Someone fill me in on what's going on with WSB subreddit and GME / BB stocks

[HPstache]

Ok, my eyes have just been opened to some serious shenanigans going on with the Wallstreetbets subreddit and the stocks for Gamestop and Blackberry.  It seems somehow this subreddit forum is actually manipulating these stocks.  From what it appears, it's just a group of investors that look for heavily shorted stocks and then all go in as a group to spike the price and force those who were shorting to have to also buy to cover their asses.  Is it really possible that such a small group (?) of investors are manipulating the market like this?  Someone fill me in here...

[mistymoney]

According to this article
https://www.wired.com/story/gamestop-stock-wall-street-bets-short-squeeze/

it was the other way around?

As GameStop foundered, some analysts suggested short-selling the stock to profit off the price going down. Investors borrowed shares of GME and then sold them in the hope that, once they bought the stock back, they’d make money off the difference. But in August, pet food site Chewy.com founder Ryan Cohen purchased a large number of GameStop shares and began strongly advocating for the company to build out its ecommerce presence. Cohen ascended to its board of directors earlier this month, and as Ars Technica reported earlier this week, analysts and investors responded positively to the news. As the stock climbed, short sellers found themselves having to buy more stock to cover their borrowing. Within a couple of days, GameStop’s stock had doubled.

[mistymoney]

also - there's this:
UPDATE: GameStop stock more than doubles to record high, then loses it all in another volatile day of trading
1:44 pm ET January 25, 2021 (MarketWatch)

[bacchi]

r/WSB is huge with over 1.5M readers. Money is moving, in the case of GME, from hedge/investment shorts to r/WSB traders.

[ChpBstrd]

Ok, my eyes have just been opened to some serious shenanigans going on with the Wallstreetbets subreddit and the stocks for Gamestop and Blackberry.  It seems somehow this subreddit forum is actually manipulating these stocks.  From what it appears, it's just a group of investors that look for heavily shorted stocks and then all go in as a group to spike the price and force those who were shorting to have to also buy to cover their asses.  Is it really possible that such a small group (?) of investors are manipulating the market like this?  Someone fill me in here...

It's certainly possible for 1.8M people in a Reddit group to soak up a couple hundred million in a small cap stock's equity. 5,000 people investing $40k each would dry up much of the liquidity. As they brag on the internet about their gains and get the attention of financial media, more people pile in. If just 1% of people in this sub put in ten grand each, they could have bought most of the company as of a few months ago.

The question is, once they've cornered the market for a company's shares, how do each of these thousands of people exit their trades profitably, without bursting the bubble they've created? Who wants to be the last Redditor to sell? It's a prisoner's dilemma type situation, where your best bet is to get out early, and you know that's everyone else's dominant strategy too. 

The Hunt Brothers faced this dilemma with silver in the 1980's. It was only after the shorts had been destroyed that it was an ideal time to go short.

[HPstache]

Ok, my eyes have just been opened to some serious shenanigans going on with the Wallstreetbets subreddit and the stocks for Gamestop and Blackberry.  It seems somehow this subreddit forum is actually manipulating these stocks.  From what it appears, it's just a group of investors that look for heavily shorted stocks and then all go in as a group to spike the price and force those who were shorting to have to also buy to cover their asses.  Is it really possible that such a small group (?) of investors are manipulating the market like this?  Someone fill me in here...

It's certainly possible for 1.8M people in a Reddit group to soak up a couple hundred million in a small cap stock's equity. 5,000 people investing $40k each would dry up much of the liquidity. As they brag on the internet about their gains and get the attention of financial media, more people pile in. If just 1% of people in this sub put in ten grand each, they could have bought most of the company as of a few months ago.

The question is, once they've cornered the market for a company's shares, how do each of these thousands of people exit their trades profitably, without bursting the bubble they've created? Who wants to be the last Redditor to sell? It's a prisoner's dilemma type situation, where your best bet is to get out early, and you know that's everyone else's dominant strategy too. 

