OT: GameStop

[UpTheMiddlex3Punt]

Am I the only one in on this wild ride? I have a limit order in to take some profits if it gets high enough today. That will cover most of what I put in.

This has gone beyond a basic short squeeze and gamma squeeze. Lines have been drawn and hedge funds have gotten involved on both sides. Individual whales are taking out hundreds of thousands of dollars in options and stock positions. How far up this thing goes nobody knows. I think Friday is when all the action is going to hit with all the call sellers having to purchase shares to cover their positions, initiating another gamma squeeze.

 

[hatfieldms]

And here I am thinking this was about the next great video game console release

 

[Seinfeld]

Wish I was, but I’d have never in a million years guessed that there was value in that one. It just seems like the gaming world’s version of Blockbuster in that its services are becoming less and less necessary by the month.

What’s driving the recent craze?

 

[TrueMaroonGrind]

Wish I was, but I’d have never in a million years guessed that there was value in that one. It just seems like the gaming world’s version of Blockbuster in that its services are becoming less and less necessary by the month.

What’s driving the recent craze?

A buddy at work told me there were a bunch of people on Reddit who decided to flood tons of money in the stock in hopes the price would surge. It has nothing to do with their business model of GameStop. I think it mainly had to do with the companies cheap stock price. It seems to be working at least temporarily. Like anything there are a lot of people that are going to make some money and a lot that will lose some money. I don’t see how it is viable long term.

 

[aTotal360]

Supposedly they are not suppose to turn profit until 2023.

 

[UpTheMiddlex3Punt]

Long story short:

Shorts take out huge positions against GameStop for the last several years. This, along with their business suffering plus covid, drives the price down.

Retail traders like GME and start buying stock & LEAPS starting in 2019 and into 2020.

In December 2020, Ryan Cohen, founder of Chewy, purchases a 12% stake in GameStop. Shares rally on this news.

In early January, Cohen and two of his buddies from Chewy take seats on the board of directors. Shares rally on this news.

In the meantime, shorts increased their positions. It got to be 130% of the shares in the company were shorted. How does that happen? They borrow shares, sell them, borrow those shares, sell them... At some point, though, short sellers have to unwind their positions. They can only do that by purchasing shares on the open market. If there are lots of shares available to purchase, it's not a big deal. However, retail investors are buying every share they can get ahold of and the shorts have to pay a premium to get their shares back. In the meantime, the bankers for the shorts are forcing margin calls. The shorts can borrow more money to pay for their margin, but the interest on this is incredibly high.

It might be okay if the shorts only had the retail investors to deal with. They also have those who sell call options to deal with. If you sell a naked call, you have to start purchasing shares once the share price is above the strike price of the option you sold. The number of shares is proportional to the delta (how much the price of the option changes per dollar change of share price) of the option. So they purchase the shares. This in turn causes a gamma squeeze. Gamma is the change in delta for each dollar in price the share changes (the derivative of delta for those of you who took and remember Calculus I). Gamma squeeze forces the price even higher.

Blood is in the water. The largest shorting firm got an infusion of cash yesterday, but this does not mean the shorts will win or keep getting ammo. Quite the opposite. Hedge funds are getting in on this, sensing a chance to make some quick money and take out competitors.

I guess that wasn't short.

 

[TrueMaroonGrind]

Supposedly they are not suppose to turn profit until 2023.

That’s probably put out there to have some suckers holding the rope once all the big boys sell and make millions.

 

[TrueMaroonGrind]

Long story short:

Shorts take out huge positions against GameStop for the last several years. This, along with their business suffering plus covid, drives the price down.

Retail traders like GME and start buying stock & LEAPS starting in 2019 and into 2020.

In December 2020, Ryan Cohen, founder of Chewy, purchases a 12% stake in GameStop. Shares rally on this news.

In early January, Cohen and two of his buddies from Chewy take seats on the board of directors. Shares rally on this news.

In the meantime, shorts increased their positions. It got to be 130% of the shares in the company were shorted. How does that happen? They borrow shares, sell them, borrow those shares, sell them... At some point, though, short sellers have to unwind their positions. They can only do that by purchasing shares on the open market. If there are lots of shares available to purchase, it's not a big deal. However, retail investors are buying every share they can get ahold of and the shorts have to pay a premium to get their shares back. In the meantime, the bankers for the shorts are forcing margin calls. The shorts can borrow more money to pay for their margin, but the interest on this is incredibly high.

It might be okay if the shorts only had the retail investors to deal with. They also have those who sell call options to deal with. If you sell a naked call, you have to start purchasing shares once the share price is above the strike price of the option you sold. The number of shares is proportional to the delta (how much the price of the option changes per dollar change of share price) of the option. So they purchase the shares. This in turn causes a gamma squeeze. Gamma is the change in delta for each dollar in price the share changes (the derivative of delta for those of you who took and remember Calculus I). Gamma squeeze forces the price even higher.

