Author Topic: GME deathwatch - how to profit?  (Read 82845 times)

trollwithamustache

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Re: GME deathwatch - how to profit?
« Reply #50 on: January 28, 2021, 01:03:17 PM »
GME likely has, and if not will, sell more shares. they may wait a little and follow SEC rules, but at current prices, they will sell equity and get a S#$%^ ton of cash. years of cash. 

I saw this expressed as a concern last week when all of this started to gain traction (hence my notice, not being a WSB regular), and I saw several nods to GME's 8k which apparently details how many new shares they can issue, the number being not too many. Having never read an 8k or having the slightest idea of what any of that means, maybe someone else can take a look and see whether significant dilution is an option. I kind of figured this was all going to be too short term to matter anyway, but now that WSB seems to have gotten a handle on the huge garbage posts influx from yesterday, I see a lot of chatter about the short squeeze lasting a week or two, not just until tomorrow, so maybe there's time for the board to take advantage of the stock price.

at 300+ they don't need to sell many shares! er, oops, 230! :)

Seriously though, 1. they have authorized shares not issued, 2. they may have treasury shares (authorized, issued and just held by the company) and 3. speed dial, security lawyers and a zoom board meeting more shares will be issued.  The board will get it done, its in their fiduciary duty to shareholders to keep GME a going concern and this does that.

The short case for bankruptcy is totally decimated. Thats not to say I think its worth 300 or 230 or whatever a share. But God Dam, I went to college with a lot of those hedge fund snot rockets and am loving this.

bacchi

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Re: GME deathwatch - how to profit?
« Reply #51 on: January 28, 2021, 01:07:06 PM »
I saw this expressed as a concern last week when all of this started to gain traction (hence my notice, not being a WSB regular), and I saw several nods to GME's 8k which

https://news.gamestop.com/node/18351/html

Shares of our Class A common stock having an aggregate offering price of up to $100,000,000
Common stock to be outstanding immediately after this offering: Up to 75,863,167 shares, assuming sales of 6,116,207 shares of our common stock in this offering at an offering price of $16.35


I don't know if they can sell 6M shares at current prices or if they have to sell a lower amount of shares to get their $100M. Either way, not a huge dilution.

ChpBstrd

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Re: GME deathwatch - how to profit?
« Reply #52 on: January 28, 2021, 01:42:08 PM »
GME likely has, and if not will, sell more shares. they may wait a little and follow SEC rules, but at current prices, they will sell equity and get a S#$%^ ton of cash. years of cash. 

I saw this expressed as a concern last week when all of this started to gain traction (hence my notice, not being a WSB regular), and I saw several nods to GME's 8k which apparently details how many new shares they can issue, the number being not too many. Having never read an 8k or having the slightest idea of what any of that means, maybe someone else can take a look and see whether significant dilution is an option. I kind of figured this was all going to be too short term to matter anyway, but now that WSB seems to have gotten a handle on the huge garbage posts influx from yesterday, I see a lot of chatter about the short squeeze lasting a week or two, not just until tomorrow, so maybe there's time for the board to take advantage of the stock price.

I am skeptical about both ideas:

1) Share issues usually require a couple of months planning with an investment bank. Since the company had no idea there'd be a short squeeze like this, they may not have started the process. Plus, the last couple of months have been occupied by the entrance of a new activist investor and the installation of new board members, so it's unlikely this project is in an advanced stage. Plus, how do they know they aren't going to get everything ready for a dilution, and then the bubble pops and they raise only a few million. Timing would have to be perfect to get $ to flow from the shorts to the company itself.

2) IDK if there's still time to "take advantage" without "being taken advantage of". We all know it's going to $5, or zero, eventually. We also all know there is no inherent limit to how high the price can go or how long the squeeze can last. A bet in any direction is a gamble on the timing of unpredictable events.

In terms of "how to profit?" I'm thinking of watch for the landslide to begin and then use a series of rolling bear spreads to profit on the way down, with limited losses - IF your broker will let you. When the longs start selling, and we're down 50% or more over 5 days or so, everyone knows it'll become harder to attract new money to the trade. The catch with this plan is you could get assigned shares or forcibly liquidated even with lots of time value remaining on your options, because the bid-ask spreads on the stocks might be greater than the TV on the options.

ChpBstrd

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Re: GME deathwatch - how to profit?
« Reply #53 on: January 28, 2021, 07:19:40 PM »
I saw this expressed as a concern last week when all of this started to gain traction (hence my notice, not being a WSB regular), and I saw several nods to GME's 8k which

https://news.gamestop.com/node/18351/html

Shares of our Class A common stock having an aggregate offering price of up to $100,000,000
Common stock to be outstanding immediately after this offering: Up to 75,863,167 shares, assuming sales of 6,116,207 shares of our common stock in this offering at an offering price of $16.35


I don't know if they can sell 6M shares at current prices or if they have to sell a lower amount of shares to get their $100M. Either way, not a huge dilution.

Thanks for that link! The document is from early December, so my question is did they already sell these shares, or are they about to be issued?
The number of shares outstanding increased from 65.2M in October to 69.75M on Dec. 1. Was this what the filing was about, or are there more shares authorized for issue?

MustacheAndaHalf

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Re: GME deathwatch - how to profit?
« Reply #54 on: January 29, 2021, 07:12:19 AM »
By market value, $100M is under 1% of the current market cap.  If they dilute by adding shares, that's 10% of the market cap.  Either way, it gets absorbed.  Personally, I just bought 11 shares to see what happens today in dramatic trading.  RH investors helped save me money in bankrupt companies last year, so maybe I'm giving them some of their money back.

Robinhood tried stopping GME purchases for a time, but relented after a massive backlash.  I'm not too attached to events, but I also got angry when IBKR did the same - this is my broker, stopping other clients from buying shares on the open market?  It's not a liquidity issue when I pay cash to buy shares, so their reasoning seems flawed.  I'm glad they are allowing purchases again.

So a group of RH and IBKR investors might be back in the game, buying more today.  This is also the day about 100k GME call options expire, and it's a safe bet people are going to exercise their option and demand shares.  That will put more buying pressure in the market - those shares must be delivered within 2 days.