The Hunt Brothers faced this dilemma with silver in the 1980's. It was only after the shorts had been destroyed that it was an ideal time to go short.

Interesting point.  Maybe that's why everyone there is like, "STAY the course" & "HOLD!!!!" during the spikes, meanwhile they themselves are probably selling haha.

[ChpBstrd]

Ok, my eyes have just been opened to some serious shenanigans going on with the Wallstreetbets subreddit and the stocks for Gamestop and Blackberry.  It seems somehow this subreddit forum is actually manipulating these stocks.  From what it appears, it's just a group of investors that look for heavily shorted stocks and then all go in as a group to spike the price and force those who were shorting to have to also buy to cover their asses.  Is it really possible that such a small group (?) of investors are manipulating the market like this?  Someone fill me in here...

It's certainly possible for 1.8M people in a Reddit group to soak up a couple hundred million in a small cap stock's equity. 5,000 people investing $40k each would dry up much of the liquidity. As they brag on the internet about their gains and get the attention of financial media, more people pile in. If just 1% of people in this sub put in ten grand each, they could have bought most of the company as of a few months ago.

The question is, once they've cornered the market for a company's shares, how do each of these thousands of people exit their trades profitably, without bursting the bubble they've created? Who wants to be the last Redditor to sell? It's a prisoner's dilemma type situation, where your best bet is to get out early, and you know that's everyone else's dominant strategy too. 

The Hunt Brothers faced this dilemma with silver in the 1980's. It was only after the shorts had been destroyed that it was an ideal time to go short.

Interesting point.  Maybe that's why everyone there is like, "STAY the course" & "HOLD!!!!" during the spikes, meanwhile they themselves are probably selling haha.

Guaranteed.

If social media is capable of persuading people to shoot up pizza restaurants, attack their own nation's capitol, and set off suicide bombs, then it can surely be used as a pump-and-dump tool. It's kind of like an informal MLM scam, where you can profit if you can recruit others to pay for your exit from the scam. See my other post for ideas on how to profit from the inevitable.

[seattlecyclone]

The key thing about this sort of blatant pump scheme is that everyone should know it will be temporary. There's no fundamental reason why these stocks should have been trading at the higher prices. They're trying to take advantage of margin requirements for stocks with a lot of short sellers.

When the share price rises so much, it can force a margin call for short sellers that lack sufficient reserves to meet their margin requirements at the higher price. The short seller then has to fix their margin balance, either by adding a bunch of cash to their account on short notice (in which case the Redditors lose), or by selling other assets to buy back the shares they borrowed at an inflated price (in which case the Redditors win).

If you're a participant in this scheme, buy shares on their way up, and fail to sell them before you run out of short sellers that have no choice but to buy from you, then you also lose. The strategy is sound, but executing it isn't for the faint of heart.

[HPstache]

Found this article dated July 31, 2020.  Google the first 5 companies listed, or so... most of them had a 10-20% spike today and have double or tripled since fall 2020.  I am going to keep going down the list... it's crazy.

https://www.kiplinger.com/investing/stocks/601156/most-heavily-shorted-stocks-bears

edit: went thru the who list... majority up 10-20% today, double or tripled since fall.

[HPstache]

WSB up to 2.3M followers

[solon]

Here's a great twitter thread on GME. Epic.

https://twitter.com/ShaanVP/status/1353951035224694785

[chicklets123]

I had read about the GME on Reddit last week when it was $40 and someone was saying to buy it.


Sent from my iPhone using Tapatalk

[HPstache]

I had read about the GME on Reddit last week when it was $40 and someone was saying to buy it.


Sent from my iPhone using Tapatalk

What did you do?

[mistymoney]

The key thing about this sort of blatant pump scheme is that everyone should know it will be temporary. There's no fundamental reason why these stocks should have been trading at the higher prices. They're trying to take advantage of margin requirements for stocks with a lot of short sellers.

