Redditors Drive up Gamestop Stock Prices, causing Hedge Fund Short Sellers Billions in Losses

Clem72

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.
I bought APR $20 puts on the day it went over 60. Every day as the stock price went up and the puts were further and further out of the money instead of going down the puts went up. Ended up selling them for almost 4x what I bought them for while the price was still rising. It will crash eventually, but now with the visibility and people apparently "approving with their wallets" of a Cohen style revitilization of the company it may not actually sink back down to the $15-$20 range. So I took the money and ran.
 

GURPS

INGSOC
PREMO Member
Jen Psaki's Brother is a Hedge Fund Manager at one of the Funds Getting Crushed

All references have been scrubbed ....
the brother deleted his linked in profile
JP's Wiki has been scrubbed to remove references to her brother



 

glhs837

Power with Control
I’ve thought about this for a while and I can’t come up with a good reason for this, can you please explain why it’s important?
Well, it's supposed to help weed out weak companies, when done properly. But, like everything else, it got turned into yet another mechanism to make easy money. It's easy to short, then get your shills/buddies to plant op-eds and articles constantly hammering the company. It becomes a self-fulfilling prophecy. DId you short because you though the company was weak? Or did you short because you saw a chance to paint the company as weak so you could profit?

That's one reason shorting has a bad name, it's been horribly abused, like so many things on Wall Street. The hedge funds saw nothing wrong, nor did regulators, in about 140% of Gamestops stock shares being sold short..... Meaning that say (made up numbers here) there were 7 million shares available for trade. 9,800,000 shares were sold short, meaning the hedge funds had literally borrowed and sold 2.8 million more shares than existed!!!! Talk about a broken mechanism.
 

GURPS

INGSOC
PREMO Member
Well, it's supposed to help weed out weak companies, when done properly.
:sshrug:

Why the need for the culling, thisn't a heard of water buffalo, if a company sucks that bad they are in the way out anyway ...... it just smacks of something immoral ... selling something you don't own, borrowing someone's stock .... hey let me borrow your house for a couple of years

Or did you short because you saw a chance to paint the company as weak so you could profit?

This ....
 

glhs837

Power with Control
:sshrug:

Why the need for the culling, thisn't a heard of water buffalo, if a company sucks that bad they are in the way out anyway ...... it just smacks of something immoral ... selling something you don't own, borrowing someone's stock .... hey let me borrow your house for a couple of years




This ....
No idea, as I said, thats it's supposed purpose. Just another money shuffle meant for the money people to make more money as far as I can see. Every long Tesla investor has spent years watching billionaires and their funds perpetrating massive amounts of what Tesla folks call FUD soley in the name of taking the company down for fun and profit. I mean, if the arguments had merit, it might mean something, but pumping every death/fire into a national case, funding frivolous lawsuits, twisting every fact to mean the companies dying. None of it honest, all with one purpose. To make money over the corpse of the company.
 

stgislander

Well-Known Member
PREMO Member
The Biden Administration needs to find a position for this person.

!
 

GURPS

INGSOC
PREMO Member
CNN SLAMMED For Lying About WallStreetBets GameStop Rebellion, The SLV Short Squeeze Is FAKE NEWS




 

GURPS

INGSOC
PREMO Member
From GamerGate to the Stock Market Revolt: How the Elite Fall Before the Unlikely

Somewhere right now, a 20-something-year-old guy is setting down his controller in between rounds of Call of Duty to pick up his phone and opening up an app to check on how his GameStop stock is doing. It’s his day off from his job and he’s spending it gaming, binging Netflix, and stuffing his face with junk food.

He, like many people around his age group, is a pretty standard sight in today’s society with a clear exception. This average guy is a hero, and he’s bringing down some of the most powerful and corrupt people in our society right there from his couch, in between Warzone matches.

He’s taking part in a revolt against the elite of our society who have been controlling the stock market and robbing untold Americans of their hard-earned cash. A stock may begin to go up and so these elites who have bet against the stock will have their media cronies announce that the stock is about to crash, causing a mass sell-off of the stock resulting in it plummeting.

It’s a way to get rich and stay rich, and with that wealth, they can pay off whoever they need to in other sectors of our society in order to keep the good times rolling.
 
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
It was both a short squeeze and a pump and dump. The power that the short squeeze would bring to bear in a stock that was so heavily shorted is likely why GameStop was targeted by whoever decided to run this play. It wouldn't require a ton of capital being motivated to action in order to manipulate the share price enough to set off a massive short squeeze and position those driving it to make a lot of money. All they needed was an appealing narrative and social media to marshal some useful fools and... voila... a modern day pump and dump. One of the questions now is, was an institutional investor behind this or was it a clever, comparably smaller, retail investor? Also, will they get away with it?

That said, of course there was a lot of additional shorting. This situation created the mother of all shorting opportunities. It was almost a no-brainer, so long as you had enough capital to meet margin requirements even in the case of further share price increases and were willing to take the chance to wait out the cycle - not knowing exactly how much, and for how long, social media driven retail capital might be motivated to manipulate the share price. The newer shorts have or will make enormous profits.

