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My Not So Short Story on GME


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9 hours ago, Updawg said:

I don’t understand why intervention is needed. Each side made a choice, let the market figure it out.

I get that rh was over their heads and didn’t have enough to cover their volume and that needs to be looked at. Also seems 140% of shorts should be looked at as well. But otherwise let it play out. If hedge funds get bailed out I’ll be pissed. We know it will eventually tank and whoever hasn’t cashed out will lose but let the shorts lose first

/I don’t know much about this but just my take

There are still entities with short position who are stuck on the other side of the trade. Their loss potential are , in theory , unlimited. 
 

if it was contained to 1 fund and they go insolvent*, fine. But if it spreads to more institutions, the entire market will need to be sold off. 

 

*margin policies are supposed to contain risk to the account holder, but if account goes bust and the escalating losses are transferred over to the broker, then what?  
 

at some point, some authority needs to make unprecedented, artificial measures to stop it. They force the company to make a gigantic stock offering to trigger a deflation in price? Even more gigantic class settlement   at some agreed price ? I.e. “yes you won the game and you BK’ed all these funds, will you accept xxx$ to walk away”

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There are still entities with short position who are stuck on the other side of the trade. Their loss potential are , in theory , unlimited. 
 
if it was contained to 1 fund and they go insolvent*, fine. But if it spreads to more institutions, the entire market will need to be sold off. 
 
*margin policies are supposed to contain risk to the account holder, but if account goes bust and the escalating losses are transferred over to the broker, then what?  
 
at some point, some authority needs to make unprecedented, artificial measures to stop it. They force the company to make a gigantic stock offering to trigger a deflation in price? Even more gigantic class settlement   at some agreed price ? I.e. “yes you won the game and you BK’ed all these funds, will you accept xxx$ to walk away”
I think a move could be that all institutions, banks, and hedge funds that sold naked shorts and created synthetic shares should pay GME the fair market value (today's price, in other words) for the amount the naked shorted or created. This takes infinite loss off the board and still leaves the float in short squeeze territory long enough for retail to plan an exit. Lest we forget, short squeezes start becoming a thing under various conditions above 30% or so, even more so when it crosses the 50% threshold and institutional ownership is high. The float would still be 100%.

GME can't budge here. Cramer wants to blame GME for not speaking up or issuing shares, but why would they? This wasn't their mess. Now they have a metric ton of customer good will. Their public image has been completely saved. Imagine the amount of buying in store and online GME is about to experience. If they interject now, they sour all of that.
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CNN story about a guy making 35k/year has run up his RH balance to 1m.  https://www.cnn.com/videos/business/2021/01/29/trader-millionaire-gamestop-stock-orig.cnn

I get the idea that some of these investors see this as a social movement against large investors. But I hope guys like him do not find themselves seeing >90% of their balance high fading away.  This guy could sell off 15% of his GME holdings and pocket 5x annual salary, before taxes. Hell, if he sold 50%, he could propel himself and his family years ahead in terms of financial health.

He hints that he sees more profits ahead. Possibly true so don't sell 100%. Lock in some profits and keep going.

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1 hour ago, Nice Guy Eddie said:

CNN story about a guy making 35k/year has run up his RH balance to 1m.  https://www.cnn.com/videos/business/2021/01/29/trader-millionaire-gamestop-stock-orig.cnn

I get the idea that some of these investors see this as a social movement against large investors. But I hope guys like him do not find themselves seeing >90% of their balance high fading away.  This guy could sell off 15% of his GME holdings and pocket 5x annual salary, before taxes. Hell, if he sold 50%, he could propel himself and his family years ahead in terms of financial health.

He hints that he sees more profits ahead. Possibly true so don't sell 100%. Lock in some profits and keep going.

You’re hoping that a guy barely meeting working class threshold throwing almost 2 months of pre-tax income into a single speculative play ... should make a reasonable financial decision. 
 

i think it’s unlikely -_-

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4 hours ago, 52-80 said:

But if it spreads to more institutions, the entire market will need to be sold off. 

I think you're being a little dramatic. A lot of people might lose money. A lot of people are making money. A lot of corrections that were waiting to be made are being made. I don't think this is some scenario where everything is rotten to the core and our entire economy is propped up by shitty hedge-fund short positions.

At least - I hope not.

