u/DeepFuckingValue and the GameStop Reddit mania • Hacker News Board

Re: u/DeepFuckingValue and the GameStop Reddit mania

#501

Post by joncrane » Sat, Jan 30, 2021, 11:52 AM UTC

ericd wrote: post #462

jjeaff wrote: post #407

Earlier quoted context omitted.

Only if insolvency makes a sound. If the shorts don't have the trillion dollars to buy that stock to pay back the debt by the deadline then they are sol.

What deadline exists for shorts, assuming these aren't puts?

Shorting doesn't only mean short stock. You can be short call options, and if they are in the money, the holder of the contract can exercise his or her option, which forces the seller of the contract to provide shares at whatever price.

For every long call option contract, there is a counterparty who is subject to unlimited upside price risk, just as a traditional stock shorter. The difference is the contract has an end date.

I would argue that options account for more of the pressure/volatility of these recent stock prices than the shares themselves.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#502

Post by joncrane » Sat, Jan 30, 2021, 12:00 PM UTC

jojobas wrote: post #463

PeterisP wrote: post #360

Earlier quoted context omitted.

Well, the other fat cats will have a claim on a fair share in the assets of the bankrupted; the WSB investors would not have any claim whatsoever on the assets of a bankrupt hedge fund who shorted the same stock - they will have the stocks they bought, the fund does not owe them anything, the broken promise to buy and return loaned shares was to some broker, not to any retail investors.

I believe anyone's shares can be lent out by their brokerage. That might differ broker by broker but that's the general idea, there's no dedicated "other side of the short" as such.

When I signed up for IB I had to check a box that permits IB to loan out my shares for a small fee. I'm not sure if a broker can loan out a client's shares without the client's approval.

It may be fine print in the TOS, though.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#503

Post by zaphirplane » Sat, Jan 30, 2021, 12:05 PM UTC

ivalm wrote: post #320

jpmattia wrote: post #97

Earlier quoted context omitted.

> The overall market is stressed, things are getting weird and I would not be surprised if this is the beginning of another stock market crash. GME short interest was still greater 100% of shares outstanding as of 1pm 1/29 (S3 Shortsight numbers). If forced to cover, short holders will have to liquidate other assets. Could those liquidations force more liquidations in a positive feedback loop? Hopefully no, but certa…

There is nothing special about being short more than 100%, they short shares that are borrowed multiple times. But it also means the “long” interest is more than 200%. Even if you own equivalent of 100% of float there are still other shares that can be used to cover. The only issue starts if someone has lent out more than 100% of float and tries to simultaneously recall all of them.

How is that, it means (within the statement made)the stock is lent multiple times if a stock can be lent multiple times then that’s no different from a naked no borrowing short b) if it lent to multiple people it’s owned by none

Re: u/DeepFuckingValue and the GameStop Reddit mania

#504

Post by PartiallyTyped » Sat, Jan 30, 2021, 12:29 PM UTC

PeterisP wrote: post #327

ggggtez wrote: post #183

Earlier quoted context omitted.

To be honest, this is kind of the problem I have to stock investing as a whole. It sounds great to "invest on the fundamentals", but there doesn't appear to be a way for the average person to even comprehend what "the fundamentals" even are. But there has to be at least one fundamental: If the company goes bankrupt, the stock is worth nothing. Gamestop is most certainly going to go bankrupt eventually. Their business…

A trivial (not necessarily smart or optimal, but possible) way for GameStop to avoid that eventuality is to liquidate; close down the business and sell off all the assets - that wouldn't be a bankruptcy, they have more than enough cash and assets to cover their debts, so they would have a nonzero amount of cash left over to distribute to the shareholders. In essence, you're correct that if the company goes bankrupt,…

You think of what GameStop was, not what it is becoming.

Chewy's Founders and now board members are obviously not in the business of losing money, they bought a sizeable portion of the stock and are now members of the board.

GME has been transitioning to e-commerce (this is where Ryan Cohen and the new board comes in), where they tripled their sales (e-commerce) each year.

