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Ask HN: What the heck is happening with GameStop?

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Re: Ask HN: What the heck is happening with GameStop?

#41

Post by AnimalMuppet »

sriram_malhar wrote: post #31

i am fairly clueless about the stock market, and would love an explanation for the following: there seems to be no discussion about the company’s fundamentals, it seems to be all about bankrupting hedge funds. That makes no sense to me. Am I being naive here? And in the final analysis, it seems to me like the bigger driver of GME’s stock was not retail redditors, but companies like Vanguard etc. So, this isnt even a…

The short sellers were shorting with no regard to the company's fundamentals, either. It's all about power and market manipulation on all sides.

Re: Ask HN: What the heck is happening with GameStop?

#46

Post by mcv »

loandigger wrote: post #32
hibbelig wrote: post #19

Earlier quoted context omitted.

The part I don't understand is this: “Someone noted that these hedgefunds shorted 140% of all shares available.” How can you borrow a share that doesn't exist?

Normally, when you short a share, your broker has to go find somebody who already owns it and they "borrow" it from there and allow you to "sell" it short. But if you can believe this, the very, very largest Wall Street firms, (Citadel, Sigma2, etc.) those with trillion dollar balance sheets got a special exemption from the SEC : rather than having to "find" shares to borrow, they can "manufacture" shares, using thei…

I didn't know about this special exemption. I thought it was just that B borrows a share from A, sells it to C, and then D borrows the same share from C to sell it to E. That way a single share has been shorted twice, and both B and D need to buy that share to pay back the loaned share.

So R quickly buys that share from E and refuses to sell it. Now B and D are screwed, because they both desperately need that share to pay back the loan that's about to run out tomorrow.

Re: Ask HN: What the heck is happening with GameStop?

#47

Post by mcv »

emteycz wrote: post #21
joubert wrote: post #14

Earlier quoted context omitted.

> So they shorted Gamestop (GME) from $20, to $10, to $4. Their greed kept compounding. They kept doing it again, and again, for months. Making billions of dollars, and almost bankrupting this company. I haven’t followed the history. In what specific way did driving the share price itself down lead GameStop to near bankruptcy?

For example Gamestop could've issued and sold new shares, instead they were forced to wait or sell them for unrealistic price.

I really hope they issued some shares now.

Re: Ask HN: What the heck is happening with GameStop?

#48

Post by mcv »

AnimalMuppet wrote: post #41
sriram_malhar wrote: post #31

i am fairly clueless about the stock market, and would love an explanation for the following: there seems to be no discussion about the company’s fundamentals, it seems to be all about bankrupting hedge funds. That makes no sense to me. Am I being naive here? And in the final analysis, it seems to me like the bigger driver of GME’s stock was not retail redditors, but companies like Vanguard etc. So, this isnt even a…

The short sellers were shorting with no regard to the company's fundamentals, either. It's all about power and market manipulation on all sides.

Exactly. WSB just gave the hedge funds a taste of their own medicine. Good or bad, there's definitely a degree of poetic justice here.

Re: Ask HN: What the heck is happening with GameStop?

#49

Post by perl4ever »

imtringued wrote: post #34
perl4ever wrote: post #5

I don't know, but this is not it: https://www.cnn.com/2021/01/27/politics/gamestop-stock-surge...

>As a result of the belief among the pro investor crowd that GameStop was, essentially, doomed, they began shorting the stock -- essentially betting on it to fail. This happens all the time to a variety of stocks with very little fanfare. It is the way of the modern stock market. This article somehow missed the abnormal part where there were more short positions than shares in circulation. It's like doing fractional…

No, come on, "no regulations"?

--

Matt Levine: "Every day people email me to say “I don’t understand how more than 100% of a company’s shares can be shorted, isn’t that illegal?” No, it is fine. I wrote about it on Monday"

My previous comment quoting his previous footnote on the same thing: https://news.ycombinator.com/item?id=25935959

Re: Ask HN: What the heck is happening with GameStop?

#50

Post by perl4ever »

loandigger wrote: post #32
hibbelig wrote: post #19

Earlier quoted context omitted.

The part I don't understand is this: “Someone noted that these hedgefunds shorted 140% of all shares available.” How can you borrow a share that doesn't exist?

Normally, when you short a share, your broker has to go find somebody who already owns it and they "borrow" it from there and allow you to "sell" it short. But if you can believe this, the very, very largest Wall Street firms, (Citadel, Sigma2, etc.) those with trillion dollar balance sheets got a special exemption from the SEC : rather than having to "find" shares to borrow, they can "manufacture" shares, using thei…

https://news.ycombinator.com/item?id=25935959
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