When the share price rises so much, it can force a margin call for short sellers that lack sufficient reserves to meet their margin requirements at the higher price. The short seller then has to fix their margin balance, either by adding a bunch of cash to their account on short notice (in which case the Redditors lose), or by selling other assets to buy back the shares they borrowed at an inflated price (in which case the Redditors win).

If you're a participant in this scheme, buy shares on their way up, and fail to sell them before you run out of short sellers that have no choice but to buy from you, then you also lose. The strategy is sound, but executing it isn't for the faint of heart.

isn't is also illegal? If one person did it they would definitely face charges, but is this diffusion of responsibility enough to protect them?

[chicklets123]

I had read about the GME on Reddit last week when it was $40 and someone was saying to buy it.


Sent from my iPhone using Tapatalk

What did you do?

I thought it was exp at the time. Would you buy now?


Sent from my iPhone using Tapatalk

[sherr]

isn't is also illegal? If one person did it they would definitely face charges, but is this diffusion of responsibility enough to protect them?

I wonder about this too. How can it be illegal if it's all happening out in the open in a public forum? There's no deception, no false statements, no misleading of the public, no non-public conspiracies. Someone just noticed that the shorts were over-exposed and pointed it it to everyone for their mutual profit.

I don't know the answer. I'm guessing the SEC has some thinking to do about what constitutes market manipulation in the "meme economy".

[Proletariat]

GME isn't trading on fundamentals anymore but I've been following the journey of /u/DeepFuckingValue on Reddit for some time now and his conviction has been insane. He started with a $50k position and slowly started adding. He's been through some serious rollercoaster rides and never sold. He took some profits yesterday tho and is sitting on $4m cash but still ~$9m in GME.

Not telling anyone what to do but I truly believe this is a historic moment and a big FU to the man. $200+ by Friday or Monday isn't unreasonable at all IMO.

[PathtoFIRE]

~$9m in GME.

At the current price just under $150, I think it's more like $25MM when you take his/her positions + cash.
Not gonna lie, I bought a little with play money. 🚀

[HPstache]

isn't is also illegal? If one person did it they would definitely face charges, but is this diffusion of responsibility enough to protect them?

I wonder about this too. How can it be illegal if it's all happening out in the open in a public forum? There's no deception, no false statements, no misleading of the public, no non-public conspiracies. Someone just noticed that the shorts were over-exposed and pointed it it to everyone for their mutual profit.

I don't know the answer. I'm guessing the SEC has some thinking to do about what constitutes market manipulation in the "meme economy".

Any different than Jim Cramer jumping up and down telling his entire audience that he thinks XYZ stock is headed up?

[Proletariat]

~$9m in GME.

At the current price just under $150, I think it's more like $25MM when you take his/her positions + cash.
Not gonna lie, I bought a little with play money. 🚀

True. That $9m was based on closing yesterday. The thing is people are aware of the narrative now and it's much bigger than Reddit at this point.

He'll post an update again today and I'm curious how confident he is on an upcoming super-squeeze still.

[edit] - Yep he's $23m - his $4m cash meaning he hasn't taken any more profits today.
[edit] - Elon just tweeted - up 30% after hours. Also worth noting Blackrock bought in today as well as some other independent billionaire.

[UnleashHell]

isn't is also illegal? If one person did it they would definitely face charges, but is this diffusion of responsibility enough to protect them?

I wonder about this too. How can it be illegal if it's all happening out in the open in a public forum? There's no deception, no false statements, no misleading of the public, no non-public conspiracies. Someone just noticed that the shorts were over-exposed and pointed it it to everyone for their mutual profit.

I don't know the answer. I'm guessing the SEC has some thinking to do about what constitutes market manipulation in the "meme economy".

Any different than Jim Cramer jumping up and down telling his entire audience that he thinks XYZ stock is headed up?

