The great Gamestop battle of 2021

[gregintenn]

I find this feud quite fascinating. I'd love to hear your take on what is happening. Do you think government will intervene somehow? I can't wait to see what problems that will cause.

[Garufa]

Your guess is as good as mine.

What are we talking about?

[gregintenn]

https://finance.yahoo.com/news/gamestop-extends-meteoric-stock-surge-093729588.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAAhFXxHe2-KbQB7uEpsuVxN2sr2vhrH7JQo26a_uhyt3b3E22tkcOzenDxrQ-b6QL2UJEZOKk20U1hj0WimiCgzuuG3613QO3eW0EY305nVszLmdN8euWfZ1NaP8CMQqhwbuGIERWcblrALZcVq3-F4Lj9jJe5oPibZVECCMq6mx

[MacGyver]

It's like 4chan got a Bloomberg terminal.

The Reddit r/WallStreetBets is actually quite interesting reading.

The fact that they've basically bankrupted a couple of major hedge funds is insane - and kind of serves them right.

They're currently moving on AMC too.

This won't end well, but it's fascinating to watch.

 

[gregintenn]

1 minute ago, MacGyver said:

It's like 4chan got a Bloomberg terminal.

The Reddit r/WallStreetBets is actually quite interesting reading.

The fact that they've basically bankrupted a couple of major hedge funds is insane - and kind of serves them right.

They're currently moving on AMC too.

This won't end well, but it's fascinating to watch.

 

How do you predict it will end? Do you see any illegal activity involved? I don't know why, but I really take an interest in this sort of thing.

[MacGyver]

The SEC could always take an interest - although they don't seem to have a lot in the way of teeth over the last few years.

This isn't like a typical pump-and-dump scheme - in that it seems far more distributed.

Were I investigating this, I'd be interested in some of the bigger 'influencers' in r/WSB. To the extent that anyone is playing with institutional money - that would be problematic. Anytime a company is shorted over 100% bears some investigation. But, whether the SEC will do it - who knows?

But, this stock and the market at large are being artificially manipulated.  Sure, here it's at a micro level - but it certainly could have larger implications at a macro level.  

 

[MacGyver]

I'd sure hate to be in management at GameStop or AMC right now.

[Chucktshoes]

 

 

Edited January 27, 2021 by Chucktshoes

[Chucktshoes]

Here’s the real money quote. 
 

[Erik88]

I read that article Greg shared and I still have no idea what's happening. I love that sub reddit though. Highly entertaining. 

[Erich]

If you go back a bit on this story, Elon Musk had a hand in this by a tweet leading to a Proof of concept pop his comment got action on. Now the scale of it is escalating.

One of my stocks got a big bump today when another reddit board just mentioned the ticker. I dont like its on the radar.

The stories I'd read this morning indicated that they had reached out to gov. But on the surface there was nothing actionable  ....all is fair in love and stealing!

I like the inferences that the hedge funds are going to work together to do them under. They dont like being beaten at their own game. That is the part of the war that will be interesting.

 

[Links2k]

26 minutes ago, Erik88 said:

I read that article Greg shared and I still have no idea what's happening. I love that sub reddit though. Highly entertaining. 

Chucktshoes video does a good job of explaining what’s happening. 

[QuackerSmacker]

2 hours ago, MacGyver said:

I'd sure hate to be in management at GameStop or AMC right now.

You're kidding, right?   If I'm in management at GME I'd sure rather see my stock at $300+  than at $2, for too many reasons to possibly mention.   And if you're way up on the ladder you can probably pull off a book deal down the road.

[MacGyver]

17 minutes ago, QuackerSmacker said:

You're kidding, right?   If I'm in management at GME I'd sure rather see my stock at $300+  than at $2, for too many reasons to possibly mention.   And if you're way up on the ladder you can probably pull off a book deal down the road.

There’s no way they can actually monetize this spike and profit from the volatility in any real way.  You’re not going to get a line of credit on that - at least not at terms that aren’t more predatory than the ones they’ve already got.

Plus, no management team wants to be in the position of having to explain what’s happening as opposed to the story they want to tell.

The team from chewy.com just took a big position in the company and three board seats to go with it.  I guarantee you this wasn’t the press they were looking for.

When short positions are at 140% you’ve already got the deck stacked against you - mind you by a bunch of hedge funds that want to profit off your failure.

This doesn’t change any of their fundamentals in any way that’s meaningful. You have a distressed company with a record of being awful to its employees being pumped up for lulz.

I won’t lose any sleep about billionaires getting screwed by other billionaires. And watching hedge funds get beat at their own game is funny.  But, GME probably still winds up at zero.

If the team from chewy actually thought, “hey we’ve got an ecommerce background - that’s what this company ought to be - we’ve got a team that can do that” - then that job just got a lot harder.  

[MacGyver]

[MacGyver]

The SEC has released a statement that they’re “monitoring the situation.”

[gregintenn]

It sure makes hedge funds a lot less appealing; at least in the short term.

[Garufa]

1 minute ago, MacGyver said:

The SEC has released a statement that they’re “monitoring the situation.”

But of course.  The fat cats don’t want anyone cutting in on their action. 