I also think others are joining in, adding to the upward spike.  A side note - I can afford to lose these shares.  Those who can't... well, where do you think greedy manias lead?

trollwithamustache

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Re: GME deathwatch - how to profit?
« Reply #55 on: January 29, 2021, 10:29:12 AM »

I also think others are joining in, adding to the upward spike.  A side note - I can afford to lose these shares.  Those who can't... well, where do you think greedy manias lead?

I'm going to disagree on this idea that it protects the little investor. Many many of the WSB people got in a long time ago. WSB has lots of stupid comments, but also lots of thoughtful and researches comments. Their cost basis could be down at 11 to 20 ranges. or sub 100 if they kept buying.  post squeeze and equity raise, GME is worth more than it was simply because they have cash hand. A lot of these guys may not sell... but if GME eventually drops back down to 20, they will still make a little bit of money. 20 is a made up price target, I don't follow GME's fundamentals enough to have a real target but with BK off the table, it settling higher than before is reasonable.

But yes, for the many have also piled on to a momentum trade and at some point will learn how those work!

dignam

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Re: GME deathwatch - how to profit?
« Reply #56 on: January 29, 2021, 11:10:53 AM »
I bought ~11 shares a couple days ago.  Honestly I don't care if I lose this money, even though I'm up a ridiculous % right now. 

I'm in it for other reasons, which I'm sure has already been beaten to death in this thread.  Sometimes your own medicine is a little bitter.

IMO shit is about to get crazy toward the end of today and into Monday.  They have many calls ITM and still a huge amount of short positions to close out.

ChpBstrd

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Re: GME deathwatch - how to profit?
« Reply #57 on: January 29, 2021, 11:18:37 AM »
There is the off chance GME takes this opportunity to somehow raise funds. Convertible bonds with maturity dates a year or so out would be a great play because it could help the shorts cover and might not be perceived as dilution by the longs. If they could suddenly raise a half-billion, then the new leadership could take the company in a startup direction.

Very few companies have prospered as a middleman reseller of software / digital media. There is strong economic incentive to buy directly from the software developer rather than a retail store, B&M or online. This is because software has a near-zero cost of inventory and because software has near-zero distribution expenses. Netflix and Pandora come to mind as businesses who essentially resell digital content on behalf of creators/developers. So the question is how could Gamestop become the Netflix/Pandora of gaming?

Traditionally, games have been locally installed because internet bandwidth did not support the streaming of rich graphics from a server at the same time as receiving user input, all with very low latency ("lag"). Yes, there were web-based flash games etc. but the real money was in the graphically intense stuff, and the only way to do that was to install software on the local machine. Hence the disc/console or disc/PC economy of the last 20 years.

Internet speeds have been increasing for years decades and we are approaching the point where 1080p or even 4k streaming can be delivered with zero buffering in real time. As 5G rolls out, we can expect speeds near 1GB per second on mobile devices, which is many times beyond the 20mb/s or so required to stream buffered video one-way. Within a year or two, a server will be able to deliver games over the internet at the same level of quality that today requires a local installation. Imagine Gamestop as an app that connects to a Gamestop server offering you the option to play a wide variety of games, just as Netflix offers a wide variety of movies. Instead of buying $60 plastic discs and trading them in, you pay a monthly subscription, get lots more variety, and don't have to regret buying the wrong disc (90's peeps recall mistaken CD purchases).

So GME has a touch of visionary leadership in Cohen and his board picks, but there is no guarantee they will pursue this path or any other. There's also no reason to think GME will succeed in raising a billion or so from the short squeeze, or if Amazon, Netflix, Apple, Google, Microsoft, or anybody else who can raise a billion bucks just by asking semi-politely won't beat them to the punch. Arguably, a startup with a few good engineers would be ahead of GME at this point, and that's the way the evolution of the internet has always gone.

More people might be attracted to the long side if rumors suggest GME could be the next Pandora or Netflix. This could extend the squeeze beyond its current insanity.


bacchi

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Re: GME deathwatch - how to profit?
« Reply #58 on: January 29, 2021, 11:23:45 AM »
This is beginning to get a Q/StopTheSteal aspect to it.

Q was always about "trust the plan" and "two more weeks." We're now seeing similar themes. The big jump was supposed to be today (Friday) but now it's Monday/Tuesday. When that doesn't happen, it'll probably move to February expiry.

crimp

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Re: GME deathwatch - how to profit?
« Reply #59 on: January 29, 2021, 12:50:44 PM »
This is beginning to get a Q/StopTheSteal aspect to it.

Q was always about "trust the plan" and "two more weeks." We're now seeing similar themes. The big jump was supposed to be today (Friday) but now it's Monday/Tuesday. When that doesn't happen, it'll probably move to February expiry.

The two are not worth comparing... one is a conspiracy about cannibal sex offenders in government and the other is a group of people expressing perhaps faulty assumptions about the behavior of a volatile stock. Seems a bit of a false equivalency to me.

I think the commentary on Friday was because of expiring calls. Shorts don't expire so much as the folks holding them just have to pay interest, right? So there isn't a hard deadline on when the folks shorting these stocks have to cover. You're right that the folks who bought in at high prices are wont to convince others there's still room to grow, regardless of the time horizon (at least until they themselves sell).

bacchi

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Re: GME deathwatch - how to profit?
« Reply #60 on: January 29, 2021, 01:33:52 PM »
This is beginning to get a Q/StopTheSteal aspect to it.

Q was always about "trust the plan" and "two more weeks." We're now seeing similar themes. The big jump was supposed to be today (Friday) but now it's Monday/Tuesday. When that doesn't happen, it'll probably move to February expiry.

The two are not worth comparing... one is a conspiracy about cannibal sex offenders in government and the other is a group of people expressing perhaps faulty assumptions about the behavior of a volatile stock. Seems a bit of a false equivalency to me.

Obviously not the subject but the...method and manner of spreading the reddit vs hedge fund narrative.

crimp

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Re: GME deathwatch - how to profit?
« Reply #61 on: January 29, 2021, 01:50:52 PM »
This is beginning to get a Q/StopTheSteal aspect to it.

Q was always about "trust the plan" and "two more weeks." We're now seeing similar themes. The big jump was supposed to be today (Friday) but now it's Monday/Tuesday. When that doesn't happen, it'll probably move to February expiry.