Blood is in the water. The largest shorting firm got an infusion of cash yesterday, but this does not mean the shorts will win or keep getting ammo. Quite the opposite. Hedge funds are getting in on this, sensing a chance to make some quick money and take out competitors.

I guess that wasn't short.

My brain hurts.

 

[kired]

I bought a few just to say I was in on it, lol. Maybe I'll make enough to buy a ps5 at gamestop.

I'm following it now mainly to see how rich deep17ingvalue gets off this.

 

[TheDawgSaint]

Congrats on getting in early. I was able to do the same with Bitcoin. I got in around a price point of 18k and sold at just under 41K a couple of weeks ago. By far the best I’ve ever done in any market.

 

[UpTheMiddlex3Punt]

I bought a few just to say I was in on it, lol. Maybe I'll make enough to buy a ps5 at gamestop.

I'm following it now mainly to see how rich deep17ingvalue gets off this.

Deep17ingValue is my hero. He sold 200 of his 1000 April $12 calls yesterday and pocketed about $2 million. Those cost him about $6,250 in the first place.

I am on pins and needles waiting to see what he did today.

I'm not going to say what my position is, but it's all in retirement accounts so it wouldn't change my life much today even if it mooned to 1000.

 

[UpTheMiddlex3Punt]

I didn't get in as early as a lot of people. Still my cost basis is 39.95/share (I'm not telling you how many). It was hard to keep my diamond hands yesterday.

 

[rynodawg]

Initially bought shares in December, and on a couple of the dips recently. I have limit orders set to get back principal hopefully by Friday. For the rest of the shares I will hold out as long as it takes for hedge funds to start covering.

 

[rynodawg]

He’s got to be over $20M today. And started with $50K in 2019.

 

[Msubulldogfan1]

Holy ****, is it really 200+ Right now?

 

[rynodawg]

Apparently Elon tweeted about it, up big again after hours.

 

[Msubulldogfan1]

That’s unreal.

 

[PineGroveBully]

The wealth that man creates creating relatively little is quite impressive.

 

[mstateglfr]

17ing Gamestop, 17ing shorters, and 17ing redditers.

This **** is why reality isnt close to academics when it comes to markets, investing, or really anything business related.
The idea that stocks are valued based on the health of a company- what it makes, what its developing, demand for its product/service is just total ******** and the older I get the more I realize that markets and investing is fueled heavily on rumor and ego. Its like a ****** teen drama, actually.

17ing morons- all of em on both sides of this fight. Its insane- people are drawing lines over gamestop stock. gamestop! They were hurting to begin with before covid and covid kinda 17ed em even more since they were trying to transition to in person meet up spots. Just let the damn stock be valued at what it should be.
Immature dicks all around. Thats all it is.

 

[ronpolk]

17ing Gamestop, 17ing shorters, and 17ing redditers.

This **** is why reality isnt close to academics when it comes to markets, investing, or really anything business related.
The idea that stocks are valued based on the health of a company- what it makes, what its developing, demand for its product/service is just total ******** and the older I get the more I realize that markets and investing is fueled heavily on rumor and ego. Its like a ****** teen drama, actually.

17ing morons- all of em on both sides of this fight. Its insane- people are drawing lines over gamestop stock. gamestop! They were hurting to begin with before covid and covid kinda 17ed em even more since they were trying to transition to in person meet up spots. Just let the damn stock be valued at what it should be.
Immature dicks all around. Thats all it is.

Clearly you have a short position**

 

[rynodawg]

If it makes money who cares? Wall Street has never had the moral high ground.

 

[mstateglfr]

If it makes money who cares? Wall Street has never had the moral high ground.

People's hard work is tied to stocks as a means to save for retirement. When a small group(and this is a small group, to be clear) decides to dick measure another small group and creates this sort of scenario, people who arent involved are affected(the potential is both positive and negative to be clear, but often ends negative). I get it- investing is a risk, yada yada. When that is repeated ad naus, it is in reference to quarterly earnings reports and boring **** like that. It really isnt intended to defend short term sword fighting that results in a mess afterwords.

You are correct- Wall Street has never had the moral high ground.

 

[rynodawg]

In this case, it was a billionaire hedge fund attempting to put GameStop out of business by irresponsibly shorting the stock to extreme levels, way below FMV. With the new console cycle, it’s LIKELY that GameStop will be profitable for at least the next few years, maybe more if Cohen reinvents the company, which puts said hedge funds at big risk. A few regular retail investors saw the potential for 1,000% gains and then many more piled on. It’s no different than any other value stock purchase. Wall St greed created this scenario, not any dummies on Reddit.