[MacGyver]

Just now, Garufa said:

But of course.  The fat cats don’t want anyone cutting in on their action. 

Basically, yes.

Oddly, they’re not really equipped for investigations like this.

They’re more or less doomscrolling on Twitter like everyone else. 

[gregintenn]

I wouldn’t surprised if somebody doesn’t turn up missing or suicided over this escapade.

[MacGyver]

32 minutes ago, gregintenn said:

I wouldn’t surprised if somebody doesn’t turn up missing or suicided over this escapade.

No doubt. 

[btq96r]

I am loving this in an admittedly unhealthy way.  It's akin to a plot twist in a show like Billions, just in a real world sample...but I know how much of a power keg it represents.

The only ones I feel sorry for are the managers of the companies caught in the crossfire...there is no way they're going to get anything approaching a fair valuation of their businesses for a bit, which is a horrible time for it to happen given all they're up against (and why they were a short target in the first place).

The Hedge Funds (getting hammered) can eat cake.  The hypocritical irony of any hedge fund crying foul at a group of pooled money seeking to profit off someone else's misery is worthy of holding federal office. 

The Hedge Funds (making money off of this) are hopefully going to be hammered.  I concur with Matthew Stoller in where the SEC should look first...

And finally for the Reddit WSB and Robinhood types...

Seriously, this is going to be a great case study in how disruptive forces can be a thing and the basics of a future model.  Even if this is found out to be a massive fraud and the Reddit/Robinhood services were just used as a preamble, the fact that they could be used for cover to begin with has exposed a mile wide vector for financial disruption.  @MacGyversaid this is like 4chan getting a Bloomberg terminal, which I chuckled at; but I'd say this is like Occupy Wall Street meets BLM, meets some other decentralized activist model and they actually got results.

It's been proven that an internet organized collectivist movement can check and punch back against hedge funds with billions in assets under management.   This has the potential to be the 21st century version of David's sling.  At best, they're going to enjoy that newfound power.  If the powers that be try to crack down on this, it's going to backfire.  There is no shortage of alternate means of organizing this kind of action, so while the institutional reflex is to protect their turf so to speak, they could just be expanding the fight if they think they have some divine right to keep digital activism out of finance.

 

Edited January 28, 2021 by btq96r

[MacGyver]

NASDAQ’s CEO has suggested they might halt trading to allow funds to “recalibrate their positions.”

https://www.mediaite.com/news/nasdaq-ceo-suggests-halt-to-trading-to-allow-big-investors-to-recalibrate-their-positions-to-combat-reddit-users/amp/?__twitter_impression=true

When 2008 happened, it was the taxpayer that bailed (most of) them out.

This is another verse to that same song. 

[btq96r]

6 minutes ago, MacGyver said:

NASDAQ’s CEO has suggested they might halt trading to allow funds to “recalibrate their positions.”

https://www.mediaite.com/news/nasdaq-ceo-suggests-halt-to-trading-to-allow-big-investors-to-recalibrate-their-positions-to-combat-reddit-users/amp/?__twitter_impression=true

When 2008 happened, it was the taxpayer that bailed (most of) them out.

This is another verse to that same song. 

Yeah, and basketball players would be able to take more efficient FG attempts if it wasn't for that pesky shot clock.

Show Millennials and Gen Z they have the power to shut down a major exchange, and Wall Street might as well go back to ticker tape and phone orders if they want to stay open without incident.

[QuackerSmacker]

1 hour ago, MacGyver said:

NASDAQ’s CEO has suggested they might halt trading to allow funds to “recalibrate their positions.”

https://www.mediaite.com/news/nasdaq-ceo-suggests-halt-to-trading-to-allow-big-investors-to-recalibrate-their-positions-to-combat-reddit-users/amp/?__twitter_impression=true

When 2008 happened, it was the taxpayer that bailed (most of) them out.

This is another verse to that same song. 

Here's why I'd love to be a GME top executive at $300+ rather than $2 or $20.

1. We are not going to bail out the hedge funds, period.  This is a tiny tiny fraction of the 2008 problem.  That was ALL of Wall Street and  the financial system.   There is no popular sympathy for a handful of hedge funds which specialize in killing companies.

2.  Litigation avoidance.  Anyone who is still a long shareholder and was previously dissatisfied with management has now lost his claim  might now come out verrrrry profitably.

3. Executive stock options.  If I'm an exec and had company stock options at $40, I have not been happy for a long time.  Now I'm happy,  assuming my options are vested and I am free to sell  (which company counsel may or may not have blessed. Some counsel would,   some  wouldn't)

4. Opportunity to sell existing stock owned.    (assuming not in a restricted "quiet period.")

5. Everyone has now heard of the company.  Great time to announce new products, services, and anything positive.

6. Part of executive bonus plans often encompass the average price of the stock during a quarter.  That's gonna be HIGH.

7. All of this attention may enable the company to do a stock offering to raise funds for......whatever.

That's just a quick rundown of reasons why it's great to be an exec of GME at this time.  I'm sure there are more.

 

Edited January 28, 2021 by QuackerSmacker
cleaning up spacing issues