The two are not worth comparing... one is a conspiracy about cannibal sex offenders in government and the other is a group of people expressing perhaps faulty assumptions about the behavior of a volatile stock. Seems a bit of a false equivalency to me.

Obviously not the subject but the...method and manner of spreading the reddit vs hedge fund narrative.

Fair enough, I think I see your point. I read your post as having more of a buy-in to the "this is Russian propaganda" and "WSBers are alt-right trolls" than it merited.

ChpBstrd

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Re: GME deathwatch - how to profit?
« Reply #62 on: January 29, 2021, 03:37:23 PM »
This is beginning to get a Q/StopTheSteal aspect to it.

Q was always about "trust the plan" and "two more weeks." We're now seeing similar themes. The big jump was supposed to be today (Friday) but now it's Monday/Tuesday. When that doesn't happen, it'll probably move to February expiry.

The two are not worth comparing... one is a conspiracy about cannibal sex offenders in government and the other is a group of people expressing perhaps faulty assumptions about the behavior of a volatile stock. Seems a bit of a false equivalency to me.

Obviously not the subject but the...method and manner of spreading the reddit vs hedge fund narrative.

Fair enough, I think I see your point. I read your post as having more of a buy-in to the "this is Russian propaganda" and "WSBers are alt-right trolls" than it merited.

I'll just note that liberals do not tend to refer to each other as "retards" or "smooth brains". It's a clue.

dignam

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Re: GME deathwatch - how to profit?
« Reply #63 on: January 29, 2021, 04:09:04 PM »
This is beginning to get a Q/StopTheSteal aspect to it.

Q was always about "trust the plan" and "two more weeks." We're now seeing similar themes. The big jump was supposed to be today (Friday) but now it's Monday/Tuesday. When that doesn't happen, it'll probably move to February expiry.

The two are not worth comparing... one is a conspiracy about cannibal sex offenders in government and the other is a group of people expressing perhaps faulty assumptions about the behavior of a volatile stock. Seems a bit of a false equivalency to me.

Obviously not the subject but the...method and manner of spreading the reddit vs hedge fund narrative.

Fair enough, I think I see your point. I read your post as having more of a buy-in to the "this is Russian propaganda" and "WSBers are alt-right trolls" than it merited.

I'll just note that liberals do not tend to refer to each other as "retards" or "smooth brains". It's a clue.

You'd be surprised.  I've been on the WSB discord voice channels which are equally vulgar to the sub reddit and the whole political spectrum is represented.

CodingHare

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Re: GME deathwatch - how to profit?
« Reply #64 on: January 29, 2021, 04:15:55 PM »
Fair enough, I think I see your point. I read your post as having more of a buy-in to the "this is Russian propaganda" and "WSBers are alt-right trolls" than it merited.

I'll just note that liberals do not tend to refer to each other as "retards" or "smooth brains". It's a clue.

You'd be surprised.  I've been on the WSB discord voice channels which are equally vulgar to the sub reddit and the whole political spectrum is represented.

I think the missing link here is that the sort of young Redditor who really enjoys WSB pre-GME probably had a not insignificant crossover with the sort that plays video games and enjoys gaming MMO economies.  They were the ones who set the tone before 4 million newbies showed up.  Lots of Reddit is bro culture.  Not saying it is good and it is certainly playing into lots of narratives about the "dangerous alt-right trolls", but it is a bit more nuanced than WSB = Gamergate = Alt Right some pundits are trying to draw an arrow to.

trollwithamustache

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Re: GME deathwatch - how to profit?
« Reply #65 on: January 29, 2021, 04:46:03 PM »
Quote from: ChpBstrd link=topic=120407.msg2783272#msg2783272
[/quote

I'll just note that liberals do not tend to refer to each other as "retards" or "smooth brains". It's a clue.

the young liberal lads talk like this all the time if they think now one is looking. Coastal professional white boys know when they have to value signal like champs to succeed in todays world and they do.

My perusal of WSB is far from complete, but most of the tone is anti-establishment/downtrodden worker. It could just as easily be Bernie supporters as Trump supporters!

dignam

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Re: GME deathwatch - how to profit?
« Reply #66 on: January 30, 2021, 06:18:15 AM »
Fair enough, I think I see your point. I read your post as having more of a buy-in to the "this is Russian propaganda" and "WSBers are alt-right trolls" than it merited.

I'll just note that liberals do not tend to refer to each other as "retards" or "smooth brains". It's a clue.

You'd be surprised.  I've been on the WSB discord voice channels which are equally vulgar to the sub reddit and the whole political spectrum is represented.

I think the missing link here is that the sort of young Redditor who really enjoys WSB pre-GME probably had a not insignificant crossover with the sort that plays video games and enjoys gaming MMO economies.  They were the ones who set the tone before 4 million newbies showed up.  Lots of Reddit is bro culture.  Not saying it is good and it is certainly playing into lots of narratives about the "dangerous alt-right trolls", but it is a bit more nuanced than WSB = Gamergate = Alt Right some pundits are trying to draw an arrow to.

Exactly.  CNBC has been trying to build the narrative as the WSB sub being what you described.  You can't possibly tell me they (CNBC) don't have buddies/overlords on Wall Street.  I've seen some of their hosts get absolutely destroyed verbally by guests who actually understand what is going on.  Some of the crusty billionaires they bring on are totally out of touch and it's borderline hilarious.

Anyone see the ad Melvin was running, claiming they had closed their short positions for GME?
1.) Why would a hedge fund ever advertise when they close short positions if they didn't have something to gain from people panic selling?
2.) If you did actually cover all your shorts, you certainly wouldn't advertise it.  You would want people to keep driving the price up and buying like what has been going on

The fact is, the stock still has ~110% short interest.  Aside from being insane, this should be illegal.  If the retail investors do actually continue holding the stock, the price will skyrocket as the short positions bleed massive amounts on interest and have no choice but to cover.  But, if people start cashing out, the squeeze will be minor if not non-existent.

IMO, we might see the price flirt with $1k/share, but I can see most wanting to cash out around then.

ender

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Re: GME deathwatch - how to profit?
« Reply #67 on: January 30, 2021, 06:27:46 AM »
Q was always about "trust the plan" and "two more weeks." We're now seeing similar themes. The big jump was supposed to be today (Friday) but now it's Monday/Tuesday. When that doesn't happen, it'll probably move to February expiry.