 

[Carbaryl]

OT with this but I read some girl made $15,000 in a single night last month on Twitch for having 400,000 people watch her sleep.If I only knew as a kid you could make beaucoup money years later to have people watch you play video games and sleep.

 

[UpTheMiddlex3Punt]

Most of the people making money on this are Robinhood traders. The shorts are almost always hedge funds.

Don't get me wrong, lots of the Robinhood traders will lose on this if they don't exit as the shorts are unwinding or before.

 

[UpTheMiddlex3Punt]

22 million today. And that's using closing prices not after hours. He'll be worth 30 million easily if it opens at the current price.

https://www.reddit.com/r/wallstreetbets/comments/l5nphz/gme_yolo_update_jan_26_2021

 

[fishwater99]

https://www.cnbc.com/2021/01/26/gam...eets-out-reddit-board-thats-hyping-stock.html

 

[Mobile Bay]

A buddy at work told me there were a bunch of people on Reddit who decided to flood tons of money in the stock in hopes the price would surge. It has nothing to do with their business model of GameStop. I think it mainly had to do with the companies cheap stock price. It seems to be working at least temporarily. Like anything there are a lot of people that are going to make some money and a lot that will lose some money. I don’t see how it is viable long term.

That is only part of the story. The other half is there are 1.5 shares already sold short for every share in existence. So short sellers are having to buy at any price to cover their positions.

 

[ronpolk]

People's hard work is tied to stocks as a means to save for retirement. When a small group(and this is a small group, to be clear) decides to dick measure another small group and creates this sort of scenario, people who arent involved are affected(the potential is both positive and negative to be clear, but often ends negative). I get it- investing is a risk, yada yada. When that is repeated ad naus, it is in reference to quarterly earnings reports and boring **** like that. It really isnt intended to defend short term sword fighting that results in a mess afterwords.

You are correct- Wall Street has never had the moral high ground.

Most people have their retirement in funds. Highly unlikely they any mutual funds hold GameStop. This situation should not be impacting anyone but those directly buying or shorting the stock.

 

[WilCoDawg]

Very similar to politicians fighting and screwing the everyday man in their battling, huh?

 

[Go Budaw]

Wish I was, but I’d have never in a million years guessed that there was value in that one. It just seems like the gaming world’s version of Blockbuster in that its services are becoming less and less necessary by the month.

What’s driving the recent craze?

You’d have never guessed it because you are probably a logical investor. Its a completely worthless (and “worthless” is the nicest thing I can say, it may actually have negative worth) company that is having its price shot into the stratosphere by third party influences that don’t have a damn thing to do with the intrinsic value of the company. If you have money to burn, you can maybe make a killing and also lose pretty much all of it by getting in at the current price.

 

[Go Budaw]

If it makes money who cares? Wall Street has never had the moral high ground.

It’s not making money in the collective sense. It’s smoke and mirrors. This is a zero sum game in which a handful of people are going to get insanely rich and 100x more are going to absolutely lose their *** when they don’t get out in time, and possibly even lose their life savings. This will probably the best case study that has ever existed about the ethical abyss that is hedge funds and those who run them. The money that is made for the people that get their profits has to come from somewhere, it doesn’t just appear out of thin air.

 

[Uncle Ruckus]

So what is it about

 

[UpTheMiddlex3Punt]

Rumor now is that WSB has bankrupted a 13.2 billion dollar hedge fund. I know it's just a rumor, but Melvin was in trouble yesterday and got a bailout and today didn't help things, so there might be some truth to it unless another source of funding comes along.

 

[Apoplectic_Objurgator]

Am I the only one in on this wild ride? I have a limit order in to take some profits if it gets high enough today. That will cover most of what I put in.

This has gone beyond a basic short squeeze and gamma squeeze. Lines have been drawn and hedge funds have gotten involved on both sides. Individual whales are taking out hundreds of thousands of dollars in options and stock positions. How far up this thing goes nobody knows. I think Friday is when all the action is going to hit with all the call sellers having to purchase shares to cover their positions, initiating another gamma squeeze.

I got in today to stick it to the Wall Street thieves. Only up 134%. I’ll hit it again on the open tomorrow.

You should not be able to float 140% of the stock. Those greedy bastards are trying to kill a company with 14,000 employees. Will WSB make it to $1000? If they do what a story and future netflix documentary

 

[ronpolk]

It’s not making money in the collective sense. It’s smoke and mirrors. This is a zero sum game in which a handful of people are going to get insanely rich and 100x more are going to absolutely lose their *** when they don’t get out in time, and possibly even lose their life savings. This will probably the best case study that has ever existed about the ethical abyss that is hedge funds and those who run them. The money that is made for the people that get their profits has to come from somewhere, it doesn’t just appear out of thin air.