Cramer has tried to crash stocks before. Its illegal and he admitted to it. Theres an interview he did with Jon Stewart on youtube.

massive scumbag.


but yeah all the funds who shorted it and told everyone it was crashing in order to make a profit. F*** them. they have been caught by the short and curlies and they are hurting. Like they put the hurt on other people all the time to make money.

sadly some of them are smart enough to take the ride upwards as well and some will come out fine.

[seattlecyclone]

The key thing about this sort of blatant pump scheme is that everyone should know it will be temporary. There's no fundamental reason why these stocks should have been trading at the higher prices. They're trying to take advantage of margin requirements for stocks with a lot of short sellers.

When the share price rises so much, it can force a margin call for short sellers that lack sufficient reserves to meet their margin requirements at the higher price. The short seller then has to fix their margin balance, either by adding a bunch of cash to their account on short notice (in which case the Redditors lose), or by selling other assets to buy back the shares they borrowed at an inflated price (in which case the Redditors win).

If you're a participant in this scheme, buy shares on their way up, and fail to sell them before you run out of short sellers that have no choice but to buy from you, then you also lose. The strategy is sound, but executing it isn't for the faint of heart.

isn't is also illegal? If one person did it they would definitely face charges, but is this diffusion of responsibility enough to protect them?

I was curious about that. Here's a rather lengthy look at the issue written by guy with experience in investment banking and corporate law. He seems to think it's kind of a gray area. The SEC could take action and there are reasonable arguments to be made either way. It's not a classical pump-and-dump scheme in the sense that there have been no fraudulent arguments made about the company's prospects. Pumping a stock by making fraudulent statements about it is illegal. Pumping a stock because you think it would be a fun thing to do with your friends online? Not as clear.

[GoCubsGo]

Chamath Palihapitiya a part owner of the Golden State Warriors, early Facebook exec , mega entrepreneur tweeted this morning that he bought Feb $115 calls of Gamestop.  People listen when that guy talks.  I was pretty surprised he jumped on the mania.  GME up 92% today alone.  My brother has been playing in GME and Blackberry call game and has done really well.  He has had his play money in bitcoin and these wild option plays and has made enough to buy a $50k car with the profit.  Wild west out there.

He lets me set the asset allocation in his 401K so at least he's somewhat prudent.

[Mr. Green]

From what I understand, a big part of the issue is that brokerages have allowed traders to short almost 150% of GameStop's actual shares in circulation.

So hedge funds are shorting the stock, but enough people are holding their shares that, as the stock price rises, it forces the traders to close out their short positions early or risk losing everything. Since closing out a short position means having to buy the stock back, those buys push the stock price even higher.

It gets really insane when you realize that it's impossible for everyone who has shorted the stock to buy it back because there are 50% more shorts out there than there are actual shares. So as short sellers panic and want out, it drives the price even higher.

If enough people with actual shares hold, there may not be any shares for short sellers to buy, or at least a very restricted supply, also driving the price up.

At this point it's a game of chicken. The longer all the holders hang on, the higher the price goes, the bigger the panic of short sellers. This is what's called a "short squeeze" because all the short sellers are getting squeezed by the stock price rising. Hedge funds are already trying to sow fear about GameStop by using the media to push rhetoric that the stick is poised for a big drop and also by trying to direct people's attention to other stocks favorable to a short squeeze in order to try and get some holders to think they've either reached the top and sell, or panic sell, or just sell because they're satisfied with the gains they have.

This is a historic event because on Friday, retail stock investors bankrupted a hedge fund company. That company had to secure an additional $3 Billion from other hedge funds to stay in business.

The general sentiment on WallStreetBets is to not blink, and hold the stock until it hits $1000 per share. Presumably at that point they would all sell, though the mechanics of that are unclear to me. Someone has to be buying, and at $1000 per share will there still be short sellers looking to close out their position and save a little face?

