GameStop, the world's biggest retail video game chain has had a wild and turbulent 12 months to say the least. As the video game market continues on its inevitable trek to becoming more and more of an entirely digital industry, GameStop has clearly been struggling to adjust to the changes. GameStop drama has been covered here on GBAtemp in the past, from its switch to focusing on merchandise and legacy games, to its decision to remain open following the COVID-19 pandemic, to its reversal of that decision. However, perhaps GameStop's craziest story has very little to do with the financial success of the company itself.

Prior to this month, GME (GameStop's stock ticker)'s 5 year high was approximately $33 in April of 2016. However, that figure drastically plunged down to under $4 in 2020. This month however, that figure has absolutely skyrocketed above anybody's expectations--closing out today (January 27th) at $347.23 a share. Many factors went into this large stock price; primarily a battle waging between investors of the /r/wallstreetbets subreddit and the short seller Melvin Capital. In essence, Melvin is betting that the stock price will fall below $60 by Friday, while hundreds of thousands of investors on /r/wallstreetbets have been rallying together to keep the price above $60 in hopes that it will skyrocket even further. Allegedly, "$1,000 GME by EoW is not a meme!"

Always remember to invest at your own risk, and know that nothing posted on GBAtemp or /r/wallstreetbets regarding this situation should be construed as financial advice.

Source

 

[GhostLatte]

Big boy wallstreet and hedge funds kept betting Gamestop stock prices would fall over and over and over again and made a ton of money, they got so greedy they doubled down to the point where they were waging 130% of the available floating stock would fall. Reddit saw that and realized if everyone bought stock and held it, as their (wallstreet's) options expired they (wallstreet) would be forced to buy at a higher price, shooting the stock price up and creating a upward cascade effect that would shoot the stock up into the stratosphere. One hedge fund lost so much money from this they needed a 2 billion dollar bailout to stay afloat, and others are suffering too, while ordinary people are getting that money to pay off student loans, fund their parents retirement, pay for surgeries, and donate to charities.

Something like that... all the info I know about the stock market I learned in the past 72 hours lol

TL;DR Wallstreet gets more cucked the more stock redditors buy in gamestop

I tried calling Melvin Capital cucks in WSB and Reddit removed my post

 

[Gamemaster1379]

I think a market correction of a grossly oversized short like this is not only welcome, it's necessary. Big hedge funds have been doing this to companies since the dawn of time - Tesla has been a target of short sellers since its inception, which decelerated its growth. Imagine shorting Tesla now when it's breaking all records of market growth, to the point that Musk briefly became the richest man on the planet, overtaking Bezos, if only for a moment. In my opinion, if you play stupid games, you should win stupid prizes - it doesn't matter if you're a billion dollar hedge fund or a small trader. This is just desserts for trying to tank a company that isn't even out of business, nor is it headed in that direction at all.

No disagreements there. Wall street has always been an insider club and they thought nobody would notice on their reckless and irresponsible trading. As it turns out, an entire generation of scorned outsider millennials took notice and realized they could do something about it.

Frustrating to see the SEC and many of these trading platforms backing wall street too by trade halts and other manipulative tactics. Can't let the little man win.

 

[gnmmarechal]

This is actually hilarious

 

[neotank19]

The concept of "price" goes out the window when you're obligated to cover your bad call and there simply isn't enough stock available to do so. Wall Street made a bet that GameStop's stock is going to crash this month and borrowed stock from Market Makers at an average price with the expectation that they will return it later once it tanks and pocket the change - that's how they make money. There's nothing wrong with doing that if it happens naturally, but you can trigger such an event artificially if you have enough volume, which they did.

There's only one problem - retail traders bought the stock in droves and the price shot up instead. Once there is simply no more stock available for hedge funds to buy, at an inflated price or not, the amount of zeroes after $1 is up to your imagination - they have to buy it back regardless. If the price continues to hover at $60, we'll see another short squeeze and the price will shoot up again. If it maintains a level of $115 or higher, we're in full on gamma squeeze simultaneously, which is unprecedented.

From Wall Street talk to human talk, there isn't enough stock available to buy back and return, and there isn't enough capital in the market to cover the difference either, so that $300 can quickly change into $1000 for no reason other than scarcity. For a short blip GameStop's stock might end up costing more than the cure for cancer, and after the blip, once positions close, it will return to previous levels. A similar situation occurred with Volkswagen during the previous financial crisis.

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https://www.ft.com/content/0a58b63a-4294-3e07-8390-c3aabef39a26

This situation is entirely Wall Street's doing, they're at fault for failing to manage their own risk. If I open a store, say that I have 10 PS5's for sale and sell them, knowing full-well that I won't be able to deliver more than 5 to customers by the due date, I am taking a risk. I am assuming that I'll be able to buy another 5 on the open market, preferably for a price lower than my asking price. If I don't do that by the due date and I have 5 customers angrily knocking at my door because I pocketed their money and they have nothing to show for it, that's on me. I'll have to deliver those 5 PS5's regardless of how much they are on eBay - I already had my payday, I was hoping that they'll be available cheaper later. They aren't, tough luck.

You explained it beatifully, thanks so much.

 

[Foxi4]

You explained it beatifully, thanks so much.

They have 6 days from Friday to cover outstanding shorts, from what I understand. This means we haven't seen anything yet, barring some cataclysmic event. I already hear calls for bail-outs, which means they're pretty scared of the possible ramifications. I suspect there will be some drastic changes in the system following this event.