My nearly 300% return would argue with your smoke and mirrors comment. Just because you don’t understand does not make it fake. Absolutely there are going to be people that lose money on the other side of this. But those are guys that chose to invest money with a fund that actively shorted stocks, which means they make money when companies fail or do poorly. So, don’t feel so sorry for those losses.

Fact is Melvin Capital made an odd bet to short a stock that frankly was already in the tank. And their arrogance and ego kept them from just cutting their losses several days ago.

 

[Apoplectic_Objurgator]

My nearly 300% return would argue with your smoke and mirrors comment. Just because you don’t understand does not make it real. Absolutely there are going to be people that lose money on the other side of this. But those are guys that chose to invest money with a fund that actively shorted stocks, which means they make money when companies fail or do poorly. So, don’t feel so sorry for those losses.

Fact is Melvin Capital made an odd bet to short a stock that frankly was already in the tank. And their arrogance and ego kept them from just cutting their losses several days ago.

And Melvin could have taken billions in the initial shorts but they got greedy and tried to kill the company. 17em - I hope they’re cleaning out their offices Saturday morning. If we didn’t already know it - Wall Street is a scam and us 40 hr/wk rubes feed this scam through our 401k and the crooked politicians we elect

 

[Go Budaw]

My nearly 300% return would argue with your smoke and mirrors comment. Just because you don’t understand does not make it real. Absolutely there are going to be people that lose money on the other side of this. But those are guys that chose to invest money with a fund that actively shorted stocks, which means they make money when companies fail or do poorly. So, don’t feel so sorry for those losses.

Fact is Melvin Capital made an odd bet to short a stock that frankly was already in the tank. And their arrogance and ego kept them from just cutting their losses several days ago.

No, I was actually referring to folks with FOMO who know jack **** about investing who will log onto WSB after reading all the news headlines and decide to dump tens of thousands of dollars into this run-up...only to be left holding their dicks when 95% of it completely disappears after greed takes over for the reddit folks and they start selling in concert with the hedge funds unwinding their positions.

This isn’t real money being earned by companies and passed down to shareholders. It’s a hysteria that is going to evaporate even quicker than it appeared, if you can believe that, and its going to leave devastation for a lot more than just a few hedge fund folks (who are all millionaires regardless and are all going to be fine in the long run no matter what, even if they have to go to a new firm). All the while, the WSB comments section is going to be full of folks saying “DFV still in, I’m sure as hell not selling!”, knowing full well they are already out or will be when their stop loss hits at whatever magic number they set.

 

[ronpolk]

No, I was actually referring to folks with FOMO who know jack **** about investing who will log onto WSB after reading all the news headlines and decide to dump tens of thousands of dollars into this run-up...only to be left holding their dicks when 95% of it completely disappears when greed takes over for the reddit folks and they start selling in concert with the hedge funds unwinding their positions. This isn’t real money being earned by companies and passed down to shareholders. It’s a hysteria that is going to evaporate even quicker than it appeared, if you can believe that, and its going to leave devastation for a lot more than just a few hedge fund folks (who are all millionaires regardless and are all going to be fine in the long run no matter what).

Certainly going to be people that get in too late and lose money. But stocks aren’t just about earning profits and returning that to shareholders. Berkshire has an astronomical EPS of over 22k and a dividend yield of 0%. Meanwhile, Exxon has an EPS of .78 and a dividend yield of 7.42%. Tesla is one of the most valuable companies in the world now and has not returned a single dime to shareholders.

The game stop thing is a farce, I agree with you on that. It’s a unique situation that a lot of people were able to take advantage of. But I disagree with your assessment that for a company needs to earn a profit and return it to shareholders for a stock to return real value to an investor.

 

[Go Budaw]

Certainly going to be people that get in too late and lose money. But stocks aren’t just about earning profits and returning that to shareholders. Berkshire has an astronomical EPS of over 22k and a dividend yield of 0%. Meanwhile, Exxon has an EPS of .78 and a dividend yield of 7.42%. Tesla is one of the most valuable companies in the world now and has not returned a single dime to shareholders.

The game stop thing is a farce, I agree with you on that. It’s a unique situation that a lot of people were able to take advantage of. But I disagree with your assessment that for a company needs to earn a profit and return it to shareholders for a stock to return real value to an investor.

Stocks traditionally provide value to an investor based on some combination of future growth potential and present earnings / revenues. It certainly isn’t all about EPS (if the price isn’t right), and a dividend doesn’t mean much either if the future outlook isn’t so good. In your example, Tesla is way more of the former than the latter. Exxon is the opposite. Berkshire is a good mix of both. Gamestop is comically terrible in both respects, which is what makes this whole thing so egregious.