It's been fascinating as hell to watch, I'll say that. Depending on how it plays out, this situation may very well end up in business textbooks as the perfect example of the risk associated with shorting a stock en masse, as hedge funds have been. The rise in trading apps like Robinhood have made it easier than ever for the regular Joe to implement the kinds of strategies that hedge funds use to manipulate a stock price, all of it perfectly legal.

[chuckster]

Yep. It's 130-150% shorted. That means some traders borrowed shorted shares and re-shorted them!

The big day is Friday, when the options expire. That's the day that the shorts that borrowed shares have to return them.

Some have rolled over their shorts into future dates... traded their January deadlines for April, September, next January, etc. That's the biggest question mark right now (and why the bid/ask on GME options is astronomical), how many shorts are going to be able to avoid the Friday deadline?

[mizzourah2006]

@Mr. Green it has been fascinating. After I saw what happened Friday I texted all my friends and said that we're witnessing history. What many people are forgetting is that their 140% short, but that assumes 100% of shares are available for sale. Index funds own Gamestop, presumably as much as 25% of the float. They aren't selling and as the share price increases, so does the market cap of Gamestop. As index funds create new shares ad new money flows in they are passive buyers of more of the stock than they were even a week ago. Plus about 20% of the float is held by insiders and they can't just decide to sell tomorrow. So that 140% quickly becomes about 300% of available float. When the WSB crew decided they were holding the float got even smaller.

[mistymoney]

@Mr. Green it has been fascinating. After I saw what happened Friday I texted all my friends and said that we're witnessing history. What many people are forgetting is that their 140% short, but that assumes 100% of shares are available for sale. Index funds own Gamestop, presumably as much as 25% of the float. They aren't selling and as the share price increases, so does the market cap of Gamestop. As index funds create new shares ad new money flows in they are passive buyers of more of the stock than they were even a week ago. Plus about 20% of the float is held by insiders and they can't just decide to sell tomorrow. So that 140% quickly becomes about 300% of available float. When the WSB crew decided they were holding the float got even smaller.

It's a bit funny that no one is up in arms over it like they are to simple buy and hold investors who beleive in tesla's future....

so - our regular 401k contributions are buying inflated index pricing due to gamestop princing shanaigans, but it's just a facinating case study.

Why the difference?

[bwall]

@Mr. Green it has been fascinating. After I saw what happened Friday I texted all my friends and said that we're witnessing history. What many people are forgetting is that their 140% short, but that assumes 100% of shares are available for sale. Index funds own Gamestop, presumably as much as 25% of the float. They aren't selling and as the share price increases, so does the market cap of Gamestop. As index funds create new shares ad new money flows in they are passive buyers of more of the stock than they were even a week ago. Plus about 20% of the float is held by insiders and they can't just decide to sell tomorrow. So that 140% quickly becomes about 300% of available float. When the WSB crew decided they were holding the float got even smaller.

Good points about index funds holding. Total outstanding shares are 70 million. Floating shares are 50 million. The short interest is a percentage of the float, not the outstanding share count.

So, they've got about 70 million shares sold short (140% of 50 million). Daily volume for the past three days has been above 150m shares, so there is a huge amount of volume/turnover.

The irony is that as the share price has risen from $10 to $20 to $40, then $60 and today $140, the short interest has remained the same. Which means that as short sellers are covering their positions (and after today's close thanking their lucky stars that they did so), they are being replaced by other short sellers who are only attracted to the stock because of all the hype--just like we are.

Point being: The stock rose from $20 to $140 (and after hours today over $200) in *ahem* short order, but the mass capitulation of the shorts HASN"T HAPPENED YET. I think that if it happens (and there's no guarantee it will), then we could see GME above $1000.

