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GameStop Stock Breaks Records as Reddit Traders War with Short Sellers

36 points by gshakir 6y ago

runnr_az 6y ago
Weird question: do the Reddit users really have that much trading power vs institutional investors?
- grassgreener 6y ago
  I think it’s a legit question. The answer is: yes. Short GME and be rich in a week. The other answer is: no. Buy call GME and be rich in a week. The whole market is irrational in the short term, maybe it’s luck, serendipity or genius. You’ll find the same pattern at your local casino. Put less than 5% of your net worth on this bs if you don’t want to FOMO. Otherwise just disregard, it’s 100% gambling.
  - billylindeman 6y ago
    I’ve been following this situation and it’s mostly due to short interest exceeding all available shares ( peaked at 140% afaik). Institutions were selling naked shorts and will be forced to cover. Has nothing to do with the business it’s supply / demand of shares outstanding driving this as far as I understand it
    - 1996 6y ago
      > Institutions were selling naked shorts and will be forced to cover Serves them well! Play stupid games, ... I smile inside thinking WSB has enough power to cause a gamma squeeze and punish institutions speculating against a company gamers love!
      - bmiller2 6y ago
        No gamer loves GameStop, where’d you get that idea? They are known for buying back your 60$ blockbuster game after a month for $3, and reselling for $55. They should be dead in the water, and the shorts will eventually be correct, if they can’t pivot to a digital presence (which they can’t, because why would anyone go outside of the native platform stores?)
        oarsinsync 6y ago
        > if they can’t pivot to a digital presence (which they can’t, because why would anyone go outside of the native platform stores?) Price. It’s often cheaper to buy a “CDKey” from a third party site and stick it into the native platform store than to buy direct. It definitely adds friction though, so it’s unlikely to become the primary method for most.
        sumedh 6y ago
        > They are known for buying back your 60$ blockbuster game after a month for $3, and reselling for $55. Why would anyone sell it for $3?
        bobthepanda 6y ago
        Ease of access to funds and buyers. GS takes all the risk of having to find an ultimate end buyer. If that buyer has issues they take it up with GS not you. And GS can give you that money right now in the store so you can buy something else at the store at that moment. Plus a lot of people trading in games were minors, who don’t exactly have easy legal access to say online means of selling.
        sumedh 6y ago
        So GS is providing a valuable service, not sure what the problem is. If you dont like GS you can always sell and buy games on facebook marketplace and other sites.
        austhrow743 6y ago
        If they can get away with that sort of margin for a business with basically no moat then people must love them.
        cwhiz 6y ago
        It’s not THAT bad. I don’t love GS, but I would be sad and disappointed if the one near me closed. It’s a convenient place to buy used games.
        6y ago
      - 3327 6y ago
        Stonks go up. Shitron will rot under the WSB banner. This is the way.
- deleted 6y ago
  [deleted]
- knaik94 6y ago
  No, the large majority of the traders there don't have the capital to be big players. Some do, but they are undisciplined in the sense that the timing of when they close positions is unpredictable. It's closer to someone in a casino on a high from their hot streak not understanding the time to pull out. Some argue that they trade on herd mentality, but the reality is that you're likely to only see people who lost or gained large amounts of money. And no matter what meme stock has attention currently, you'll see losses contrasting the gains.
jollofricepeas 6y ago
The irrationality of the mob is multiplied 10x with the power of technology and automation. These past two years makes me feel like we’re living in a black mirror episode. “Plato argued that democracies inevitably degenerate into anarchy, as the poor plunder the rich and profligacy produces bankruptcy.” Tech has only sped the slide of western democracy. 100 years from now, the West will be ruled by mobs or will have adopted something close to China’s modern communism just to ensure “order.”
- knaik94 6y ago
  That's an overgeneralization. Democracy is not a new invention, it was theorized and implemented back in Athens in 5 BC. If it took 100 years to fall apart, it would already have fallen apart. A pure democracy doesn't scale well and so requires some corrections to be implemented in the real world. If anything modern technology has accelerated the corrections required to sustain a government based on liberal democracy principles. Also I'm not sure what makes you think that China is not ruled by mob mentality. I would argue that propaganda and censorship, which is the foundation of a communist government, is more likely to produce mobs. While classical communism might not have a strong opinion on information censorship, China's modern communism is strongly for censoring speech as well as information.
- sandspar 6y ago
  He thought democracy degenerates into tyranny - what we'd think of as a dictatorship. Anarchy is a temporary stop on the route. (Democracy - anarchy - people look for leader - tyranny)
- cwhiz 6y ago
  When a bunch individuals BUY a stock to hold it, it’s an irrational mob. As opposed to the “institutional investors” who are shorting a stock, which is to borrow a stock, sell it, and then buy it back later at a reduced price. Which one sounds more like an irrational mob? Seems like people are getting mad that the exclusivity of Wall St is getting torn down.
knaik94 6y ago
It's interesting to see how this is being framed as a consequence of retail investors on r/WSB when the reality is that the price has been short squeezed up mostly due institutional investors having to buy back stock in order to cover their shorts on GME. Anyone who has spent more than a few hours on r/WSB sees that it's not exactly a cohesive unit. " Just today, CNBC reported that GameStop is “the single most shorted name in the U.S. stock market.” " I currently am not holding any positions.
- hehehaha 6y ago
  r/wsb is not mostly retail. I can tell there are people from shady hedge funds doing pumps there. And they’re all breaking securities law by doing that without disclosures.
  - knaik94 6y ago
    r/WSB has over 2 million readers. It is mostly retail. Most people don't post.
rubatuga 6y ago
Flagged post from HN shows some more info from yesterday: https://news.ycombinator.com/item?id=25868680 https://news.ycombinator.com/item?id=25868680 Going through HN "new" and looking at flagged posts is the only reason I was able to buy GME stock. You can read the deleted "conspiracy" here: https://web.archive.org/web/20210122054438if_/https://www.reddit.com/r/SubredditDrama/comments/l2guoc/wallstreetbets_full_story_my_post_blew_up_and/ https://web.archive.org/web/20210122054438if_/https://www.re...
rdtwo 6y ago
For some reason this makes me think of EVE online and how a group called goonsquad basically took over a large chunk of the game by overwhelming established player empires with sheer numbers of disposable units. The Zerg approach to stock market gambling.

