Reddit/Gamestop vs.Wall Street

Friend is on that wave. He put in 2k and he’s up to 20k now. I have pocket change so I bought one share of AMC :pac:

Basically big hedge funds tried to short the stock when it was under $20, the market caught wind of this and began a squeeze. So the hedge funds could end up having to buy back the stock at over 20x what they sold their short options for. This is a big drama now between big players, big media (who frankly are also likely invested in this somehow) who want to play favorites with hedge funds vs little guys, and now even the White House is “closely monitoring the situation.” The hedge funds took a huge bet - 140% of the stocks volume, that the price would go down, and when it doesn’t they’re going to get creamed, daddy CEO won’t get another sports car and hundreds of first time investors will be paying off their student loans or medical debts. But last night r/wallstreetbets went private and it’s discord server was shut down by discord for hate speech (voluminous use of “retard” etc) so the masses are a bit less organized than they were at the start of the week and we may see the stock dip out as people get scared to keep riding the wave. But I guess we just have to see what happens when the market opens in a a few minutes.

Muahahaha wrote: »

once the music stops they're left with a vastly over valued stock thats in an inflated bubble.

The important part here is that the key instigators don't really care. They're prepared to lose the money they put in. A few later comers who wanted to cream off will probably lose out.

The main demonstration here is just how much of the money in the hedge market is completely invented and adds no value to anything whatsoever.

Hedge funds engage in these kinds of manipulative practices continuously. It's basically just a big game to them; to see who can place the wildest bets and come out on top.
The entrance of a player who isn't willing to play by the unspoken rules has completely upset the apple cart.

Basically it involves shorting stock. Let's say you invest €1000 in certain stocks with a Broker (call him Broker A). Now Broker A has a mate (Broker who wants to make some money. So he borrows your stock from Broker A and sells it for €10 a share hoping to drive down the price. Ideally for Broker B the price goes down and he buys the same shares for €8, which he then gives back to Broker A who acts as if nothing happened and at the end of the year tells you that you have lost 20% of your share price in that stock. But it's the stock market and these things happen. Besides if you are smart these things even out over time.

Then Broker A wants to short some stock himself so he approaches Broker B who lends him stock and the whole thing starts again. :rolleyes:

In this case, Reddit has played some of these Hedge funds (Melvin and Citron) at their own game and invested in Gamestop shares driving their price higher while Melvin and Citron had gambled that the price of Gamestop shares would go down. But instead it's gone much higher and they are on the hook for the difference. They have now had to be shored up to avoid bankruptcy, and some are now saying that they will need a government bailout. :rolleyes:

There's a better explanation here.

But short selling should be illegal anyway.

Marcos wrote: »

In this case, Reddit has played some of these Hedge funds (Melvin and Citron) at their own game and invested in Gamestop shares driving their price higher while Melvin and Citron had gambled that the price of Gamestop shares would go down. But instead it's gone much higher and they are on the hook for the difference. They have now had to file for bankruptcy, and are now saying that they will need a government bailout. :rolleyes:

Don't know where you're getting that info from. Melvin weren't bankrupted - they closed out their position, swallowed a $3.75B loss and were subsequently shored up by a couple of rivals.

This is all Donald Trump's fault.

https://edition.cnn.com/2021/01/27/politics/gamestop-stock-surge-trumpism/index.html

Deleted User wrote: »

Its great to watch it play out....i dont claim any expert knowlege in this area


But how can someone bet 140% of the volume of stocks??

The same way that a bank can give you a 120% mortgage and you're still on the hook for the entire amount; a complete lack of regulation due to politicians being in the pockets of hedge funds.

People's jobs, careers, pensions and savings are directly impacted by what happens with share prices. And now we can see how easily multi-billion-dollar companies manipulate these prices for profit with little or no consequence. It's a big casino for wealthy people and the chips are your average Joe's money.

Short-selling, like currency speculation, should be illegal. It has the power to topple entire economies if used maliciously.

Ardent wrote: »

Don't know where you're getting that info from. Melvin weren't bankrupted - they closed out their position, swallowed a $3.75B loss and were subsequently shored up by a couple of rivals.

OK I'm happy to be corrected and will edit my post.

Absolutely loving this. F*ck the entire financial system.

hatrickpatrick wrote: »

Absolutely loving this. F*ck the entire financial system.

What about the employees?

The Robinhood app has delisted AMC and GME. The heck? I still have AMC stock in my portfolio but nobody interested in buying it can do anything to access it on the platform.

Deleted User wrote: »

Im really sorry,i think i kind of grasp it


I dont want to sound mad/conspiracy person....but if the broker deosnt buy/sell you back stock (at the last leg) deos the whole thing not collaspe and is it not dependant on goodwill/trust of all involved not to screw each other over??

It's probably contractual - likewise I'd say when you initially borrow stock from them & sell its all at an agreed price, and when you buyback and return its all at a fixed price also - i.e. the extra 50% of an 150% volume short is traded at the same price as the first 100% when it comes to closing out.

The thing some people were theorising would happen though, is that if enough people held onto their stock of GME and did not sell, that the hedge funds running big shorts would not be able to buy enough volume back at any price - choked out of the market essentially. And since theyre shorting stocks they are obligated to buy back at some stage - what happens then?

Overheal wrote: »

The Robinhood app has delisted AMC and GME. The heck? I still have AMC stock in my portfolio but nobody interested in buying it can do anything to access it on the platform.

“ Our mission at Robinhood is to democratize finance for all. We’re proud to have created a platform that has helped everyday people, from all backgrounds, shape their financial futures and invest for the long term.

We continuously monitor the markets and make changes where necessary. In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AMC, $BB, $BBBY, $EXPR, $GME, $KOSS, $NAKD and $NOK. We also raised margin requirements for certain securities.

Amid significant market volatility, it’s important as ever that we help customers stay informed. That’s why we’re committed to providing people with educational resources. We recently revamped and expanded Robinhood Learn to help people take advantage of the hundreds of financial resources we offer and educate themselves, including how to make sense of a volatile market. In 2020, more than 3.2 million people read our articles through Robinhood Learn.

We’re committed to helping our customers navigate this uncertainty. We fundamentally believe that everyone should have access to financial markets. We’re humbled to have helped many people invest in the markets for the first time. And we’re determined to provide new and experienced investors with the tools and resources to help them invest responsibly for their long-term financial futures. ”


:mad: so basically the brokers are forcing everyone into sell-only on these stocks now because we can’t have regular people buying into this thing any longer. What the hell! How is that not market manipulation?

Has anyone actually made real world money on this or is just a case of sticking it to the hedge funds