[mizzourah2006]

@Mr. Green it has been fascinating. After I saw what happened Friday I texted all my friends and said that we're witnessing history. What many people are forgetting is that their 140% short, but that assumes 100% of shares are available for sale. Index funds own Gamestop, presumably as much as 25% of the float. They aren't selling and as the share price increases, so does the market cap of Gamestop. As index funds create new shares ad new money flows in they are passive buyers of more of the stock than they were even a week ago. Plus about 20% of the float is held by insiders and they can't just decide to sell tomorrow. So that 140% quickly becomes about 300% of available float. When the WSB crew decided they were holding the float got even smaller.

Good points about index funds holding. Total outstanding shares are 70 million. Floating shares are 50 million. The short interest is a percentage of the float, not the outstanding share count.

So, they've got about 70 million shares sold short (140% of 50 million). Daily volume for the past three days has been above 150m shares, so there is a huge amount of volume/turnover.

The irony is that as the share price has risen from $10 to $20 to $40, then $60 and today $140, the short interest has remained the same. Which means that as short sellers are covering their positions (and after today's close thanking their lucky stars that they did so), they are being replaced by other short sellers who are only attracted to the stock because of all the hype--just like we are.

Point being: The stock rose from $20 to $140 (and after hours today over $200) in *ahem* short order, but the mass capitulation of the shorts HASN"T HAPPENED YET. I think that if it happens (and there's no guarantee it will), then we could see GME above $1000.

Valid call-out on my misue of float vs. shares outstanding. It's either other people  joining the short game thinking they can win or the same people covering their old shorts and buying new ones.

Yes it could very well get to $1k. Or people could be happy with $200 tomorrow and sell their shares and start a selloff. It depends on whether or not people continue to hold and if they can get some big money on the buy side like it appears happened this afternoon.

[bwall]

Valid call-out on my misue of float vs. shares outstanding. It's either other people  joining the short game thinking they can win or the same people covering their old shorts and buying new ones.

Yes it could very well get to $1k. Or people could be happy with $200 tomorrow and sell their shares and start a selloff. It depends on whether or not people continue to hold and if they can get some big money on the buy side like it appears happened this afternoon.

Bold mine.

The hilarious part is that the big money on the buy side now is short covering and/or options hedging. The short coverers are being replaced by new short sellers who think they have spotted a terrific opportunity; whether for profit or loss remains to be seen.

[UnleashHell]

@Mr. Green it has been fascinating. After I saw what happened Friday I texted all my friends and said that we're witnessing history. What many people are forgetting is that their 140% short, but that assumes 100% of shares are available for sale. Index funds own Gamestop, presumably as much as 25% of the float. They aren't selling and as the share price increases, so does the market cap of Gamestop. As index funds create new shares ad new money flows in they are passive buyers of more of the stock than they were even a week ago. Plus about 20% of the float is held by insiders and they can't just decide to sell tomorrow. So that 140% quickly becomes about 300% of available float. When the WSB crew decided they were holding the float got even smaller.

It's a bit funny that no one is up in arms over it like they are to simple buy and hold investors who beleive in tesla's future....

so - our regular 401k contributions are buying inflated index pricing due to gamestop princing shanaigans, but it's just a facinating case study.

Why the difference?

Gamestop is small potatoes.  Vanguard had 5m shares back in September - a value of some $50m at the time
I doubt any index funds would buy now and even if they did its still a very small share of the overall funds. For them its a rounding error.

[Mr. Green]

If index funds were smart they would realize this is a fantastic opportunity to create value for their investors and sell all their GameStop shares at some point on the way up,knowing this is an anomaly and the price will crater when someone finally blinks. The massive dumping of shares could kill the short squeeze but even that isn't certain because of how oversold the stock is.

And 5m shares @ $10 a share in September are now worth $750 million. It'll be over $1 Billion today when GameStop opens above $200 per share. That's a 2,000% gain. While it may be small potatoes compared to the total market cap of all funds, it's still a an insane return.

[By the River]

...It's certainly possible for 1.8M people in a Reddit group to soak up a couple hundred million in a small cap stock's equity. 5,000 people investing $40k each would dry up much of the liquidity. As they brag on the internet about their gains and get the attention of financial media, more people pile in. If just 1% of people in this sub put in ten grand each, they could have bought most of the company as of a few months ago...