36 points by gshakir 6y ago

runnr_az 6y ago

Weird question: do the Reddit users really have that much trading power vs institutional investors?

grassgreener 6y ago
I think it’s a legit question. The answer is: yes. Short GME and be rich in a week. The other answer is: no. Buy call GME and be rich in a week. The whole market is irrational in the short term, maybe it’s luck, serendipity or genius. You’ll find the same pattern at your local casino. Put less than 5% of your net worth on this bs if you don’t want to FOMO. Otherwise just disregard, it’s 100% gambling.
- billylindeman 6y ago
  I’ve been following this situation and it’s mostly due to short interest exceeding all available shares ( peaked at 140% afaik). Institutions were selling naked shorts and will be forced to cover. Has nothing to do with the business it’s supply / demand of shares outstanding driving this as far as I understand it
  - 1996 6y ago
    > Institutions were selling naked shorts and will be forced to cover Serves them well! Play stupid games, ... I smile inside thinking WSB has enough power to cause a gamma squeeze and punish institutions speculating against a company gamers love!
    - bmiller2 6y ago
      No gamer loves GameStop, where’d you get that idea? They are known for buying back your 60$ blockbuster game after a month for $3, and reselling for $55. They should be dead in the water, and the shorts will eventually be correct, if they can’t pivot to a digital presence (which they can’t, because why would anyone go outside of the native platform stores?)
      - oarsinsync 6y ago
        > if they can’t pivot to a digital presence (which they can’t, because why would anyone go outside of the native platform stores?) Price. It’s often cheaper to buy a “CDKey” from a third party site and stick it into the native platform store than to buy direct. It definitely adds friction though, so it’s unlikely to become the primary method for most.
      - sumedh 6y ago
        > They are known for buying back your 60$ blockbuster game after a month for $3, and reselling for $55. Why would anyone sell it for $3?
        bobthepanda 6y ago
        Ease of access to funds and buyers. GS takes all the risk of having to find an ultimate end buyer. If that buyer has issues they take it up with GS not you. And GS can give you that money right now in the store so you can buy something else at the store at that moment. Plus a lot of people trading in games were minors, who don’t exactly have easy legal access to say online means of selling.
        sumedh 6y ago
        So GS is providing a valuable service, not sure what the problem is. If you dont like GS you can always sell and buy games on facebook marketplace and other sites.
      - austhrow743 6y ago
        If they can get away with that sort of margin for a business with basically no moat then people must love them.
      - cwhiz 6y ago
        It’s not THAT bad. I don’t love GS, but I would be sad and disappointed if the one near me closed. It’s a convenient place to buy used games.
      - 6y ago
    - 3327 6y ago
      Stonks go up. Shitron will rot under the WSB banner. This is the way.
deleted 6y ago
[deleted]
knaik94 6y ago
No, the large majority of the traders there don't have the capital to be big players. Some do, but they are undisciplined in the sense that the timing of when they close positions is unpredictable. It's closer to someone in a casino on a high from their hot streak not understanding the time to pull out. Some argue that they trade on herd mentality, but the reality is that you're likely to only see people who lost or gained large amounts of money. And no matter what meme stock has attention currently, you'll see losses contrasting the gains.