This is such a ridiculous comparison.

There is a several day settlement period for options which expired today.

I've been an avid lurker on WSB for a long time (well before the last few weeks) and there are plenty of people on both sides of the political party there.

I'll just note that liberals do not tend to refer to each other as "retards" or "smooth brains". It's a clue.

Most people do something like, "well I'm <republican/democrat/libertarian/etc> and there are X other of us, who are all pretty much the same as me, therefore, since I can't imagine my party doing Y they can't."

But real life political parties are way more diverse than a monoculture.

Not to mention most posters let alone lurkers in WSB don't actually even do what you are saying. So characterizing most of WSB this way is pretty naive.

I'm not particularly surprised to see people stereotyping though, given the ad hominem media campaign this last week.

Anyone see the ad Melvin was running, claiming they had closed their short positions for GME?
1.) Why would a hedge fund ever advertise when they close short positions if they didn't have something to gain from people panic selling?
2.) If you did actually cover all your shorts, you certainly wouldn't advertise it.  You would want people to keep driving the price up and buying like what has been going on

The fact is, the stock still has ~110% short interest.  Aside from being insane, this should be illegal.  If the retail investors do actually continue holding the stock, the price will skyrocket as the short positions bleed massive amounts on interest and have no choice but to cover.  But, if people start cashing out, the squeeze will be minor if not non-existent.

IMO, we might see the price flirt with $1k/share, but I can see most wanting to cash out around then.

One thing to keep in mind here is there are real people with money invested in Melvin Capitol too - it's possible the "we closed the shorts" stuff is entirely about alleviating anxiety in those folks.

Wordstew

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Re: GME deathwatch - how to profit?
« Reply #68 on: January 30, 2021, 08:37:48 AM »
The Problem Has Not Fundamtally Changed.....

Retail Investors Still Exposed, their Positions and Strategies are Out in the Open for all to see....

Hedgies and the Pros still not Transparent, Yeild a ton of $$$ and Leverage....

I Do Not See This Ending Well for Retail Investors.....

Many Hedgies Hopped On Board and Joined the Reddit Crowd....

Now they will Strategize and Employ Every Possible Method to Take all the Retail Investors $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$.....(BEWARE)

The Nature of the Beast

dignam

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Re: GME deathwatch - how to profit?
« Reply #69 on: January 30, 2021, 09:26:33 AM »
^ Hedgies have very few moves left.  There were no shares to be bought for the HF because retail investors AREN'T SELLING.  At least for now.  Volume has been quite low the last few days comparatively.  Every day they hold short positions without covering they are losing BILLIONS to interest.

Take a look at the charts for GME on Thursday morning.  Massive ladder shorting going on in the morning to artificially lower the price from ~430 ---> ~140 to try and scare people into panic selling.  What happened after?  Price shot right back up, after retail investors were allowed to actually buy again.

Same thing at the end of the day yesterday, but the price didn't drop nearly as much.  The GME and AMC charts looked almost IDENTICAL during price dips (i.e. coordinated ladder shorting attacks by HF), meaning they are doubling down on their short positions and manipulating the price, NOT joining the people holding long positions.  The only hedging they did was some options to offset their short positions.

They are bleeding profusely right now and desperate.  I agree with you that they will pull every trick in the book to minimize their losses.  But, it ultimately comes down to how long retail investors hold their shares and NOT SELL.  Either way, hedgies have and will lose huge amounts of money.  The thing HF didn't prepare for: most of us don't give two shits if we lose $$$ holding GME.  It's fraction of a fraction of my net worth I have into this, and there are millions more like me.  There are retail investors who were down 10s of millions during the dip on Thursday and still didn't sell.

ctuser1

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Re: GME deathwatch - how to profit?
« Reply #70 on: January 30, 2021, 09:46:01 AM »
Internet speeds have been increasing for years decades and we are approaching the point where 1080p or even 4k streaming can be delivered with zero buffering in real time. As 5G rolls out, we can expect speeds near 1GB per second on mobile devices, which is many times beyond the 20mb/s or so required to stream buffered video one-way. Within a year or two, a server will be able to deliver games over the internet at the same level of quality that today requires a local installation. Imagine Gamestop as an app that connects to a Gamestop server offering you the option to play a wide variety of games, just as Netflix offers a wide variety of movies. Instead of buying $60 plastic discs and trading them in, you pay a monthly subscription, get lots more variety, and don't have to regret buying the wrong disc (90's peeps recall mistaken CD purchases).

So GME has a touch of visionary leadership in Cohen and his board picks, but there is no guarantee they will pursue this path or any other. There's also no reason to think GME will succeed in raising a billion or so from the short squeeze, or if Amazon, Netflix, Apple, Google, Microsoft, or anybody else who can raise a billion bucks just by asking semi-politely won't beat them to the punch. Arguably, a startup with a few good engineers would be ahead of GME at this point, and that's the way the evolution of the internet has always gone.

More people might be attracted to the long side if rumors suggest GME could be the next Pandora or Netflix. This could extend the squeeze beyond its current insanity.

Gamestop has a heck of a competitive landscape to beat - Steam (which I personally used for years), Google Stadia, and others I don't know much about.

Their chances of success 10 years out is less than any other startup trying to achieve the same in this same space. I say a little less than a startup because historically startups seem to succeed more often than outright strategy pivots. OTOH, companies that manage to strategy pivot successfully (e.g. Amex in 1918, after the Woodrow Wilson government basically outlawed their primary business) become the new "built to last" corporations where you can invest and forget for the next few decades.

My money is still on Gamestop going bankrupt in the next 10-15 years, first gradually and then suddenly - Sears style.


chasesfish

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Re: GME deathwatch - how to profit?
« Reply #71 on: January 30, 2021, 10:22:12 AM »
Personally I just sold a put option on FIZZ a few days ago.  A real company that I already own some stock in, somehow some book maker paid me $27/share for a $100 put option for later this year.

I'll probably buy to cover for $10-$14/share in another week or two as volatility declines. 