 

[anhminh]

They have 6 days from Friday to cover outstanding shorts, from what I understand. This means we haven't seen anything yet, barring some cataclysmic event. I already hear calls for bail-outs, which means they're pretty scared of the possible ramifications. I suspect there will be some drastic changes in the system following this event.

Yup, rich people hate losing money, expressly to poor people.

 

[hippy dave]

Still worth buying in today y/n?

 

[Foxi4]

Still worth buying in today y/n?

Nobody here is a financial advisor, nothing posted on GBAtemp should be misconstrued as financial advice or "tips". Nobody will take responsibility for any financial decisions anybody else makes. You can do your own due diligence, look at the numbers and make an independent decision. All investment carries risk, keep that in mind before making any rash moves. If you're looking for financial advice, this isn't the site for that, I'm afraid.

 

[Subtle Demise]

Still worth buying in today y/n?

Idk, it's dropped a few percent overnight, but that could change when the market opens again. I put about $35 worth in fractional shares, if it drops any more today I'm just gonna cut my losses.

 

[hippy dave]

Nobody here is a financial advisor, nothing posted on GBAtemp should be misconstrued as financial advice or "tips". Nobody will take responsibility for any financial decisions anybody else makes. You can do your due diligence, look at the numbers and make an independent. All investment carries risk, keep that in mind before making any rash moves. If you're looking for financial advice, this isn't the site for that, I'm afraid.

Wise words, of course. Still up for any number of unqualified opinions tho


e:

 

[Foxi4]

Idk, it's dropped a few percent overnight, but that could change when the market opens again. I put about $35 worth in fractional shares, if it drops any more today I'm just gonna cut my losses.

It's sitting at $450 pre-market and peaked a little over $500 according to NASDAQ. It only dropped slightly because the market was closed, it's back up and then some. Whether that's an indicator of a new rally or not remains to be seen - you'll read about it here if it is.

 

[CallmeBerto]

To the moon!!

 

[Sicklyboy]

Wise words, of course. Still up for any number of unqualified opinions tho

Unqualified (extremely) opinion, there's a lot of potential on the table here, but also a LOT of risk. If you want to get in and haven't yet, the best time is a few days ago, and the second best is any time that's not more expensive than it already is; there may be a dip on Friday but there also might not be. IMO be prepared to lose anything you put in, and be pleasantly surprised if you come out ahead, but know what your acceptable levels of risk are, what you can afford to lose (on the bottom end), and roughly where you'd want to get out on the top end.

Typical warning that this is not financial advice, I'm only slightly more intelligent an ape with a cell phone, I just like the stock, you're a fool if you think anyone here is qualified enough to know what they're doing, etc etc.

 

[FAST6191]

Boo those places seeking to put a halt on trading, or that have put a halt on trading. I will certainly remember that the next time you bleat about the free market in this or something else, or what I would say is justifiably laugh as someone small loses their investment because they are an idiot or because they assumed the market reflected reality and you say "them's the risks".

Here's hoping we get some blood sports as the various funds out there playing in this compete to make sure they are not the ones holding the bag (collectively they might exceed public shares or whatever but individually might be able to dodge it).

Nobody here is a financial advisor

I am going to wonder there on that one. It is a reasonably easy field to get into and there are plenty here that otherwise represent all sorts of interesting professions, including accountants.

Granted there is likely the "I am a lawyer but I am not your lawyer" thing going on for that one; assuming you are not one of the "we like the stock" crowd buying it for its aesthetic appeal or to be part of a movement then said advisor would probably want to look at your portfolio and expected returns to see whether taking a punt with this much as a gamble could pay off, especially at this late in the day and vs doing the same in AMC, nokia, blackberry and other such things that are also potential candidates for some having some fun.

No disagreements there. Wall street has always been an insider club and they thought nobody would notice on their reckless and irresponsible trading. As it turns out, an entire generation of scorned outsider millennials took notice and realized they could do something about it.

To be fair little guy/collective activist investors is not exactly a new thing
https://www.forbes.com/sites/michaelpellmanrowland/2019/04/07/fairr/?sh=30441f0a48a5 with the thing in question going back to 2015.
https://raisevegan.com/peta-buys-slaughterhouse-stocks-to-push-for-transition-to-vegan-meat/

 

[GhostLatte]

I can’t even purchase more shares on Robinhood

 

[Subtle Demise]

I can’t even purchase more shares on Robinhood

The market doesn't open until 9:30 EST. Or do you mean just not today?

 

[Plasmaster09]

The market doesn't open until 9:30 EST. Or do you mean just not today?

no like robinhood has actually disabled buying (but not selling) shares on amc and gamestop stocks, in a transparent attempt to trick people into selling early
they're trying every horribly scummy trick in the book so that the rich can remain rich and the poor remain poor

 

[Subtle Demise]

no like robinhood has actually disabled buying (but not selling) shares on amc and gamestop stocks, in a transparent attempt to trick people into selling early
they're trying every horribly scummy trick in the book so that the rich can remain rich and the poor remain poor

Even pending orders? That would suck for me if so

 

[Plasmaster09]

Even pending orders? That would suck for me if so

idk but I wouldn't be surprised
thankfully the WSB mob has decided to respond to this in the best way possible: sending a jillion complaints of every kind in an attempt to get some form of overseeing entity on RH's ass

 

[GhostLatte]

no like robinhood has actually disabled buying (but not selling) shares on amc and gamestop stocks, in a transparent attempt to trick people into selling early
they're trying every horribly scummy trick in the book so that the rich can remain rich and the poor remain poor

This is literally communism rip free market