Hertz, the original meme stock, is turning out to be worthless • Hacker News Board

Re: Hertz, the original meme stock, is turning out to be worthless

#261

Post by PebblesRox » Wed, Mar 10, 2021, 2:48 AM UTC

ineedasername wrote: post #218

brandmeyer wrote: post #78

Hol' up. While in bankruptcy, some fools ran up the price of Hertz stock. Then, while the price was up in the middle of bankruptcy proceedings , Hertz sold some new shares to the same fools. The final result of the bankruptcy wiped out all of the shareholders. While the buyers were obviously fools, Hertz should have known that zero shareholder value was a likely outcome. How was selling more stock in that situation l…

Hertz explicitly stated that shareholders were highly likely to get absolutely nothing. I think it's also highly obvious to even retail investors that this is an incredibly risky bet with potential for a total loss. I don't think there's a strong argument here that buyers didn't know what they were getting in to. Besides, how is this different than any other shareholder selling their stock, also knowing full well it…

One difference is it increases the supply, no? With shareholders selling existing shares it's more of a zero sum game.

I don't know if that's an important difference, but it has a different feel to it.

Re: Hertz, the original meme stock, is turning out to be worthless

#262

Post by pwillia7 » Wed, Mar 10, 2021, 3:00 AM UTC

vkou wrote: post #189

brandmeyer wrote: post #78

Hol' up. While in bankruptcy, some fools ran up the price of Hertz stock. Then, while the price was up in the middle of bankruptcy proceedings , Hertz sold some new shares to the same fools. The final result of the bankruptcy wiped out all of the shareholders. While the buyers were obviously fools, Hertz should have known that zero shareholder value was a likely outcome. How was selling more stock in that situation l…

> How was selling more stock in that situation legal? Why should it not be? Consider the following situation: 1. Alice owns 5 shares of Hertz. 2. Hertz owns 5 shares of Hertz. 3. Bob is an ape. For some stupid reason, Bob wants to buy 5 shares of Hertz. Is it immoral or illegal for Alice to sell her 5 shares to Bob? If not, why should it be immoral or illegal for Hertz to do so? Especially if they are up front about…

You could use the same argument for snake oil, which I think is pretty universally not accepted as moral.

Re: Hertz, the original meme stock, is turning out to be worthless

#263

Post by cwhiz » Wed, Mar 10, 2021, 3:00 AM UTC

throwaway5752 wrote: post #249

cwhiz wrote: post #230

Earlier quoted context omitted.

What’s happening is that the masses now have access to do the same absurd gambling that the “experts” have been doing for a century. The only way out is to remove the gambling functions from the market. But then that would require that traders go get actual jobs, and produce actual value. I think these people would rather see the US burn than do that.

That's pretty cynical and optimistic at the same time. Cynical because it doesn't acknowledge the value that a well functioning and regulated financial system can create. Efficient flow of capital only sounds bad if you haven't seen the absence of it, like projects failing for lack of funding while bad ones are burning money. Optimistic for thinking that the masses have anything approaching the same level of access.…

>Cynical because it doesn't acknowledge the value that a well functioning and regulated financial system can create.

You don’t need gambling to have a well functioning financial system.

The price of goods at Walmart is not based on what uninterested bettors think the price should. It’s just based on supply and demand.

We don’t need gambling to have a functioning financial market.

Re: Hertz, the original meme stock, is turning out to be worthless

#264

Post by cesarb » Wed, Mar 10, 2021, 3:04 AM UTC

PeterisP wrote: post #220

fogof wrote: post #111

Earlier quoted context omitted.

What do you mean by "not enough to incentivize mining"? Mining works on a system where the fewer miners there are the larger a portion of the total transaction fee share each miner gets. Even if the there were no exchanges or people sending transactions, I'm sure there would be at least a few nerds who would mine on their desktop computers for shits and giggles. A better criterion would be "when transaction fees aren…

There is a particular risk, unlikely but theoretically possible, that I'm thinking of here. In case of a sudden huge decrease of BTC price for a whatever reason, the cost of electricity for mining would become much larger than the cost of all the expected reward (the newly mined part plus the txn fee part). If such a situation would cause major miners cease mining, then there's a gap where there's a lot of unprofitab…

> There is a particular risk, unlikely but theoretically possible, that I'm thinking of here. [...] TL;DR - there's a mechanism where a sudden large, rapid drop in BTC price might perhaps cause a sustained collapse of BTC price.

This scenario is known as the "chain death spiral". When BCH forked from BTC, the BCH backers hoped to cause a death spiral on the BTC chain, so that it would die and be replaced by the BCH chain, the later having a modified algorithm which adjusted the hash difficulty faster. IIRC, they failed for two reasons: first, there was a large enough group of miners which didn't defect and stayed on the BTC chain even while the BCH chain was more profitable, keeping the hash rate high enough that the difficulty adjustment kept working; second, the faster difficulty adjustment of the BCH chain led it to oscillate between long periods without any block and periods in which many blocks were mined very quickly, most of them empty. IIRC, this ended when the BCH chain hard forked again to change its difficulty adjustment to one which didn't oscillate as much; however, the hype caused by all this mess (whoever had Bitcoin had doubled the amount of coin they had! Of course, half of it was BTC and half of it was BCH) led to an increase to the price of Bitcoin (and a few more forks).

