David Costing Goliath Billions

The most epic battle between retail investors and hedge fund billionaires is playing out right now.

I know a lot of people don't pay attention to or understand the stock market so I will try to explain this as best as possible.

A retail investor is basically the common person who invests in the stock market. Then you have the billionaire hedge fund managers and MM (market makers). And the most hated of all, short sellers.

Short sellers suck. In the most basic terms they borrow shares from a lender and immediately sell them. Trying to drive the share price lower. At which point they will buy the stock back at the lower price and pocket the difference. Example. You borrow 1000 shares at 10 dollars a share. Immediately sell them. That gives you $10,000. If the share price drops to 5 dollars and you buy the 1000 shares back for $5,000 you get to keep the other $5,000. But if the share price goes up you are screwed. Remember this is all scalable. Hedge funds and institutions trade 100's of thousands of shares. There is big money at play.

What is going on is called a short squeeze. A short squeeze occurs when a stock jumps sharply higher, forcing traders who had bet that its price would fall, to buy it in order to forestall even greater losses. Their scramble to buy only adds to the upward pressure on the stock's price.

That brings us to Game Stop. Just a few months ago the share price of a game stop share was about 3 dollars. This is a brick and mortar store that sells games. In a time where more and more people buy their games digitally. This isn't about GS being a good business to put money behind. These retail investors are engaged in an uprising against the establishment.

At the time of writing this thread game stop share price is currently at $358!!! Now imagine being short at 20 dollars a share times 10,000 shares. This is premarket so prices are all over the place right now.

A bit of how this was all started and set up.

This past August, as Gamestop the stock failed to keep up with a broader equities market that was heating up, former CEO of pet food e-retailer Chewy Inc. (NYSE: CHWY) and generic venture capital type guy Ryan Cohen started accumulating shares until he owned 12.9% of Gamestop. In November, he started what might be called an activist investor’s campaign, in which an investor buys a not-insignificant stake in a company, then makes a nuisance of themselves, publicly questioning management’s aptitude and agitating for control of the board of directors.

Sometimes, the activist investor pushes his fight for the hearts and minds of his fellow shareholders all the way to a proxy fight at the annual general meeting, but Gamestop didn’t put up much of a fight. Cohen was given three board seats on January 11th by a board of directors that seemed like it didn’t really know what it was going to do in the first place, and was happy to shirk responsibility to someone who seemed like he cared.

Deep dive

This is about CITRON the billionairs hedge fund trying to short the stock

the firm’s short position in a January 21st video. Within, Citron Research Founder and Executive Editor Andrew Left outlines the various reasons he’s short GME, prefacing it with an emphatic pronouncement that there is NOT a short squeeze in GME, so you can forget about it being a short squeeze, because a short squeeze isn’t what this is.

Deep dive

These are the smug A-holes that think they know better than everyone else


Game Stop closed at $61.50 on Friday 1/22

Monday 1/25, with an even larger spotlight on the trade, GME blew up to $159.18, eventually settling at $76.79.

I thought it was over at that point and it would fall back to earth. The shorts had doubled down and were ready to battle it out longer

Nope

Last night in after hours trading it spiked to over 200

This morning when I woke up it was above 300

It has now dropped to 250 while writing this thread.

Today will be another battle between the longs and the shorts. The shorts have already lost billions.

To all the new millionaires. The hedge funders do not hold the power when the little guys stick together.

The next big thing on Wallstreetbets:

PSTH, ACB, FSR

And I have no idea what company those are. And would not bet a single buck, but you might get luckyyyyy! The attention of worlds media is on that kind of thread right now.

GIT RICH GUICK!

originally posted by: FauxMulder
And the most hated of all, short sellers.

Short sellers suck.

Shorts are the Kevin of the investing world.

a reply to: AugustusMasonicus

I was laughing my butt off at 4:30 this morning when I saw 300+. My wife thinks I'm nuts.

She's not wrong.

These Kevins can EAD.

a reply to: FauxMulder

I've been following the Game Stop saga and it's enjoyable to observe how the usual screwers are getting screwed.