There have been some wildly mispriced options on some of these short squeezed stocks, but you have to have the capacity to sell the option.

dignam

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Re: GME deathwatch - how to profit?
« Reply #72 on: January 30, 2021, 11:02:55 AM »
The thing is, I don't think anyone on either the short or long side believes GameStop will survive anyway.  This is simply the hill chosen to fight the battle on.

frugalnacho

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Re: GME deathwatch - how to profit?
« Reply #73 on: January 30, 2021, 01:10:40 PM »
Nobody buying GME at this point is buying it for the underlying fundamentals, or the long term viability.  Everyone is hoping to extract some profit from a hedge fund.  They think they have the hedge fund by short and curlies and can bankrupt them, and they have a lot of momentum piling in now. 

bacchi

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Re: GME deathwatch - how to profit?
« Reply #74 on: January 30, 2021, 01:18:28 PM »
Q was always about "trust the plan" and "two more weeks." We're now seeing similar themes. The big jump was supposed to be today (Friday) but now it's Monday/Tuesday. When that doesn't happen, it'll probably move to February expiry.

This is such a ridiculous comparison.

There is a several day settlement period for options which expired today.

I've been an avid lurker on WSB for a long time (well before the last few weeks) and there are plenty of people on both sides of the political party there.

Sorry, I wasn't clear. I'm not comparing the political leanings of the Q and WSB crowds. I'm comparing the methods and narrative. I.e., elites vs proles, conspiracies, making snap judgements from headline skimming, misinformation, not understanding how things work, memes, "Hold the line!" posts, etc.

It still hasn't been explained what the settlement has to do with a big jump. Since any shares were removed/added to accounts yesterday, why would any big jump be delayed? Were the market makers oblivious earlier in the week and were unprepared for expiration? That seems extremely unlikely.

hadabeardonce

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Re: GME deathwatch - how to profit?
« Reply #75 on: January 30, 2021, 01:20:18 PM »
GME deathwatch - how to profit?
There's an old adage about during a gold rush, the ones who make money are those selling shovels.

If you had capability to post YouTube videos, $1 ebook to explain what's going on, create "I bought GME" t-shirts, or something else, it would probably be a safer bet than getting your hands dirty.

bacchi

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Re: GME deathwatch - how to profit?
« Reply #76 on: January 30, 2021, 01:22:29 PM »
^ Hedgies have very few moves left.  There were no shares to be bought for the HF because retail investors AREN'T SELLING.  At least for now.  Volume has been quite low the last few days comparatively.  Every day they hold short positions without covering they are losing BILLIONS to interest.

This keeps getting repeated.

There was 3x the float traded on Wednesday.

Who was selling that day?

MustacheAndaHalf

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Re: GME deathwatch - how to profit?
« Reply #77 on: January 30, 2021, 02:50:39 PM »
Maybe Wall Street Bets members aren't selling, but retail investors are a wide group of people, many of whom are getting involved because of widespread news coverage.  Our discussion here is a good example - I bought on Thursday, but most of my limit orders triggered near Friday's open.  So I'm a retail investor who sold on Friday.

Options contracts exercised Friday require shares delivered in 2 days, and you can see heavy buying pressure from after-hours trading, where GME rose from $325/sh to $456/sh (+68%) so far.
(EDIT: GME actually dropped slightly in after hours trading, which Yahoo doesn't display)
https://finance.yahoo.com/quote/GME?p=GME

Game-themed ETF "GAMR" holds 27% GME, while S&P Retail ETF ("XRT") holds 20% GameStop stock.  A graph of their price changes over the past 5 days matches that of GME, although the percentages are different.  (GME more than tripled while GAMR went up +17%).  Those might be lower risk ways to benefit or get hurt by the GME stock price moves.
https://etfdb.com/stock/GME/
« Last Edit: January 30, 2021, 03:49:43 PM by MustacheAndaHalf »

frugalnacho

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Re: GME deathwatch - how to profit?
« Reply #78 on: January 30, 2021, 02:58:38 PM »
I understand the explanation of the squeeze and how these retail investors that are already in are going to (and already have) transfer a lot of money from hedge funds to themselves.  What I don't understand is the continued hype of buying in.  I visited WSB and the narrative appears to be to continue buying in and hold forever to bleed them dry.  But if I can just yolo my IRA into GME at market price on Monday morning and just hold those stocks to the moon, then why can't the hedge fund bros also just buy those same publicly available shares at market price?  If I can just buy and hold and "name my own ridiculous price", what's stopping them from just owning the stock first?  If there is a huge arbitrage available here, and the hedge fund guys are shitting their pants, then why is it still available?  What am I missing?

mizzourah2006

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Re: GME deathwatch - how to profit?
« Reply #79 on: January 30, 2021, 03:27:06 PM »
This is beginning to get a Q/StopTheSteal aspect to it.

Q was always about "trust the plan" and "two more weeks." We're now seeing similar themes. The big jump was supposed to be today (Friday) but now it's Monday/Tuesday. When that doesn't happen, it'll probably move to February expiry.

It's kind of impossible to know what could have been. The buy side was completely restricted by the very sites/apps that most of the people use, specifically Robinhood, IBKR, and Webull. The gamma squeeze was very real last Friday without those limitations.

@MustacheAndaHalf I believe it was actually slightly down after hours, it looks like you are adding the days gain to the current price to get your $456, is that right? On Google and Stocktwits I'm seen an AH end of $312. Happy to be proven wrong though because that means more money for me :)
« Last Edit: January 30, 2021, 03:34:14 PM by mizzourah2006 »

MustacheAndaHalf

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Re: GME deathwatch - how to profit?
« Reply #80 on: January 30, 2021, 03:48:40 PM »
mizzourah2006 - Oops!  I mistook Yahoo's price change as after-hours, when it was actually Friday's price change.  I went to a higher quality source and found the last trade was $313/sh.  You're right, the price dropped.
https://www.nasdaq.com/market-activity/stocks/gme/after-hours-trades

frugalnacho - Using round numbers, about 100k call options expired Friday, with each option being a demand to buy 100 shares at a certain price.  Some fraction were "covered calls", where the seller of the option has 100 shares of GME waiting to be delivered.  Some fraction were "naked calls", with no shares of GME to hedge the risk.  I can't imagine market makers were prepared for this week, so I expect they don't have all 10 million shares needed to cover these call options - but they have a contractual obligation to do so within 2 days.

