Posted on Jan 29, 2021
How GameStop’s stock grew tenfold from a fight between Reddit users and Wall Street bankers
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Video game retailer GameStop’s stock price has increased dramatically due to the actions of users on the WallStreetBets subreddit.
The Reddit users pushed the stock up from $20 on 11 January to a staggering high of $146.97.
The general reason for this is because the stock market is subject to wild speculation that can deem companies like Tesla, for example, more valuable than the nine largest automakers combined.
The more specific reason is that the company found itself as the central catalyst in a battle between short-sellers and online traders.
The Reddit users pushed the stock up from $20 on 11 January to a staggering high of $146.97.
The general reason for this is because the stock market is subject to wild speculation that can deem companies like Tesla, for example, more valuable than the nine largest automakers combined.
The more specific reason is that the company found itself as the central catalyst in a battle between short-sellers and online traders.
How GameStop’s stock grew tenfold from a fight between Reddit users and Wall Street bankers
Posted from independent.co.uk
Video Games
Investing
Stock Market
Stock Trading
Posted 3 y ago
Responses: 3
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F'em - the short-sellers. They gambled and lost. People with money game the system all the time, but people only seem to get upset when poor people do it. Short-sellers, fringe interest investors, market speculators, etc. are all lining their pockets hand over fist and aren't contributing anything useful. So F'em.
That said, while I understand the short-selling aspects and how those engaging the practice are now up a river, I don't entirely understand the artificial overvalue inflation of the company as a whole. Seems at some point there will be a race to be in the front of the line to cash out and get away with the profits. Surprised it hasn't started already.
That said, while I understand the short-selling aspects and how those engaging the practice are now up a river, I don't entirely understand the artificial overvalue inflation of the company as a whole. Seems at some point there will be a race to be in the front of the line to cash out and get away with the profits. Surprised it hasn't started already.
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Sgt James S.
They've shorted more shares than physically exist--140% short interest at one point. As people buy shares and drive the price up, the shorts have to cover at higher prices, which in turn drives the price up even higher. As long as people buy and hold the shares, shorts could theoretically be forced to pay whatever price the holders demand---up to infinity.
Eventually the squeeze will play out and the stock will drop back down to reflect real valuation--and some people will end up holding the bag. In the meantime, fortunes are being made (and extracted).
Eventually the squeeze will play out and the stock will drop back down to reflect real valuation--and some people will end up holding the bag. In the meantime, fortunes are being made (and extracted).
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MSgt Steve Sweeney
Sgt James S. - They could short more shares than actually existed? How/why could they do that... other than an appalling lack of regulation? Well, at least karma is working on this one... for now. Thanks for the break-down.
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Sgt James S.
MSgt Steve Sweeney - There are multiple breakdowns on the WallStreetBets subreddit page that explain the backstory and how the short squeeze started. And then there's this: https://www.reddit.com/r/wallstreetbets/comments/l9rk78/sec_doj_60_minutes_public_data_suggests_massive/
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MSgt Steve Sweeney
Sgt James S. - Good gouge. I don't have enough knowledge about the stock market to understand the issue at a granular level, but I am learning... as I suppose many are. Makes me curious to know how widespread the practice of counterfeiting shares is, and what mechanisms are in place to prevent it, as feeble as they appear to be. Are shares backed or represented with anything tangible, or are they just electron blips residing in a server? I will look this up myself, but feel free to share whatever knowledge you may have, but don't feel obligated to do so.
On a personal note, I see you are a crypto-linguist and wanted to ask if you were ever at DLI, and if so, when?
Belay that... I just looked at your profile and see you were there in 93-94. Outstanding! Out of boot, they sent me there to learn Korean (2673) in 89. I shipped on an infantry contract, but they screened me in boot camp and told me I was going to be a linguist... not something I really signed up for, but at the time I didn't feel I had the opportunity to say no. I didn't hablo Korean very well, but between casual platoon and them figuring out me speaking Korean was not in the stars, I spent almost 7 month in Monterey. What a party. I consider those 7 months my "college days".
On a personal note, I see you are a crypto-linguist and wanted to ask if you were ever at DLI, and if so, when?
Belay that... I just looked at your profile and see you were there in 93-94. Outstanding! Out of boot, they sent me there to learn Korean (2673) in 89. I shipped on an infantry contract, but they screened me in boot camp and told me I was going to be a linguist... not something I really signed up for, but at the time I didn't feel I had the opportunity to say no. I didn't hablo Korean very well, but between casual platoon and them figuring out me speaking Korean was not in the stars, I spent almost 7 month in Monterey. What a party. I consider those 7 months my "college days".
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unless there is an intervention on a Godzilla type scale, that would throw an already volatile situation into further Chaos, Melvin is doomed. The filthy rich have been manipulating the market for years with short selling. There are already whispers trying to frame this as an alt right attack on the market.
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SSG Robert Perrotto
MSgt Steve Sweeney - um - that is why I said "whispers trying to frame". What occured was a group of people savvy with how the market works on a reddit board saw the Melvin (the hedge fund), was going to short gamestop stock, betting on the stock dropping in order to make a boatload of cash, and at the same time, bankrupt Gamestop. This happens quite a lot. So when Melvin started to sell the stock, the reddit group bought it, others saw what was happening, and joined in, driving the price of the stock up, essentially, melvin gambled, and got caught with their pants at their ankles. Melvin has to buy back those shares, because they owe those shares to someone(s) else, who will also get screwed by this. The grey area is by so many people joining in, they created a speculative bubble, which has to burst. Those that bought in when the shares were high, might also be holding the bag as the stock inevitably crashes. in this instance though, It is more likely the people who bought high, knew they were going to lose their money, but felt that it was worth it to have the rich lose billions, compared to their hundreds.
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MSgt Steve Sweeney
SSG Robert Perrotto - Well, "whispers" doesn't really provide much attribution. Regardless, I don't see the fingerprints of cousin-humping, Trump loving, dental challenged, cross-burning rednecks on this, so selling it as an "alt-right" action would be a stretch, whomever is trying to make that claim.
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