Is there any lower form of life than a hedgefund manager?

a reply to: Ohanka

Congress?

This has been my obsession for the last week, did anyone else get some tickets to the moon?

Edit - Where are you getting the pre market numbers?

a reply to: wheresthebody

I'm looking at robinhood. You can also google GME stock price but you have to look at the premarket below the listed price.

These hedge funds who short stocks are basically kicking a company when they're struggling making it impossible to turn the business around causing 1,000's of people to lose jobs while lining their own pockets at the same time.

Nothing but blood sucking parasites.

Was going to post about this, but S&F for your detailed explanation of what's going on a saving me all that typing.


I was looking at a price plot of GameStop this morning, and it's just........bananas.

The scene from SpaceBalls comes to mind, where Lone Star is trying to escape Scrooge, and Scrooge's ship sails right past, skipping Ludicrous Speed right onto Plaid.

That's essentially what GameStop did...they skipped right over a parabolic increase and went straight to vertical climb mode. The price chart from the past few days is a vertical cliff, like you're staring at the face of El Capitain.

Only other point I'll add beyond all the great stuff you covered is that don't discount the role of algorithmic trading in bizarre situations like this where security prices and movements defy all rational human explanations for what's going on in the market. I think the retail community could be what's fueling this, but often algo/computer trading systems are programmed to look for value oppurtunities like this (i.e. unknown stock has sudden, fluky spike in value), and a lot of $$$ can be dumped into positions quickly, triggering a cascade of other algo traders doing the same thing. We've seen the inverse of this on a much larger scale in the market during the "Flash Crash" in 2010. I wonder to what extent automated trading helped melt this up.

I'm staying faarrr away from this myself. I stick to buy low sell high. This is like watching a North Korean space rocket lift off. I'll watch from a safe distance, maybe it'll level off eventually. Maybe.....

originally posted by: SleeperHasAwakened
I wonder to what extent automated trading helped melt this up.

Maybe some but I think this is really just a lot of old fashioned big dick ego-nomics.

a reply to: SleeperHasAwakened

I too am watching this from the sidelines. I would have been in had I known back when it was 10 dollars. Hindsight and all that.

Funny enough, when I first signed up I was given a free share of game stop. I think it was worth 5 dollars at the time. I sold it immediately to invest in other things. Should have kept that one.

Looking at the 1 year chart for GME is ridiculous. The cliff has pretty much erased all the previous peeks and valleys. Now it's just a strait line.

I was trying to upload the chart I referred to, but don't have time today and can't be bothered to wait for the ATS image upload hamsters to awaken and start spinning up the wheel.

Behold

LOL @ Melvin losing their business.
Screw all the greedy short sellers and their market manipulations.

This is a giant transfer of wealth back to the people who deserve it.

Oh did we forget that all these hedge fund characters were basically bailed out years ago with tax payer funds? From a mess they created? Yeah. They can all rot.

DFV is making history.
This will be monumental and Netflix will buy the rights.


🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀

a reply to: FauxMulder

The buzz going around is that people are going to make their positions non-lendable to stop them being bought as a hedge on the short positions.

Very entertaining. The pearl clutching over manipulation is not about manipulation, it's about who is manipulating.

I first heard of this yesterday from a co-worker who told me that it was Elon Musk who tweeted something about gamestop, and then the stock went bananas.

originally posted by: Ksihkehe
a reply to: FauxMulder

The buzz going around is that people are going to make their positions non-lendable to stop them being bought as a hedge on the short positions.

Very entertaining. The pearl clutching over manipulation is not about manipulation, it's about who is manipulating.

Love it!

a reply to: Ksihkehe

This is true, we have 5 set at 10 000 each, if the shorts want them its going to cost them.

But I don't know anything about stonks.

originally posted by: NoCorruptionAllowed
I first heard of this yesterday from a co-worker who told me that it was Elon Musk who tweeted something about gamestop, and then the stock went bananas.

It's true. Elon helped. Also another billionaire who hates short sellers jumped in on the action.


Elon



Chamath