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It turns out an online community can stay irrational longer than a hedge can solvent.
These situations tend to blow Up both sides, more or less. A few lucky Redditors will get out with profits. Most of the late entries are going to take steep losses. Those losing Redditors will be paying the winning Redditors. The narrative that this is hedge funds losing to Redditors isn’t fully accurate.
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If they wished a quick way to bankruptcy, that would certainly be it. Make enemies and robbing both your customers and your investors in 1 single move. I don't think there has been anything as foul in history, has there?
Having a high stock price does altogether nothing for the company if they can't sell stock. Similarly, having a low stock price doesn't bankrupt a company.
Low stock price wont make a company bankrupt, agree.
But if in the process of doing so, you stole value from your own 19yr old stockholders.... then its pretty certain you just painted a bulleye on you. And... They are also your targer demographic customer base. Woops! Lets see how quickly your revenues dip to $0 after that.
If you have $0 revenue you dont have a business. Period.
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You're assuming that people on r/wallstreetbets are exactly the same as people on wall street who literally only care about money. The redditors buying don't want to make money, they just want to kill the hedge fund. By wasting a few hundred dollars they are making a larger dent in wall street than congress has made for the last few decades.
Lol. What are idiotic statement.
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Works until it doesn't. Exhibit TSLA.
'Fundamentals' and all that is a bs excuse used to scapegoat driving stocks they or their friends don't like to the ground. Let me ask this. How in the world can an 'analyst' know more about tech than the people that work all their lives in bleeding edge research and technology? They don't. They don't know more than Jim Keller whose primary task was development of Zen architecture at AMD - which traded at $5 before h…
Many analysts do. Some don't. They all tend to cover several names, and each name has some analysts who are more influential than others. The influential ones aren't exclusively found at prestigious investment banks, either. One of the most influential analysts for AAPL, Dan Ives, works at Wedbush.
Technology experts are often clueless to a fault and don't have some kind of "third eye" for business, any more than business experts have a "third eye" for technology.
It's also a mistake to think that just because a person is familiar with one technology, he/she understands the demand for that technology -- let alone other, weakly related technologies.
> 'Fundamentals' and all that is a bs excuse used to scapegoat driving stocks they or their friends don't like to the ground.
I agree with this in the case of GME and AMC, but in other situations fundamental analysis can help a person to understand valuations. It seems like BS until you actually find yourself carrying risk and trying to figure out how much a stock should be worth.
Fundamentals shouldn't play much of a role for valuing companies that are at risk of default or bankruptcy, because the stock prices the long-term EV of a binary outcome: either the equity value approaches zero or it doesn't. People who think they know what GME stock is worth, but haven't sold any shares short, are just pontificating and they should either put their money where their mouths are or sit on the sidelines and watch with fascination like the rest of us.
I know there are a lot of Wall st guys here. Can someone explain what's really going to happen here in regards to the short squeeze? Is it really so simple? How will the shorts be able to cover? Also, is this page correct in saying that GameStop is the only stock on all listed US markets that's shorted over 100%?
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They’re bleeding because others are holding, no? There are premiums at play.
That would be virtual bleeding (which could be the case though), but if you bleed real money then somebody else has to receive it. If you hold a stock money doesn't come to you (except as annual profit distribution but that is a different issue). I read the fees for borrowing a stock for shorting are coupled to the market price (not sure). So if you fund lost a few billion real money (so they have to sell other asset…
The troubled melvins and maples are exiting succesful positions to be liquid and cover for the black hole that is GME.
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You're assuming that people on r/wallstreetbets are exactly the same as people on wall street who literally only care about money. The redditors buying don't want to make money, they just want to kill the hedge fund. By wasting a few hundred dollars they are making a larger dent in wall street than congress has made for the last few decades.
There might even be some overlap, wall street using wallstreetbets to manipulate.
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It turns out an online community can stay irrational longer than a hedge can solvent.
Good one. They also call themselves Autists and Retards. I read a suggestion that it’s not the price of the stock that scared the hedge fund. But the borrowing costs, where the interest rates might have gone as high as 80%! That’s quite an expensive credit card there to be shorting stocks with.
I believe in normal circunstances it tends to be less than 1%
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Hedge funds are down $70 billion over this, so I'm pretty sure there's some accuracy. And no, its not all GameStop, but $GME is a driver. https://www.reuters.com/article/us-retail-trading-shortbets-...
This is very much reminding me of 2008. If you keep blowing up financial institutions, eventually you're going to hit a Lehman and the counterparty risk spreads to the rest of the system.