The price of GME is the last trade.  There's orders on NYSE's books right now, with all the buyers lined up below $325 and all the buyers above $325.  If a buyer says they'll pay $2,000,000/sh ... they are matched up with a seller just above $325, and that's the price of the trade.  If you place a market order to sell, it's similar: the highest price order to buy is matched, and a trade happens just below $325.

If there's equal numbers of buyers and sellers arriving near $325, the price stays about the same.  There's people waiting to buy from $325 down to $1, and people waiting to sell from $325 and up.  It might help to personify it as one fast Buyer and one slow Seller.  They have lots of orders already, waiting... and then the Buyer starts moving twice as fast as the Seller.  The Buyer and Seller agree on $325, but then the Buyer places another order before the Seller can react.  That order matches a $326 order the Seller made previously.  The Buyer and Seller place an order near $326 and a trade occurs.. but the Buyer moves too fast again, and has to trade against an old order at $327.

If a large enough fraction of Friday's calls lacked 100 GME shares, there should be immense pressure on Monday and Tuesday.  It's possible RH, IBKR and/or TD will restrict trading again, ruining the plan of pressuring the market markers who sold call options.  Apparently when I place an order, IBKR doesn't take my money immediately, but instead uses their own account to settle the trade ... and only later settles with me.  So that's apparently why they needed to limit trading, get loans, or both.

trollwithamustache

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Re: GME deathwatch - how to profit?
« Reply #81 on: January 30, 2021, 04:18:16 PM »


One thing to keep in mind here is there are real people with money invested in Melvin Capitol too - it's possible the "we closed the shorts" stuff is entirely about alleviating anxiety in those folks.

Those real people placed their bets, and it didn't work out. Fortunately for them, those real people don't have to play by the same rules you or I do... their margin loans are being extended and not called because their friends know the price is an aberration and will go back. Plus their friends are stopping the order flow that goes against them!

some might feel this is unfair.


frugalnacho

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Re: GME deathwatch - how to profit?
« Reply #82 on: January 30, 2021, 04:28:53 PM »
So why didn't they buy the shares on Friday if they are contractually obligated to return those shares by Tuesday? If it closed at $313/share then that means there were shares available for $313 at the end of the day Friday, right? Isn't hat what the market price is? Why didn't the hedge fund in deep shit keep buying shares and driving the price up to the point that it's a financial wash for them? If $313 is a good price and is going to explode and cost the hedge fund money, why didn't they already buy it when it was available at $313?

firemane

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Re: GME deathwatch - how to profit?
« Reply #83 on: January 30, 2021, 05:01:12 PM »
Maybe I am being extra paranoid here, but aside from some potential quick cash is anyone actually worried about this meme stock stuff?

It’s cool that people are having their fight club deal against the hedge funds but there are more people to be hurt besides just hedge funds If they destabilize normal sp500 stock investments it’s bad news for everyone else. I see people with small portfolios that are egging on “taking down the market” on social media.

I didn’t think there was much to it at first until I saw Apple make record earnings and then tank 
« Last Edit: January 30, 2021, 05:03:16 PM by firemane »

bacchi

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Re: GME deathwatch - how to profit?
« Reply #84 on: January 30, 2021, 06:13:12 PM »
Maybe I am being extra paranoid here, but aside from some potential quick cash is anyone actually worried about this meme stock stuff?

It’s cool that people are having their fight club deal against the hedge funds but there are more people to be hurt besides just hedge funds If they destabilize normal sp500 stock investments it’s bad news for everyone else. I see people with small portfolios that are egging on “taking down the market” on social media.

I didn’t think there was much to it at first until I saw Apple make record earnings and then tank

Apple is a $2 trillion company. There's no way redditors/memers are pushing it around.

trollwithamustache

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Re: GME deathwatch - how to profit?
« Reply #85 on: January 30, 2021, 06:49:10 PM »
OK for all you participating in GME, I'm just gonna put this here

https://www.sec.gov/reportspubs/investor-publications/investorpubsholdsechtm.html

if you intend to hold and don't want your broker loaning out your shares to the shorts.

dignam

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Re: GME deathwatch - how to profit?
« Reply #86 on: January 30, 2021, 06:57:37 PM »
I think the long term effects will be minimal on the market as a whole when the GME thing is all done.  We will, however, never see a situation like GME again.  Never again will a stock have this kind of short % of float.  Hopefully we see some regulatory changes because of it, because we are exposing a whole bunch of bullshit and shenanigans.  How is it even legal to have short % of float > 100?

@frugalnacho they haven't begun covering yet because they are trying everything they can (scare tactics, bullshit ads) to lower the share price to minimize their losses first.  They haven't realized all of the losses yet, but buying to cover at $313 and higher will lock in their current very very red positions.  Buying to cover does not mean they own the stock, they are only closing out what they borrowed.  They presumably shorted much of their positions at < $20/share.  Sure, they could take long buy positions like reddit is doing but then they are still short on their other positions.  Plus, with the daily interest owed it makes no sense for them not to close shorts first vs. going long.

MustacheAndaHalf

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Re: GME deathwatch - how to profit?
« Reply #87 on: January 30, 2021, 10:57:59 PM »
So why didn't they buy the shares on Friday if they are contractually obligated to return those shares by Tuesday? If it closed at $313/share then that means there were shares available for $313 at the end of the day Friday, right?
Yes, there were some shares at $313/sh, but not enough.  Thursday would have been a better time for them to buy, when many retail investors were blocked from doing so (Robinhood, Interactive Brokers and TD Ameritrade).

Are half of the market makers calls "naked"?  That would mean they need to come up with 5 million shares in 2 days.  Look at the Thursday close ($194) and Friday open ($380) - that's an example of excessive buying.  They didn't all get $194/sh, but had to find enough sellers to meet demand.

I was actually a seller in Friday's initial trading.  I had a limit order around $330 or $340 ... and it executed at $380/sh, the opening price.  Another order triggered soon after at $390/sh.  All of that happened from buying pressure, which moves the stock price as it eats up seller's orders.