Overall though, the short interest in GameStop has fallen dramatically. That's why the retail investors left in the stock should be even more wary now; there isn't nearly as much potential going forward for a short squeeze dynamic to artificially inflate the share price. For those not savvy enough to get out earlier, it may be time to fun for the hills.

Also, the volume last Thursday (during the steep decline you referred to) was much less than it had been over the previous four trading days when the average daily volume was more than twice the total float. That's when the trading back and forth, driving the price up, really occurred - not so much when the drop started. And the really sudden decline on Thursday morning, which was halted multiple times by automatic triggers, wasn't on tremendous volume. Again, the real market manipulation here was on the bull side.

At the end of the day, some of the original short sellers (who may have been fundamentally right on their shorts) will have lost a lot of money. But other hedge funds - to include new short sellers - will have made a lot of money. Some retail investors will also have made some quick cash, but many more will have lost money. Some people were the users; some people got used. And it doesn't look like GameStop was in a position to quickly do a new equity offering, meaning it likely won't have been able to take advantage of the inflated share price to raise a bunch of new capital (without much shareholder dilution). So it will largely be in the same position it was before - with a business model that has been failing, and either trying to figure out how to turn it around or working on an exit strategy.

We'll see whether momentum from the original narrative will carry on and motivate a new push to inflate the share price, or if the current decline keeps up. I would't be shocked either way, though I'd probably bet on the latter. Either way, looking back this situation is going to seem - to those fairly assessing it - to be something quite different from what it was originally sold as.
 
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 ...
Okay, at what share price was it undervalued? And at what share price was it fairly valued? Was $300 or $400 reasonable? $200? $100? And when do you think GameStop will return to profitability? Has it done enough to adjust to the shift to digital media purchases? Perhaps more importantly, is it positioned to remain relevant with the possible coming shift to streaming and subscription gaming models?

I still haven't seen a good argument for how it was that the short sellers were hurting GameStop itself - the business and its prospects for the future - rather than just its, mostly institutional, shareholders. The narrative was, best I can tell, bunk. The market wasn't being manipulated to hurt GameStop the business. The market manipulation was what happened to cause and continue the short squeeze. As I've said, short selling can be used abusively. But I don't see where that was the case with GameStop. It was heavily shorted for legitimate reasons.
 
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I’ve thought about this for a while and I can’t come up with a good reason for this, can you please explain why it’s important?
There are a number of reasons. I'm not sure how deep in the weeds you want to get with how equity markets work - behind the scenes, so to speak, with the processes that make the markets function. So I'll be fairly cursory for now. (I'm no expert when it comes to such things anyway. But I do have a decent-enough working understanding of them.)

Generally speaking, I'd refer to the roles played by shorting as: (1) liquidity, (2) hedging, and (3) more effective pricing / bubble mitigation.

Market makers - the entities behind the scenes who make efficient and liquid equity trading possible - sometimes need to short positions in order to mitigate the carrying risks they face. They aren't there to make money on moving share prices. They're there to make money on bid / ask spreads and, in doing so, facilitate trades for those who are trying to make money on moving share prices. They can't do what they do if they risk losing too much money on price movement. And all the equity investors who want to be able to easily make trades, and buy or sell their shares quickly at prices they think are right, need the market makers behind the scenes providing liquidity and efficient price matching. They're kind of (some of) the gears doing the work of actually making trades happen.

Further, various entities need to be able to short in order to hedge the risks they're taking. Hedging plays an important role in investment. And investment, or course, is part of what drives new business and job creation. Society, on the whole, benefits from risk taking in capital allocation and risk taking is often easier to justify when hedging is possible.

Perhaps more importantly, short selling is needed to counter the natural bull bias in equity investment. Short sellers aside, the parties involved with trading given equities are, on the whole and generally speaking, biased in favor of higher valuations than realities would have. The people who affect the price of stocks are the people who think the stock prices should be high. They're choosing to buy particular stocks or had previously chosen to buy them. They are less inclined to appreciate downside risks than people who wouldn't chose to buy those stocks. They benefit from prices going up. Without short selling, the people who recognize problems - or, just overvaluation - don't have an effective mechanism to weigh in and keep stock prices in check. Bubbles - in particular stocks and in equity markets more broadly - would happen more often and would burst more violently if short sellers weren't allowed to weigh in and exert bearish pressure on market prices. In some cases short sellers are the canaries in the coal mines, so to speak, sniffing out problems - accounting issues, fraud, poor business practices. Without the ability to short sell particular stocks, they'd have less incentive to identify such problems and less ability to convince markets of what they've identified.

As I've said numerous times, short selling can be abused. (So can long buying - what's happened with GameStop being a timely example.) But more often it's used for legitimate reasons and helps maintain efficient, liquid markets with better - though, of course, far from perfect - price discovery.
 
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Merlin99

Visualize whirled peas
PREMO Member
It was both a short squeeze and a pump and dump. The power that the short squeeze would bring to bear in a stock that was so heavily shorted is likely why GameStop was targeted by whoever decided to run this play. It wouldn't require a ton of capital being motivated to action in order to manipulate the share price enough to set off a massive short squeeze and position those driving it to make a lot of money. All they needed was an appealing narrative and social media to marshal some useful fools and... voila... a modern day pump and dump. One of the questions now is, was an institutional investor behind this or was it a clever, comparably smaller, retail investor? Also, will they get away with it?