Re: Hertz, the original meme stock, is turning out to be worthless

#265

Post by Dylan16807 » Wed, Mar 10, 2021, 3:06 AM UTC

marshmallow_12 wrote: post #256

Dylan16807 wrote: post #245

Earlier quoted context omitted.

Presumably the math there is expected value, but does that even matter? Imagine two lotteries that each sell ten million $1 tickets, and will only sell one ticket per person. One has a jackpot of $7 million. The other has a jackpot of $15 million. Math would tell you there's a significant difference between the two, wouldn't it? But I would say the right answer is that the difference in payout doesn't matter. And you…

You overanalysed it. The math is simply that you are statistically unlikely to get your dollar back.

Is that even math? I can accept that but it's not a very satisfying answer.

And almost anyone playing the lottery can tell you the chance of winning a jackpot is very low!

Re: Hertz, the original meme stock, is turning out to be worthless

#266

Post by dragontamer » Wed, Mar 10, 2021, 3:15 AM UTC

ineedasername wrote: post #228

dragontamer wrote: post #180

Earlier quoted context omitted.

Many would suggest that such an action you propose is fundamentally immoral. Lets say a hypothetical company is overall $-4 Billion in debt (total assets - liabilities). You successfully raise $5 Billion from some means. Now you're in a position where you sold $5 Billion worth of shares on a company that (by all fair evaluations) is only worth $1 Billion after the capital raise.

Plenty of companies are valued at more than 5x their assets. Tesla for example is valued at more than 10x their assets. Besides, immorality doesn't really enter into it. The SEC requires public filings to ensure investors can make informed decisions. The rest is up to the investor who presumably would be betting that the company's prospects will increase, at least partly as a result of avoiding bankruptcy an having e…

A more logical option is to wait for Hertz to inevitably go bankrupt, and THEN invest $5 billion into them.

Under no circumstances is it better for the new investors to pay billions before the bankruptcy.

Re: Hertz, the original meme stock, is turning out to be worthless

#267

Post by kjrose » Wed, Mar 10, 2021, 3:16 AM UTC

Scoundreller wrote: post #254

kjrose wrote: post #253

Honestly when hertz pulled the selling more stock to suckers move I was shocked by the sheer ballsiness of the maneuver. Especially when they admitted that the stock would likely be worthless. Honestly, this is one of those situations where a bunch of people took a gamble and lost hard. Hopefully it will serve as a lesson for next time.

I think their buyers would have been the short coverers looking for an exit. A single share could be bored and shorted multiple times. Not overnight, but with enough time, you can end up with more shares short than shares that exist.

That actually makes a lot of sense. I wonder if that was the play the whole time.

Re: Hertz, the original meme stock, is turning out to be worthless

#268

Post by Lazare » Wed, Mar 10, 2021, 3:17 AM UTC

pwillia7 wrote: post #262

vkou wrote: post #189

Earlier quoted context omitted.

> How was selling more stock in that situation legal? Why should it not be? Consider the following situation: 1. Alice owns 5 shares of Hertz. 2. Hertz owns 5 shares of Hertz. 3. Bob is an ape. For some stupid reason, Bob wants to buy 5 shares of Hertz. Is it immoral or illegal for Alice to sell her 5 shares to Bob? If not, why should it be immoral or illegal for Hertz to do so? Especially if they are up front about…

You could use the same argument for snake oil, which I think is pretty universally not accepted as moral.

Nope.

With snake oil, we would way that it is immoral for ANYONE to sell it. As a result, we (mostly) make it illegal too.

With Hertz stock, nobody seems willing to say that all sales of such stock are immoral. And certainly they're not illegal; people have been buying and selling an enormous volume of Hertz stock.

Re: Hertz, the original meme stock, is turning out to be worthless

#269

Post by xsmasher » Wed, Mar 10, 2021, 3:22 AM UTC

david927 wrote: post #219

agumonkey wrote: post #135

meanwhile GME is back to 200+

And it will go much, much higher. GME is a short squeeze of epic proportions. It's going to be interesting to see how it plays out.

if the wsb narrative is true - and that if they hold, the shorts must buy at any price - then why don't other knowledgeable traders and institutions recognize that and get in the game?

In other words, if the wsb moon-theory is true, it would have already happened.

Isn't it more likely that the price is, at this point, just getting pumped by memes and wsb throwing good money after bad?

Re: Hertz, the original meme stock, is turning out to be worthless

#270

Post by vkou » Wed, Mar 10, 2021, 3:26 AM UTC

pwillia7 wrote: post #262

vkou wrote: post #189

Earlier quoted context omitted.

> How was selling more stock in that situation legal? Why should it not be? Consider the following situation: 1. Alice owns 5 shares of Hertz. 2. Hertz owns 5 shares of Hertz. 3. Bob is an ape. For some stupid reason, Bob wants to buy 5 shares of Hertz. Is it immoral or illegal for Alice to sell her 5 shares to Bob? If not, why should it be immoral or illegal for Hertz to do so? Especially if they are up front about…

You could use the same argument for snake oil, which I think is pretty universally not accepted as moral.

Selling snake oil is illegal and immoral because it misrepresents the product.

Selling stock, when you make it clear that your stock is worthless does not misrepresent the product.

And, again - note that Alice is not even required to make such a disclosure, when selling her stock to Bob. The assumption on the stock exchange is that as long as public companies are up front and honest about their financials, it's Bob's responsibility to not buy stupid, overpriced crap.