I'll be interested to see if this buying pressure can be kept up on Monday and Tuesday.

dignam

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Re: GME deathwatch - how to profit?
« Reply #88 on: January 31, 2021, 06:38:20 AM »
I think the hordes have been dumping Robinhood and moving to other brokerages that have actually been letting people buy at will (Fidelity, Vanguard).  We can expect more buying pressure this coming week most likely.

bwall

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Re: GME deathwatch - how to profit?
« Reply #89 on: January 31, 2021, 08:58:32 AM »
Here's a conservative (?) way to play GME; write Jan. 29 puts in the $100 to $200 range. The bids are still pretty high ($20 on the $190 strike price) and the likelihood of having them put to you is rather slim, in my non-professional opinion.

GME stock closed at $325 on Jan. 29th, so the above trade would have been successful. However, the two day emotional rollercoaster would have been a doozy and not for the faint of heart.

chasesfish

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Re: GME deathwatch - how to profit?
« Reply #90 on: January 31, 2021, 09:17:04 AM »
This one has been infuriating to me...

I know it's going back to $20, but the put option market is incredibly expensive and there are no virtually shares to borrow and sell short.

The last set I looked at required paying $70 for a $100 put option for January of 2021.   Putting up $7,000 to potentially make $1,000 to $2,000 is not fun.

dignam

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Re: GME deathwatch - how to profit?
« Reply #91 on: January 31, 2021, 09:55:36 AM »
I was looking at buying puts too, but hot damn it is expensive.  $3,300 for Feb 19 with strike price of $105.  This could very easily drag out longer than that.

bwall

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Re: GME deathwatch - how to profit?
« Reply #92 on: January 31, 2021, 09:56:02 AM »
^ Hedgies have very few moves left.  There were no shares to be bought for the HF because retail investors AREN'T SELLING.  At least for now.  Volume has been quite low the last few days comparatively.  Every day they hold short positions without covering they are losing BILLIONS to interest.

This keeps getting repeated.

There was 3x the float traded on Wednesday.

Who was selling that day?

On Monday and Tuesday there was 3x the float traded. On Wed. it dropped to 76m (1.5x), on Thursday it was 56m and on Friday it was 50m.
I'm not sure what to make of these numbers, however.

Borrow rates on GME shorts are around 38% the last time I looked. This works out to about 3% a month, or .75% per week, or about .1% per day, including weekends. Borrow rates are subject to change quickly in either direction.

So, if you have sold GME short to the tune of $100m USD, then your daily interest is $100,000. Market cap at close on Friday was $23 billion and if 100% of the share are short, then the total daily interest the shorts are paying is $23m, or $161m per week. It would take six weeks for shorts to pay $1 billion at current market cap and borrow rates.

bwall

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Re: GME deathwatch - how to profit?
« Reply #93 on: January 31, 2021, 10:06:02 AM »
If I were going to trade GME options, I think the safest trade would be to wait until Wednesday, Feb. 3rd.

If the volatility is still high, then I would sell deep out of the money puts at the Feb. 5 expiration.
Maximum profit is the income from the sale of the put.
Maximum loss (if the option expires in the money) is the strike price minus the premium received minus the price of GME.

sixwings

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Re: GME deathwatch - how to profit?
« Reply #94 on: January 31, 2021, 10:19:29 AM »
I'm watching but not buying anything, however I'm seeing tons of people on social media putting their life savings into this and posting about it and very clearly don't understand what's happening. This is also something that I could see people make a bit of money off and then decide they can easily repeat it (because they dont understand it) and bet it all on something again and lose it. WSB is inundated with people wanting to know what the next GME is to they can dump their life savings into it.

On the flip side, WSB may be big enough with enough influence to drive stock prices for small cap companies up at will by having a few influencers like DFV post about their next investment. Up to 8M users now. Populism in the stock market.

dignam

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Re: GME deathwatch - how to profit?
« Reply #95 on: January 31, 2021, 11:29:19 AM »
I'm watching but not buying anything, however I'm seeing tons of people on social media putting their life savings into this and posting about it and very clearly don't understand what's happening. This is also something that I could see people make a bit of money off and then decide they can easily repeat it (because they dont understand it) and bet it all on something again and lose it. WSB is inundated with people wanting to know what the next GME is to they can dump their life savings into it.

Yes, that part scares me.  There will not be another GME.  Other stocks might see some small jumps because of GME (like AMC), but people putting their life savings at this...no bueno.  Worst case is a bunch of people with 0 experience make a ton on GME, get overconfident, then get suckered into "this is the next GME" type crap and then lose everything.

Hopefully the proportion of people throwing money at this for the memes/to bleed HF is greater.

frugalnacho

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Re: GME deathwatch - how to profit?
« Reply #96 on: January 31, 2021, 12:23:34 PM »
I think the long term effects will be minimal on the market as a whole when the GME thing is all done.  We will, however, never see a situation like GME again.  Never again will a stock have this kind of short % of float.  Hopefully we see some regulatory changes because of it, because we are exposing a whole bunch of bullshit and shenanigans.  How is it even legal to have short % of float > 100?

@frugalnacho they haven't begun covering yet because they are trying everything they can (scare tactics, bullshit ads) to lower the share price to minimize their losses first.  They haven't realized all of the losses yet, but buying to cover at $313 and higher will lock in their current very very red positions.  Buying to cover does not mean they own the stock, they are only closing out what they borrowed.  They presumably shorted much of their positions at < $20/share.  Sure, they could take long buy positions like reddit is doing but then they are still short on their other positions.  Plus, with the daily interest owed it makes no sense for them not to close shorts first vs. going long.

Doesn't closing your short or going long require the same action?Buying a share at market price.

This is what I don't understand. On one side you have WSB saying they got the hedge fund by the short and curlies, the hedge funds are absolutely fucked and will go bankrupt when they have to close these shorts out eventually, and they will close them because it's going to bleed them dry in the meantime.  And if they don't close their shorts the price is going to go parabolic and the sky is the limit. $500, $1k, $10k, etc.

Then on the other side you have the hedge fund not buying up all available shares at market price, which just had me scratching my head.  If the hedge fund is in as deep of shit as everyone keeps saying they should have been buying up shares at $313.  There should be no shares available for me to purchase at $313, or $350, or $400, or whatever. 

