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u/DeepFuckingValue and the GameStop Reddit mania

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Re: u/DeepFuckingValue and the GameStop Reddit mania

#421

Post by pb7 » Sat, Jan 30, 2021, 4:32 AM UTC

whatever1 wrote: post #418

pb7 wrote: post #416

Earlier quoted context omitted.

If they issue a few million shares at the current price, shorts still have to cover at an absurdly high price compared to their entry which will cost them in the single to low double digit billions. It may screw over retail investors but bankruptcy is inevitable.

Pardon my ignorance, I have no expertise in the field. When you issue new shares, do they have a fixed price or are they sold at market value (whatever market decides the price to be)? If the latter happens, I expect that the price of the [edit:GME] stock will collapse immediately.

Issuing shares is a move done to raise money. It would then follow that GameStop would want to get the most money possible for these shares so they would try to sell them for the highest price possible, somewhere around the current going price. I’m not 100% on whether they have to release them all at once but I’m guessing dumping multiple million shares all at once would crash the price which isn’t good for anyone in normal circumstances so it’s probably not done that way. Regardless, there are like 50-60M shares currently shorted — there’s no chance GameStop would issue that many.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#422

Post by xur17 » Sat, Jan 30, 2021, 4:35 AM UTC

whatever1 wrote: post #345

If GameStop issues some million shares on Monday morning to raise capital isn't it game over for every retail player? Shorts will close their positions, RH users will suffer great losses from dilution. Am I missing something?

You are. I believe they have to preannounce something like this, which would cause the price to instantly drop. In addition, the public backlash they would receive would likely be overwhelming.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#423

Post by nostrademons » Sat, Jan 30, 2021, 4:35 AM UTC

bawolff wrote: post #381

nostrademons wrote: post #161

Earlier quoted context omitted.

I remember when this came out 20 years ago. It was part of the whole wave of P2P filesharing programs that came out between 1999-2002: Napster, Gnutella, Kazaa, Audiogalaxy, etc. Amazing it's still going on. BTW, for folks new in tech - it's amazing how influential that wave of programs were, even though they largely failed in the marketplace. Napster founder Sean Parker later became the first investor and first pres…

They may not have made money, but they certainly succeded in getting marketshare. The main reason they dont now (other than napster being sued out of existence) is that bit torrent displaced them, and really that should be considered the same class of program

BitTorrent was also careful to demonstrate that it had substantial non-infringing uses. That's perhaps a lesson to folks who want to challenge the system: seem as innocuous as possible for as long as possible, until you become the system.

Google did this to very good effect: even when I was there the first time (~2010, over a decade after founding) they still had a sterling reputation in the press, while Netscape got crushed by their arrogance (and Microsoft, relatedly) less than 5 years after founding. Microsoft too, for that matter: through the 80s they were seen as an innocuous software publisher, because the hardware was where the money was, and then in the 90s people realized hardware was a commodity and Microsoft was a monopoly.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#424

Post by [deleted] » Sat, Jan 30, 2021, 4:37 AM UTC

semi-extrinsic wrote: post #64

misiti3780 wrote: post #31

I'm honestly confused by the press around this event. I get it, /DFV started a short squeeze and got rich, that is great for him. I don't support naked shorting, it should probably be illegal (if it is not already) and it looks that was part of the reason this happened. Everyone has been suspecting for a while (especially here) that a lot of volatility in stocks like TSLA etc was due to Robinhood. As of 5:33 EST, I'm…

I've also seen some speculation that Citadel may have been intentionally amplifying the short squeeze caused by Redditors, and then getting a sweet deal with Melvin capital by injecting money the latter sorely needed in exchange for a share of future revenue. I don't understand exactly how the math works out there to be able to evaluate if it was an extra good deal or not, but I find it credible that institutional in…

[deleted]

Re: u/DeepFuckingValue and the GameStop Reddit mania

#425

Post by fakedang » Sat, Jan 30, 2021, 4:40 AM UTC

__MatrixMan__ wrote: post #374

trianglem wrote: post #366

Earlier quoted context omitted.

But it’s no longer effecting just the rich. It’s working people with pensions and 401ks... and this better not mess up the decade long sweet bull market for a handful of millionaires.

I'm not without sympathy for them, but I also think it would be good if people stopped allocating their retirements towards "money tricks on Wall-Street" and instead found ways to put it towards creating a world worth retiring in.

If they did that, I doubt their would be retirements.

Assuming all eco-tech companies on WS are trustworthy enough (not Enron-esque), and investing in eco-tech will "create a world worth retiring in", most people would have seen a significant part of their retirement go to zero.

