline for how to push back against the political equivalent of the short-selling hedge fund billionaires — the smug, aggressive, and abusive Democrats, liberal media, and leftist activists who feel invulnerable to challenge, who brag about how they are going to purge the deplorables from public life, deprive them of the ability to earn a living, cancel them from life and the internet. They are ascendant, taunting people, trying to criminalize political opposition to the party that controls both Houses of Congress, the presidency, higher education, increasingly elemenary and secondary education, the entertainment industry, and Big Tech.
Whatever other elements there end up being in this story, it is sure that the short-selling hedge fund billionaires didn’t see it coming. A bunch of people organizing under the radar stuck it to them.
I think there’s some political equivalent here. I don’t know what it looks like yet, but there’s only so long the rapid destruction of jobs and the economy and political persecution can continue without the political equivalent of a short squeeze on Democrats.
well at this point GSE is at the center of the story / news cycle .. tbh I understand there are doz if not hundreds of stocks on a short sale
I'll say it again with the current console releases in play, I agree with the analysis GSE was under valued in the market and the price should have been higher ...
Toxick
Splat
Are you aware that the current consoles are phasing out physical media? The consoles that I have sitting in my living room don't even have disk players in them. My games get there through wifi.
There are still some luddites, purists and sundry hangers-on who like to have disks - and I can't deny that I, myself, look at my bookshelf full of video games, all neatly arranged with XBox games on one shelf XBox360 games on another with pride and satisfaction. And I have a big ol' box of PC games under my desk by my right ankle as I type (not a single one of them installed on this computer) - But the fact is, physical media is on the way out. And without physical media, the only reason to have GameStop is to get Fortnite Snowglobes, Minecraft Plushies, or gaming and meme t-shirts or coffee mugs. And nostalgia. I don't think there's a big enough market for game "merch" to keep a big chain like that open. And nostalgia is free and doesn't require a physical location to enjoy it.
GameStop was dying for a reason, and it wasn't the hedgefunds - although they were accelerating the demise of GME. And when all of this is over, GameStop will continue their journey into the sunset, although a little happier, a little richer and a little later.
Anyway - my point is, I don't think GameStop was undervalued and their prices should not have been higher. At least not by MUCH...
I think they're incredibly and mindbogglingly OVERvalued right now and when the bubble pops, somebody's losing a house. The only bright side is that a some billionaire sleezebags have lost their shirts - even if they've been bailed out by other billionaire sleezebags, and will likely be further bailed out and subsequently protected by government sleezebags. But light has been shown on some festering bullshit and I can only hope this effects some sort of positive change for the little guys. Especially now that they know what they're capable of.
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