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14 minutes ago, ztejas said:

I think you're being a little dramatic. A lot of people might lose money. A lot of people are making money. A lot of corrections that were waiting to be made are being made. I don't think this is some scenario where everything is rotten to the core and our entire economy is propped up by shitty hedge-fund short positions.

At least - I hope not.

I gathered he was hinting at large pension funds and the savings and retirement funds for everyday folks who will pay (by virtue of their portfolio values going down). 

To which I say boo-hoo. You take the good and the outsized gainz; you take the bad and the implied risk. 

Dozens of black swan or black swan-like events that hurt investments over the past 200 years out front shoulda told ya.

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2 hours ago, Nice Guy Eddie said:

CNN story about a guy making 35k/year has run up his RH balance to 1m.  https://www.cnn.com/videos/business/2021/01/29/trader-millionaire-gamestop-stock-orig.cnn

I get the idea that some of these investors see this as a social movement against large investors. But I hope guys like him do not find themselves seeing >90% of their balance high fading away.  This guy could sell off 15% of his GME holdings and pocket 5x annual salary, before taxes. Hell, if he sold 50%, he could propel himself and his family years ahead in terms of financial health.

He hints that he sees more profits ahead. Possibly true so don't sell 100%. Lock in some profits and keep going.

Someone school me on this because I have never actually used a trading platform - could he instantly dump all of his shares for $1M using Robinhood? Are there sell limits he would run into? Say the stock starts to correct back - because it will - I'd imagine he'd run into difficulty trying to dump all of it in the middle of a free fall and could get fucked out of most of that profit, right?

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5 minutes ago, DonkeyCigars said:

I gathered he was hinting at large pension funds and the savings and retirement funds for everyday folks who will pay (by virtue of their portfolio values going down). 

Okay but how much of that capital is tied to hedge fund principal? I know I made the point back that a lot of mutual funds that were holding millions of shares of GME are raking it in right now. 

Like you said - if your retirement fund is based off of a stake in a hedge fund then sucks to suck. That shit is super volatile by nature and will always carry risk with it.

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1 minute ago, ztejas said:

Okay but how much of that capital is tied to hedge fund principal? I know I made the point back that a lot of mutual funds that were holding millions of shares of GME are raking it in right now. 

Like you said - if your retirement fund is based off of a stake in a hedge fund then sucks to suck. That shit is super volatile by nature and will always carry risk with it.

I don’t have this answer for you, but I think if you are making that argument, it’s because there is enough hazard that everyday folks with teachers pensions or firefighter pensions or HF retirements, who have no idea what GameStop is or who think a Stonk is a new dance by green haired youth, will be punished.

Again I’m not making that argument and not even sure he was, it just seemed like it from what I could gather, because I actually agree with your initial statement.

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11 minutes ago, ztejas said:

Someone school me on this because I have never actually used a trading platform - could he instantly dump all of his shares for $1M using Robinhood? Are there sell limits he would run into? Say the stock starts to correct back - because it will - I'd imagine he'd run into difficulty trying to dump all of it in the middle of a free fall and could get fucked out of most of that profit, right?

Millions of GME shares are traded every day. I don't think he would have trouble selling a few thousand shares.

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28 minutes ago, ztejas said:

Okay but how much of that capital is tied to hedge fund principal? 

The short obligation doesn’t go away if 1 or 2 funds go tits up.  It just gets transferred to the prime broker and up the chain. 
 

There are ~50M shares short.  If the stock goes up 500 more points (not unfathomable, it already did 50–>550 in a week), that’s a further $25B of loss, stacked on top of the $20B already incurred.  
 

That money has to come from somewhere — explanation for the big drop in Dow and Nasdaq this week, and companies like Apple despite smashing their earnings. 
 

That amount is insignificant to the total stock market if you simply ripped it out cleanly. But becomes more significant in terms of the cascading effect the concentrated sell-off triggers


The other fallout from this episode is that it exposed the structural weakness in the system. The fact that people realize they can’t buy and sell equities as “freely” as they thought will erode trust. Tightening up the clearing and settlement process; maybe legislation requiring higher reserves and risk requirements; will end up creating more cost and friction for retail participation in the market. Less money flowing into equities. 
 