That said, of course there was a lot of additional shorting. This situation created the mother of all shorting opportunities. It was almost a no-brainer, so long as you had enough capital to meet margin requirements even in the case of further share price increases and were willing to take the chance to wait out the cycle - not knowing exactly how much, and for how long, social media driven retail capital might be motivated to manipulate the share price. The newer shorts have or will make enormous profits.

Overall though, the short interest in GameStop has fallen dramatically. That's why the retail investors left in the stock should be even more wary now; there isn't nearly as much potential going forward for a short squeeze dynamic to artificially inflate the share price. For those not savvy enough to get out earlier, it may be time to fun for the hills.

Also, the volume last Thursday (during the steep decline you referred to) was much less than it had been over the previous four trading days when the average daily volume was more than twice the total float. That's when the trading back and forth, driving the price up, really occurred - not so much when the drop started. And the really sudden decline on Thursday morning, which was halted multiple times by automatic triggers, wasn't on tremendous volume. Again, the real market manipulation here was on the bull side.

At the end of the day, some of the original short sellers (who may have been fundamentally right on their shorts) will have lost a lot of money. But other hedge funds - to include new short sellers - will have made a lot of money. Some retail investors will also have made some quick cash, but many more will have lost money. Some people were the users; some people got used. And it doesn't look like GameStop was in a position to quickly do a new equity offering, meaning it likely won't have been able to take advantage of the inflated share price to raise a bunch of new capital (without much shareholder dilution). So it will largely be in the same position it was before - with a business model that has been failing, and either trying to figure out how to turn it around or working on an exit strategy.

We'll see whether momentum from the original narrative will carry on and motivate a new push to inflate the share price, or if the current decline keeps up. I would't be shocked either way, though I'd probably bet on the latter. Either way, looking back this situation is going to seem - to those fairly assessing it - to be something quite different from what it was originally sold as.
Ok last question on this topic. Is this a zero sum issue, have all of the gains by the robinhood investors been paid by the institutional investors or has someone else been dragged into it?
 

Merlin99

Visualize whirled peas
PREMO Member
There are a number of reasons. I'm not sure how deep in the weeds you want to get with how equity markets work - behind the scenes, so to speak, with the processes that make the markets function. So I'll be fairly cursory for now. (I'm no expert when it comes to such things anyway. But I do have a decent-enough working understanding of them.)

Generally speaking, I'd refer to the roles played by shorting as: (1) liquidity, (2) hedging, and (3) more effective pricing / bubble mitigation.

Market makers - the entities behind the scenes who make efficient and liquid equity trading possible - sometimes need to short positions in order to mitigate the carrying risks they face. They aren't there to make money on moving share prices. They're there to make money on bid / ask spreads and, in doing so, facilitate trades for those who are trying to make money on moving share prices. They can't do what they do if they risk losing too much money on price movement. And all the equity investors who want to be able to easily make trades, and buy or sell their shares quickly at prices they think are right, need the market makers behind the scenes providing liquidity and efficient price matching. They're kind of (some of) the gears doing the work of actually making trades happen.

Further, various entities need to be able to short in order to hedge the risks they're taking. Hedging plays an important role in investment. And investment, or course, is part of what drives new business and job creation. Society, on the whole, benefits from risk taking in capital allocation and risk taking is often easier to justify when hedging is possible.

Perhaps more importantly, short selling is needed to counter the natural bull bias in equity investment. Short sellers aside, the parties involved with trading given equities are, on the whole and generally speaking, biased in favor of higher valuations than realities would have. The people who affect the price of stocks are the people who think the stock prices should be high. They're choosing to buy particular stocks or had previously chosen to buy them. They are less inclined to appreciate downside risks than people who wouldn't chose to buy those stocks. They benefit from prices going up. Without short selling, the people who recognize problems - or, just overvaluation - don't have an effective mechanism to weigh in and keep stock prices in check. Bubbles - in particular stocks and in equity markets more broadly - would happen more often and would burst more violently if short sellers weren't allowed to weigh in and exert bearish pressure on market prices. In some cases short sellers are the canaries in the coal mines, so to speak, sniffing out problems - accounting issues, fraud, poor business practices. Without the ability to short sell particular stocks, they'd have less incentive to identify such problems and less ability to convince markets of what they've identified.

As I've said numerous times, short selling can be abused. (So can long buying - what's happened with GameStop being a timely example.) But more often it's used for legitimate reasons and helps maintain efficient, liquid markets with better - though, of course, far from perfect - price discovery.
I got something out of this, not enough that I have a real understanding, but enough that I don't see the people doing the shorting as the bad guys now. Thanks for taking the time to go into all of these details.
 

PeoplesElbow

Well-Known Member
Ok last question on this topic. Is this a zero sum issue, have all of the gains by the robinhood investors been paid by the institutional investors or has someone else been dragged into it?
A lot of little guys are going to be stuck with GME that lost a lot from what they paid for it, it should be under $5.
 
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