I read some of the threads yesterday.  It's definitely not only people putting in 10-50K each.  I saw comments such as "I had $1000 left from working at McDonalds over the summer, so I just bought in.", "My mom and I just bought 20 shares together", and "I had $400 left over from the stimmi so I put that in GME"   

I'm not investing gambling in GME right now but actively watching what will happen on Friday and in the future. 

[Mr. Green]

Just opened at $300 per share. Unbelievable!

[Financial.Velociraptor]

We have any securities attorneys here who can weigh in as to whether the SEC rules against market collusion apply to retail investors?  I could see the people who perpetrated this thing on /r getting prosecuted.  I can't see everyone who posted getting prosecuted.  It's bad optics for the Feds to put a kid who works at McDonald's in jail for market collusion.  They are probably not fully aware of their risks and are caught up in something over their heads.

[PathtoFIRE]

I went in on a few of these meme stocks this week with a small amount of play money, chose to stay out of AMC but now I'm seeing it's up 250% this AM!

[MustacheAndaHalf]

Financial.Velociraptor - If you trust the lawyers CNBC has available, they believe the wallstreetbets attack on GME can be defended on freedom of speech grounds.


It's my understanding that one of the targets of wallstreetbets isn't GME stock itself, but market makers like Citidel.  When I looked up 2019 data on where Vanguard routes it's orders, Citidel came out on top at around 40% of routed orders.  I wonder if there's an attack on Citidel that is spilling over to Vanguard?  Vanguard was very slow for me, while other websites operated normally.

[By the River]

I agree that the redditors should not be charged with financial manipulation.  They are very much giving wildly extravagant opinions on how high the stock should go but how is that different from Cramer and all the other commentators on financial news channels?

[bwall]

I agree that the redditors should not be charged with financial manipulation.  They are very much giving wildly extravagant opinions on how high the stock should go but how is that different from Cramer and all the other commentators on financial news channels?

+1

The analysts got lazy and the shorts got greedy. Retail players sounded the alarm and are handing them their ass(es). The entire world is now trying to bust the shorts, which they don't seem to quite understand, since

The short interest shows no sign of decreasing.

Which means that GME will continue to go up.

It's like shooting fish in a barrel now.

[hodedofome]

 "He who sells what isn't his'n, must buy it back or go to pris'n." - Daniel Drew

https://www.investorvillage.com/smbd.asp?mb=160&mn=284933&pt=msg&mid=5666642

[ender]

I agree that the redditors should not be charged with financial manipulation.  They are very much giving wildly extravagant opinions on how high the stock should go but how is that different from Cramer and all the other commentators on financial news channels?

The SEC has rarely had this problem when people do this because normally, no one listens to financial commentators.

The only reason this situation exists is because information is more public and a hedge fund did something that was borderline illegal (naked shorts) and is getting punished.

Narrative should entirely be about how often hedge funds get away with things like this and don't get caught and for the first time... well, ever, they are getting punished for it by retail investors.

[UnleashHell]

I agree that the redditors should not be charged with financial manipulation.  They are very much giving wildly extravagant opinions on how high the stock should go but how is that different from Cramer and all the other commentators on financial news channels?

The SEC has rarely had this problem when people do this because normally, no one listens to financial commentators.

The only reason this situation exists is because information is more public and a hedge fund did something that was borderline illegal (naked shorts) and is getting punished.

Narrative should entirely be about how often hedge funds get away with things like this and don't get caught and for the first time... well, ever, they are getting punished for it by retail investors.

exactly. the SEC is toothless when it comes to hedge funds. The one that got is trouble over this was run by a guy who used to work for Steve Cohen. He got a severe rap over the knuckles for his behavior in the past but he is still is crazy rich. Guess who stepped in to help the hedge fund.. Steve Cohen!! because the SEC can't punish anyone. ever.