Anyway, rockets go up. Choo choo
 

 

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3 hours ago, 52-80 said:

You’re hoping that a guy barely meeting working class threshold throwing almost 2 months of pre-tax income into a single speculative play ... should make a reasonable financial decision. 
 

i think it’s unlikely -_-

So only upper middle class or rich white collar folks are allowed to take calculated risks with their own money without judgment from surly 1%ers? This is a shitty classist take imo. You know nothing about the guy or what other assets he and his wife may or may not have so you can't really say what kind of risk a $4500 play on GME that paid off bigly for him was to begin with. Did he get an inheritance like millions of Americans and put it in the stock market or real estate? Was he making money trading options first? Has he already sold off other positions and kept some in cash? We can't say from that clip but my guess (as a fellow "working class" schmuck) is that he's probably played it safe with a chunk of his investments already but isn't going to go on CNN and tell the r/wsb crowd that he's cashed out x percent of GME or say anything that doesn't fit the rocketship meme. 

But maybe I'm just personalizing it because I was so close to pulling the trigger on chunk of GME back in September and left it in my paper trading thinkorswim to follow short term, b/c if I'd made a $3500 investment that day in my live account, I'd have enough in my brokerage account that would make me sell most of it. I'm not gambling that opportunity to pay off my mortgage or a safety net for my family. tldr Don't assume you know anything about that guy just because he makes $35000/yr.

 

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55 minutes ago, ztejas said:

Haven't they come under fire during this whole ordeal for selling people's orders on dips? 

those people probably got margin called, and those were were their biggest holdings.  bad timing, but thats the risk with overextending...

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I think a move could be that all institutions, banks, and hedge funds that sold naked shorts and created synthetic shares should pay GME the fair market value (today's price, in other words) for the amount the naked shorted or created. This takes infinite loss off the board and still leaves the float in short squeeze territory long enough for retail to plan an exit. Lest we forget, short squeezes start becoming a thing under various conditions above 30% or so, even more so when it crosses the 50% threshold and institutional ownership is high. The float would still be 100%.

GME can't budge here. Cramer wants to blame GME for not speaking up or issuing shares, but why would they? This wasn't their mess. Now they have a metric ton of customer good will. Their public image has been completely saved. Imagine the amount of buying in store and online GME is about to experience. If they interject now, they sour all of that.

Truth. If GME helps bail out the hedges, they will incur the wrath of millions of Redditors
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12 minutes ago, 52-80 said:

those people probably got margin called, and those were were their biggest holdings.  bad timing, but thats the risk with overextending...

Makes sense. Thanks. So selling shares that were paid for in cash shouldn't be an issue.

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32 minutes ago, Gourmand said:

So only upper middle class or rich white collar folks are allowed to take calculated risks with their own money without judgment from surly 1%ers? This is a shitty classist take imo. You know nothing about the guy or what other assets he and his wife may or may not have so you can't really say what kind of risk a $4500 play on GME that paid off bigly for him was to begin with. Did he get an inheritance like millions of Americans and put it in the stock market or real estate? Was he making money trading options first? Has he already sold off other positions and kept some in cash? We can't say from that clip but my guess (as a fellow "working class" schmuck) is that he's probably played it safe with a chunk of his investments already but isn't going to go on CNN and tell the r/wsb crowd that he's cashed out x percent of GME or say anything that doesn't fit the rocketship meme. 

But maybe I'm just personalizing it because I was so close to pulling the trigger on chunk of GME back in September and left it in my paper trading thinkorswim to follow short term, b/c if I'd made a $3500 investment that day in my live account, I'd have enough in my brokerage account that would make me sell most of it. I'm not gambling that opportunity to pay off my mortgage or a safety net for my family. tldr Don't assume you know anything about that guy just because he makes $35000/yr.

 

I think his point was that this guy has more than likely never made a present value 6 figure decision in his life - let alone a 7 figure one - so the chances that he fucks it up are a bit higher. Whether he fucks it up or not is kind of irrelevant.