In addition, one of the board members is owner of Cloud9, an e-sports company. I suspect that this could enable GME shops to organize events/tournaments, another idea is to play the same role sports pubs do, but adjusted for e-sports.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#505

Post by cwhiz » Sat, Jan 30, 2021, 12:45 PM UTC

xur17 wrote: post #405

cwhiz wrote: post #311

Earlier quoted context omitted.

The supply of Bitcoin is “limited” but in reality it’s irrelevant. 1 satoshi is 0.00000001 which means for every 1 Bitcoin in circulation there is actually 100,000,000 satoshi. You can’t buy a hundred millionth of GME.

The supply of Bitcoin being limited absolutely is relevant, and you can buy partial shares of stock (not sure if you can go down to a hundred millionth, but not sure that's relevant). The point is that Gamestop can issue new shares, diluting the existing supply, making it a terrible "store of value". Bitcoin on the other hand has a fixed supply that cannot be increased.

Supply constraints don’t matter when there is virtually infinite availability. There are nearly 19,000,000 coins in circulation and each coin represents 100,000,000 swappable assets. We will reach the heat death of the universe before Bitcoin supply matters.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#506

Post by andersonvieira » Sat, Jan 30, 2021, 1:02 PM 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.

This is wrong. All stock prices are supply and demand. Dividends are simply taking money from one pocket, the company you own shares, and putting into another, your bank account.

What matters is that the company is capable of making cash and, ideally, of increasing that amount of cash with time. Dividends are just a capital allocation decision.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#507

Post by tony0x02 » Sat, Jan 30, 2021, 1:13 PM UTC

f430 wrote: post #26

What makes WSB legal vs emails about imminent pump on an unspectacular stock? What stops somebody from purchasing aged reddit accounts and then pumping up, upvoting their own threads?

> What stops somebody from purchasing aged reddit accounts and then pumping up, upvoting their own threads?

I think it is already happening. Search Reddit for Tootsie roll. One 3 yr old Reddit acct with no posts makes a flurry of posts about TR and it jumps 30% in 2 days.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#508

Post by kzrdude » Sat, Jan 30, 2021, 1:22 PM UTC

jberryman wrote: post #120

eternalny1 wrote: post #34

He posted his daily update today, he has not sold his shares through all of this chaos. Talk about "diamond hands". https://www.reddit.com/r/wallstreetbets/comments/l846a1/gme_...

How much does a successful youtuber/internet personality make? It seems like he might have even some economic incentive not to jump ship and risk losing social cache

Youtubers probably not making $13.8 million any time soon.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#509

Post by kevincox » Sat, Jan 30, 2021, 1:38 PM UTC

BelenusMordred wrote: post #448

kevincox wrote: post #56

Earlier quoted context omitted.

https://ipfs.io/ipfs/QmTW7sdBbZ1BXau8Cmrpv5srf38GZi1AiWWBBkv... There you go. It's not perfect though because a lot of the links still point to live assets. But it captured the important bits.

Just a tip, I find the cloudflare ipfs gateway to be a lot quicker. Only need to change the domain name of the link. eg. https://cloudflare-ipfs.com/ipfs/QmTW7sdBbZ1BXau8Cmrpv5srf38...

However it does munge content and break sites by serving captchas instead of images or css so I don't link to it by default. It is generally faster though.

That's the beauty of IPFS. You can use whichever gateway you want, even your own.

Re: u/DeepFuckingValue and the GameStop Reddit mania

#510

Post by xur17 » Sat, Jan 30, 2021, 2:20 PM UTC

cwhiz wrote: post #505

xur17 wrote: post #405

Earlier quoted context omitted.

The supply of Bitcoin being limited absolutely is relevant, and you can buy partial shares of stock (not sure if you can go down to a hundred millionth, but not sure that's relevant). The point is that Gamestop can issue new shares, diluting the existing supply, making it a terrible "store of value". Bitcoin on the other hand has a fixed supply that cannot be increased.

Supply constraints don’t matter when there is virtually infinite availability. There are nearly 19,000,000 coins in circulation and each coin represents 100,000,000 swappable assets. We will reach the heat death of the universe before Bitcoin supply matters.

This is only true if 1 unit is treated the same as 100k units, and it is not.