They got caught naked shorting and their hand in the cookies jar and for once there's some accountability.

And the hedge funds are complaining? suck it bitches!

[ChpBstrd]

It's my understanding that one of the targets of wallstreetbets isn't GME stock itself, but market makers like Citidel.  When I looked up 2019 data on where Vanguard routes it's orders, Citidel came out on top at around 40% of routed orders.  I wonder if there's an attack on Citidel that is spilling over to Vanguard?  Vanguard was very slow for me, while other websites operated normally.

Citadel is probably a large part of the explanation for why >100% of the float are sold short. If Melvin and Citron go "tits up", as they say on wallstreetbets, the liabilities will have to be met by Citadel, who ultimately manufactured these short obligations using derivatives.

Citadel put capital into Melvin in the hopes that Melvin can hold out until the retail investors fall apart and the price descends back to earth. All the shorts, including the probable new ones, are utterly convinced that given enough time GME will return to <$20 where its fundamentals suggest it should be. They are probably right - it's hard to keep a social media fad going, and even harder to convince millions of people on a Reddit board to keep buying shares after a 100x run up. But the wallstreetbets crowd are also right that if they can keep the float low enough, the shorts will have to run up the price for them. The outcome will be that the shorts make huge money by a few months from now, the early sellouts will make huge money on GME long shares, and the latecomers to the party will fare as well as they do in any ponzi scheme.

All this emotional talk about the little guy vs. the rich hedge funds misses the point. Some of both will lose big, and some of both will win big. Early retail investors and late shorts will win. Late retail investors and early shorts will lose.

[PathtoFIRE]

~$9m in GME.

At the current price just under $150, I think it's more like $25MM when you take his/her positions + cash.

Just under $48MM now, jesus

[By the River]

I read that he makes $190K for each $1 increase in price.  Today it went up $199.53 for a estimated gain of $37.9M 

[turketron]

After reading snippets about this over the past few days I'm just now catching up on what's been going on. I thought this video was a pretty interesting take on the whole thing: https://youtu.be/9ToOGrUQ7ME

Reminds me of the movie Trading Places except with GME instead of orange juice futures...

[RWD]

Reminds me of the movie Trading Places except with GME instead of orange juice futures...

I was thinking the same thing! Relevant scene:
https://www.youtube.com/watch?v=-4_fwzC4PNI

[HPstache]

After reading snippets about this over the past few days I'm just now catching up on what's been going on. I thought this video was a pretty interesting take on the whole thing: https://youtu.be/9ToOGrUQ7ME

Reminds me of the movie Trading Places except with GME instead of orange juice futures...

That video was amazing... said everything I was thinking.

[Travis]

Someone was on a cable news show this morning talking about this thing and pointed out that while it's cathartic to watch a hedge fund get its ass kicked by the general public, there are normal individual investors inside that hedge fund who might have just lost a ton of money because a handful of people are doing a kind of pump and dump. Like pensioners. At first I nodded my head that yeah, a hedge fund represents a lot of mom and pops who might have a lot to lose over this little financial battle, but then I thought who the hell puts their pension in a hedge fund. That's a thing?

[JetBlast]

Someone was on a cable news show this morning talking about this thing and pointed out that while it's cathartic to watch a hedge fund get its ass kicked by the general public, there are normal individual investors inside that hedge fund who might have just lost a ton of money because a handful of people are doing a kind of pump and dump. Like pensioners. At first I nodded my head that yeah, a hedge fund represents a lot of mom and pops who might have a lot to lose over this little financial battle, but then I thought who the hell puts their pension in a hedge fund. That's a thing?

The pensioner doesn’t put their pension in a hedge fund. The pension fund managers invest some of the fund’s money in the hedge fund.  For example, employees of the city of Fairfield, Connecticut saw their pension fund lose $42 million when Bernie Madoff’s fund/ponzi scheme imploded.