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57 minutes ago, Gourmand said:

So only upper middle class or rich white collar folks are allowed to take calculated risks with their own money without judgment from surly 1%ers? This is a shitty classist take imo. You know nothing about the guy or what other assets he and his wife may or may not have so you can't really say what kind of risk a $4500 play on GME that paid off bigly for him was to begin with. Did he get an inheritance like millions of Americans and put it in the stock market or real estate? Was he making money trading options first? Has he already sold off other positions and kept some in cash? We can't say from that clip but my guess (as a fellow "working class" schmuck) is that he's probably played it safe with a chunk of his investments already but isn't going to go on CNN and tell the r/wsb crowd that he's cashed out x percent of GME or say anything that doesn't fit the rocketship meme.

 

You are correct that we don't know anything substantial about the guy.  All we know is the sensationalistic portraiture that the media loves to promote - poor working man strikes a million overnight. 

I think everyone should be allowed participation in the market.  But given all the information we're presented with, it is a very poor risk that he's taken.  On a % sense, it's a  concentrated position for anybody, but on effective % sense, it's much higher at his income level due having less surplus income.

If I was his financial advisor, I'd have a motivation for wanting to help him improve his earnings, and I wouldn't have advised doing that.  Anyway I'm not his advisor, and I'm not 1%er.

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7 hours ago, Nice Guy Eddie said:

CNN story about a guy making 35k/year has run up his RH balance to 1m.  https://www.cnn.com/videos/business/2021/01/29/trader-millionaire-gamestop-stock-orig.cnn

I get the idea that some of these investors see this as a social movement against large investors. But I hope guys like him do not find themselves seeing >90% of their balance high fading away.  This guy could sell off 15% of his GME holdings and pocket 5x annual salary, before taxes. Hell, if he sold 50%, he could propel himself and his family years ahead in terms of financial health.

He hints that he sees more profits ahead. Possibly true so don't sell 100%. Lock in some profits and keep going.

Let’s pretend you bet $100 on a 10 team CFB parlay and you hit the first 9 games.  Google tells me that pays 720-1 if you hit all ten.  Your last game of the day is the PAC12 nightcap.  Oregon -10.5 vs. UW.  You took UW and the points.  You now have $72k riding on this game.  Probably not a bad idea to call your bookie and put some cash on Oregon covering.

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2 hours ago, 936horn said:

What happens when GameStop offers more shares to the market?

My basic understanding (so probably wrong) is this. plz correct me as required.

GameStop makes a ton of cash as the shorts get covered by purchasing of the new stock at the current price. 

Price goes up as buys happen if that's what the short holders do. But not the exponential increase expected with a real short squeeze because supply is not limited. Then stock drops as people take their tendies and go home.

 

again, that's my playdough understanding. poke holes in it!

 

 

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1 hour ago, cam4mav said:

hmmmmmmmm

 

 

moving to this thread for visibilty/focus of convo. This whole thing going forward is betting / gambling that there are still huge amounts of shorts that must buy stock back to cover and this thing goes to the moon. 
That's the idea but if almost half of the shorts that were believed to be out there already got covered friday/thursday and the price remained flat.... there goes a lot of the fuel in that rocket. 

 

2 hours ago, 936horn said:

What happens when GameStop offers more shares to the market?

Watched this guy earlier today. I don't know anything about him. He addresses that question at 58:50 in this video. 

 

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instagram meme page

https://www.instagram.com/holdtheline__/

 

Spoiler

https://www.instagram.com/p/CKufRMCgAsf/

hold the line chants at ski resort lift

https://www.instagram.com/p/CKuUAK7ArGq/

Lord Of The Rings big ass battle memed

https://www.instagram.com/p/CKr7NMnA7Bj/

The bought a fucking digital billboard in Time Square

https://www.instagram.com/p/CKr8Q3FAzz_/

Plane flying Greg Davis Sucks banner [SUCK MY NUTS ROBINHOOD] over their HQ building

https://www.instagram.com/p/CKppuGEA8dc/

nice sing song "Soon may the Tendieman come.... To send our rocket into the sun"

https://www.instagram.com/p/CKpdetyAYma/

 

 

 

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45 minutes ago, cam4mav said:

My basic understanding (so probably wrong) is this. plz correct me as required.

GameStop makes a ton of cash as the shorts get covered by purchasing of the new stock at the current price. 

Price goes up as buys happen if that's what the short holders do. But not the exponential increase expected with a real short squeeze because supply is not limited. Then stock drops as people take their tendies and go home.

 

again, that's my playdough understanding. poke holes in it!