Or if they decided to invest in a publicly traded life-sciences company in hopes of finding more breakthroughs, they would see their investment go towards funding some pricey acquisition instead.

"Create a world worth retiring in" is as vague as it gets.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#426

Post by fakedang » Sat, Jan 30, 2021, 4:41 AM UTC

Rapzid wrote: post #315

shyn3 wrote: post #115

Earlier quoted context omitted.

Wsb can remain irrational longer than the market can remain solvent. That was a comment by a poster which I find funny.

Until Monday when the bills are due and their wives(let's be honest, this crazy train is the T train) discover their bank accounts are empty.

But what about the wives' boyfriends' accounts?

Re: u/DeepFuckingValue and the GameStop Reddit mania

#427

Post by sfblah » Sat, Jan 30, 2021, 4:42 AM UTC

raziel2701 wrote: post #22

On wsb u/deepfuckingvalue showed he still holds 50,000 shares and 500 deep ITM call options. He has secured a profit of $13.8 million dollars, and his remaining open position is valued at $45 million. I would caution people to not quickly fall into the "if he's still in, I'm still in" meme. He has secured a $14 million bag, regardless if the stock goes to zero he's already secured a life changing amount of money, he…

I'm not sure anyone cares, but the way to think about this is simply to ask if you would own GME at $300 a share if you had to hold it for the next 20 years. The answer is just obviously no. You'll never receive anything remotely close to that in dividends from the company. It's just a mania.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#428

Post by __MatrixMan__ » Sat, Jan 30, 2021, 4:43 AM UTC

bawolff wrote: post #385

__MatrixMan__ wrote: post #374

Earlier quoted context omitted.

I'm not without sympathy for them, but I also think it would be good if people stopped allocating their retirements towards "money tricks on Wall-Street" and instead found ways to put it towards creating a world worth retiring in.

Money tricks on wall street do have effects on the real world, some of which are positive.

Sure, occasionally.

But I think that the most common side effect is an increase in class stratification--which I'd argue undermines the political stability of the future that you're hoping to retire into.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#429

Post by matthewbauer » Sat, Jan 30, 2021, 4:44 AM UTC

billylindeman wrote: post #98

ggggtez wrote: post #63

Earlier quoted context omitted.

Just because he's still in doesn't mean that it's actually worth $300 on the fundamentals. I could definitely see the argument that $20 was undervalued, but it's plain to see that the short-squeeze is now part of the calculation of value. There is no way that GameStop has an actual fundamental value of $300 per share. That price is clearly inflated, and in a few weeks will decrease, probably to somewhere above $20, b…

Any stock that does not pay dividends _has no fundamentals_. It's just supply / demand.

Some companies do buybacks that provide the same value as dividends - but avoid capital gains. Since there are less shares after the buyback, the remaining shareholders have relatively more value in the company.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#430

Post by pb7 » Sat, Jan 30, 2021, 4:48 AM UTC

runarberg wrote: post #417

pb7 wrote: post #409

Earlier quoted context omitted.

Every dollar you make in interest from your savings account at your credit union is $30 that someone had to pay the credit union in interest on their mortgage. You are swindling people out of their hard earned money — people who are struggling to own their home or business — to fund your own retirement.

Do you honestly believe that these are equivalent? Or are you just arguing in bad faith? I’m gonna assume the former and explain the difference. The interest you are paying when you take out a loan is a) compensating the creditor for money lost because of inflation, and b) paying for a service. The bank/credit union at the same time will at the same time a) compensate for inflation and b) reward savings accounts for…

It’s odd to me that you see the mutually beneficial transaction there but not in the stock market.

I will state this once as simply as I can: stock market investors are rewarded for funding companies by taking on that risk in hopes that the companies they invest in produce a profit. It is overwhelmingly similar to the process you are describing with your credit union, but in a much more distributed way.

> Workers don’t need the shareholders, and they get nothing in return (except lower salaries).

There would be no workers if companies didn’t have the capital the needed. So no, the workers very very much need the shareholders. The money has to come from somewhere. No bank is going to bankroll the next Airbnb, Uber, Instacart, DoorDash, etc.

Beyond that, the workers aren’t owed a penny more than they agreed to be paid. If public shareholders didn’t exist, the owners would have full ownership which is what happens with small businesses. Nowhere in these circumstances are workers any better off. Profits and losses are not their domain.

I’m sorry if I sound like I’m talking down to you. It is just that you are a victim of cognitive dissonance possibly due to your unconscious bias against wealth.

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