The very fact that I can jump on vanguard tomorrow morning and buy a couple shares at or near market price gives me great pause, because why isn't the hedge fund already placing orders at that price to close out their shorts?  I understand it's not as simple as them just buying 50M shares, but why not start buying until the price is driven up to the equilibrium where they think buying more shares will be more expensive than riding out the shorts? 


dignam

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Re: GME deathwatch - how to profit?
« Reply #97 on: January 31, 2021, 03:48:26 PM »
^ Yes - to an extent.  The problem is they have shorted > 100% of float.  They essentially short sold shares that didn't exist.  The price will not start going parabolic until they begin to close shorts, presumably.  The moment they start covering, and because there is a shortage of sellers (due to them shorting shares that didn't exist), it turns into simple supply and demand and will result in price skyrocket. If they sit there and bleed interest, the share price likely won't change much.  Their best bet is to somehow dramatically lower the share price first, THEN start covering...through ladder attack manipulation, or whatever method they can figure out.  I think we'll see some clever new tricks this week.

They should have been buying to cover days ago (driving up price), but they doubled down on shorts instead.  Not sure why...greed? Lack of cash? Refusal to be beaten by a bunch of "degenerates"?  Hoping to scare said degenerates into selling?  One thing we can be almost certain of is they were selling their winning long positions on Friday which might help explain the big price drops, even on companies that had phenomenal earnings reports (Apple for example).  There's only one reason they would do that.

They may be past the equilibrium point.  No one really knows exactly how deep they're in, and probably won't until after all is said and done.

blue_green_sparks

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Re: GME deathwatch - how to profit?
« Reply #98 on: January 31, 2021, 06:10:26 PM »

Comment I saw on WSB...Such a funny bunch !

Just called GME customer service & they told me to please HOLD.

Chris@TTL

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Re: GME deathwatch - how to profit?
« Reply #99 on: January 31, 2021, 10:07:19 PM »
I'm watching but not buying anything, however I'm seeing tons of people on social media putting their life savings into this and posting about it and very clearly don't understand what's happening. This is also something that I could see people make a bit of money off and then decide they can easily repeat it (because they dont understand it) and bet it all on something again and lose it. WSB is inundated with people wanting to know what the next GME is to they can dump their life savings into it.

Yes, that part scares me.  There will not be another GME.  Other stocks might see some small jumps because of GME (like AMC), but people putting their life savings at this...no bueno.  Worst case is a bunch of people with 0 experience make a ton on GME, get overconfident, then get suckered into "this is the next GME" type crap and then lose everything.

Hopefully the proportion of people throwing money at this for the memes/to bleed HF is greater.

I'm with you both.

While WSB has historically been a place to see wild memes mixed with wild bets, the huge influx of users has brought a lot of regular people unfamiliar with the landscape. Like you said, I've seen a ton of "I'm putting my rent check in $GME and paying rent with a credit card" posts that are heavily upvoted. And as you said, it's not just WSB—plenty of folks on social media are saying similar things.

It's always hard to separate fact from fiction on WSB, but I'm worried people are really doing it.

I wrote something up about just this—why I'm worried about Gamestop stock.

Here's the sort of concern I have:

Quote
There is an ever-increasing number of commenters on /r/WallStreetBets saying they’re paying their rent with a credit card and buying a share or three of GameStop. Others have taken downpayment money or college funds and put it in. Many, many people suggest they’re paycheck-to-paycheck and are doubling-down on GameStop with any funds they can come up with.

As another poster mentioned, I think it's likely that institutional investors are riding the hype train bubble up...and will probably get out before regular joes and janes do:

Quote
Might individual long investors now just be selling to each other to keep the price going higher?

Is it instead today’s Tulipmania?

I don’t know. There’s not enough data to be able to analyze this. The folks who do have the data or at least an inkling of it are almost certainly taking advantage. Are the hedge funds now riding the stock price up, making a killing on the backs of regular Joes and Janes that have been trying to put the screws to them?

Probably. Sadly.

While I'm sad to think of what is likely going to come at the end of this for a ton of individual retail investors with large chunks of their savings in GME—especially in the context of someone who tries to promote financial independence—I also hope it leads to a less toothless SEC that might be able to even the playing field. I'm not sure how, but it's the sort of silver lining I'm hoping for. Anybody have some specific thoughts on that topic?

From a less emotional perspective, it's terribly interesting watch from the sidelines. It seems like a giant behaviorial economics experiment running in front of our eyes.

How long will the diamond hands last? How long will they fight rationality? Are the shorts already out and they're really just trading amongst themselves (a case of the "greater fool")? Or is there still plenty of short money to go around if they continue to hold?

On the experimental side, it makes me think a lot of the Public Goods Game:

Quote
Here’s a simple example:

Let’s say there are 4 players given $10 each and the pot multiplier is 2x. If everyone contributes their full $10, the total shared pot is $40. It’s multiplied by 2 and the total is $80 which is then divided amongst the 4 players.

Everyone walks away with $20 instead of the $10 they started with.

Let’s say this experiment is run again with the same players.

Having seen how things worked out, a player might rightly see that in their own self interest they could contribute none of their initial $10 and assume other players will contribute their full $10 again. Assuming so, the pot will be $30, multiplied by 2 to become $60 and divided amongst all players so each receives $15.

The player who contributed nothing will walk away with $25 (more than when they contributed in the first iteration). Other players only receive $15.

You can imagine how a third iteration may result in no one contributing anything and everyone getting just $10.

In fact, that’s what experiments in this game often show—different multipliers and group size affect the result but subsequent iterations tend to decrease contributions.

If GameStop investors continue to hold, they won’t see any monetary value from the increased share price. They’re effectively keeping as much money “in the pot” as they can.

Their self-interest pushes them toward selling as each day passes and more shares change hands in a sort of iteration of the public goods game.

Will our “players” in this game be able to hold through more iterations that have been found to be experimentally “normal”?

These Public Goods Games experiments, the classic "Prisoner's Dilemma", Game Theory... it all suggests that individuals still invested in GME at the moment should follow their own self-interest and get out.

But what happens if their self-interest isn't profit...and it's actually an ideological fight?

I'm not sure what's going to happen here, but as Mustachians...it's terribly interesting to watch and learn.

 

Wow, a phone plan for fifteen bucks!