 

 

It's all speculative, right? You may be right. I'm not sure the share price would continue to go up if they issued more shares. I guess it depends on how many shareholders continue to stick this thing out. And how many shares GME offers. 

I am pretty confident that it will come crashing down at some point. Unless the market has really decided that GME is worth $25 billion.

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Again coming back to how all this is based on short #'s.... Video in spoilers from an angry ny macbook repairman that does finance videos. He's on team diamond hands, his other videos are very clear about that. However this is an interesting counterview from an un verified reddit hedgefund manager. take it for what it's worth. which might be nothing. might be true AF. no idea.

 

Spoiler

 

 

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4 hours ago, cam4mav said:

Again coming back to how all this is based on short #'s.... Video in spoilers from an angry ny macbook repairman that does finance videos. He's on team diamond hands, his other videos are very clear about that. However this is an interesting counterview from an un verified reddit hedgefund manager. take it for what it's worth. which might be nothing. might be true AF. no idea.

 

  Hide contents

 

 

Video is private

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Video is private
Weird he must have de listed it.

Yup he did. Haven't watched this next upload yet but the description sounds like some shady shit was going on and got caught. Can't copy paste on mobile but will do so and spoiler tag later





Sent from my SM-G973U using Tapatalk

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9 hours ago, cam4mav said:

My basic understanding (so probably wrong) is this. plz correct me as required.

GameStop makes a ton of cash as the shorts get covered by purchasing of the new stock at the current price. 

Price goes up as buys happen if that's what the short holders do. But not the exponential increase expected with a real short squeeze because supply is not limited. Then stock drops as people take their tendies and go home.

 

again, that's my playdough understanding. poke holes in it!

 

 

most of the time the price goes down when new shares are issued.  simple supply v demand.  rarely, as in maybe .1% of the time, the new issues are set at a price close enough to the previous close that it sends the market price a little higher.  why?  b/c people are expecting new shares at a price at least 10% lower but get spooked when the price isn't that low.  other than that rare situation the price always goes down.

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11 hours ago, cam4mav said:

My basic understanding (so probably wrong) is this. plz correct me as required.

GameStop makes a ton of cash as the shorts get covered by purchasing of the new stock at the current price. 

Price goes up as buys happen if that's what the short holders do. But not the exponential increase expected with a real short squeeze because supply is not limited. Then stock drops as people take their tendies and go home.

 

again, that's my playdough understanding. poke holes in it!

 

 

I don’t know this firsthand but from what I’ve seen on Reddit, GameStop is only authorized to issue $100MM worth of shares right now. They’d have to vote and make a public filing to be able to issue more, but I’m sure if they did that then the stock price would tank on news of the filing. 

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9 minutes ago, Burt Macklin said:

I don’t know this firsthand but from what I’ve seen on Reddit, GameStop is only authorized to issue $100MM worth of shares right now. They’d have to vote and make a public filing to be able to issue more, but I’m sure if they did that then the stock price would tank on news of the filing. 

that is correct - they filed to issue up to 100M worth

https://www.sec.gov/Archives/edgar/data/1326380/000119312520312805/d67321d424b5.htm

 

Jefferies will provide written confirmation to us before the open on the New York Stock Exchange on the day following each day on which our shares of common stock are sold under the Sales Agreement. Each confirmation will include the number of shares sold on that day, the aggregate gross proceeds of such sales and the proceeds to us.

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2 hours ago, gsoda3 said:

most of the time the price goes down when new shares are issued.  simple supply v demand.  rarely, as in maybe .1% of the time, the new issues are set at a price close enough to the previous close that it sends the market price a little higher.  why?  b/c people are expecting new shares at a price at least 10% lower but get spooked when the price isn't that low.  other than that rare situation the price always goes down.

This was my instinct answer but I wasn't aware enough of the frequency to make a claim one way or the other. 

Is this mainly due to the fact that sellers have to then compete with the company meaning sell prices would need to be lower than the new issue price? On top of the new issues being below the mkt price to begin with. That was my line of thinking. 

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1 hour ago, cam4mav said:

twitter land is not happy with this update from these guys. 

There were, at one point, 62 million shares shorted.

The total shares outstanding is approximately 69.5 million.

17 million or so of the shares are held by mutual funds.

And then there are all the open short calls.

This may not make it to the Moon, but it's going to hang out in orbit for a while.

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