Investment & Investing

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

It's a funny tale but there's going to be some spicy collateral damage.

Over what time period?

It’s not just GameStop either. This could be a disaster for funds that are top heavy with short positions.

https://www.bloomberg.com/amp/news/articles/2021-01-26/short-sellers-crushed-like-never-before-as-retail-army-charges?__twitter_impression=true

Who is actually behind this? I get it that Citron pissed people off and that guy on Reddit who made 8 figures in a year had a lot to do with it, but is it that straightforward?

Because GameStop has a fairly small market cap and liquidity isn’t huge, it’s easy to move the needle.

If retail investors buy, it triggers the algos and suddenly anybody with a short position has to cover that by buying, which triggers the algos again and the squeeze begins.

There has also been lots of retail investors buying (and exercising) call options, which means dealers have had to buy the underlying shares, which has the same effect.

https://youtu.be/4EUbJcGoYQ4

Tldr: short sellers got too greedy and shorted more than 100% of the company stocks, internet nerds realised and bought some stocks knowing the short sellers will need to buy those stocks off them to close their position.

Elon Musk just tweeted about the stock & they're now trading at $192
after-hours… if they open at this price, Melvin Capital will go
bankrupt tomorrow morning. $13.1 billion in wealth transferred from
Wall St to Reddit trolls.

https://twitter.com/williamlegate/status/1354166397874671616?s=20

This was a good watch, even though I knew what was going on. Also gives hints on some future plays as well. At least for the short term til the whale sharks adjust their play styles.

Join wallstreet forum. Find over shorted stocks. Check to make sure the valuation is wrong. Buy a couple shares.

It's incredible to watch

And when the Reddit team run out of steam - who is going to buy all their worthless shares off them ?

Market manipulation is crime, usually if it's an individual or small group they go to jail. How can organized mass events like this be punnished ?

Article in the FT covers this to some extent

The SEC is also likely to investigate whether users are being paid for their recommendations by companies or other organisations seeking to move a stock. Any investigation could take months — or longer — involving subpoenas of user IP addresses and broker trading records, Mr Cutler said.
The commission can also intervene sooner if it sees egregious market moves or suspects manipulation by suspending trading in a stock or by seeking temporary relief through the courts. Mr Cutler noted, though, that suspensions were often unpopular because it left investors who had jumped into the stock stuck in the shares.
The SEC declined to comment. Reddit said it prohibited the facilitation of “illegal transactions” and that it would “review and co-operate with valid law enforcement investigations or actions as needed”

Market manipulation is crime

Personally, shorting a stock over 100% to force it to crash in your favour is market manipulation.

shorting a stock over 100% to force it to crash in your favour is market manipulation

I get ya but isn't this just a whataboutism?

This is the unique element of a squeeze. Because of the over-short, the only way they can exit their positions is by buying the underlying stock. Which equals near infinite 🚀.

With the press and attention r/wallstreetbets and GME are getting now, the stock isn't going to crash anytime soon. Those short-sellers are seriously fucked

Plus some of the figures being thrown around in WSB are eye-watering. I get that it's a forum / you shouldn't believe everything you read, but one of their rules is transparency on position sizes. 50k+ investments going in regularly even now.

Those short-sellers are seriously fucked

Tiny violin times!

pre-market GME up 100% ! nuts

https://www.nasdaq.com/market-activity/s­tocks/gme/pre-market

Pre market trades of $360+ going in atm.

Total madness. Also, this:

https://www.reddit.com/r/wallstreetbets/comments/l60euz/theory_the_hold_is_working_and_the_squeeze_is/

DISCLAIMER: This is not investment, legal, or financial advise. I am
HIGH as FUCK right now

God bless r/wallstreetbets

Legends.

What’s the likelihood of collateral damage from the short sellers going bust? Obviously their employees are screwed, but will it impact on other companies whose stakes they hold?