jollofricepeas 6y ago

The irrationality of the mob is multiplied 10x with the power of technology and automation. These past two years makes me feel like we’re living in a black mirror episode. “Plato argued that democracies inevitably degenerate into anarchy, as the poor plunder the rich and profligacy produces bankruptcy.” Tech has only sped the slide of western democracy. 100 years from now, the West will be ruled by mobs or will have adopted something close to China’s modern communism just to ensure “order.”

knaik94 6y ago
That's an overgeneralization. Democracy is not a new invention, it was theorized and implemented back in Athens in 5 BC. If it took 100 years to fall apart, it would already have fallen apart. A pure democracy doesn't scale well and so requires some corrections to be implemented in the real world. If anything modern technology has accelerated the corrections required to sustain a government based on liberal democracy principles. Also I'm not sure what makes you think that China is not ruled by mob mentality. I would argue that propaganda and censorship, which is the foundation of a communist government, is more likely to produce mobs. While classical communism might not have a strong opinion on information censorship, China's modern communism is strongly for censoring speech as well as information.
sandspar 6y ago
He thought democracy degenerates into tyranny - what we'd think of as a dictatorship. Anarchy is a temporary stop on the route. (Democracy - anarchy - people look for leader - tyranny)
cwhiz 6y ago
When a bunch individuals BUY a stock to hold it, it’s an irrational mob. As opposed to the “institutional investors” who are shorting a stock, which is to borrow a stock, sell it, and then buy it back later at a reduced price. Which one sounds more like an irrational mob? Seems like people are getting mad that the exclusivity of Wall St is getting torn down.

knaik94 6y ago

It's interesting to see how this is being framed as a consequence of retail investors on r/WSB when the reality is that the price has been short squeezed up mostly due institutional investors having to buy back stock in order to cover their shorts on GME. Anyone who has spent more than a few hours on r/WSB sees that it's not exactly a cohesive unit. " Just today, CNBC reported that GameStop is “the single most shorted name in the U.S. stock market.” " I currently am not holding any positions.

hehehaha 6y ago
r/wsb is not mostly retail. I can tell there are people from shady hedge funds doing pumps there. And they’re all breaking securities law by doing that without disclosures.
- knaik94 6y ago
  r/WSB has over 2 million readers. It is mostly retail. Most people don't post.

rubatuga 6y ago

Flagged post from HN shows some more info from yesterday: https://news.ycombinator.com/item?id=25868680 https://news.ycombinator.com/item?id=25868680 Going through HN "new" and looking at flagged posts is the only reason I was able to buy GME stock. You can read the deleted "conspiracy" here: https://web.archive.org/web/20210122054438if_/https://www.reddit.com/r/SubredditDrama/comments/l2guoc/wallstreetbets_full_story_my_post_blew_up_and/ https://web.archive.org/web/20210122054438if_/https://www.re...

rdtwo 6y ago

For some reason this makes me think of EVE online and how a group called goonsquad basically took over a large chunk of the game by overwhelming established player empires with sheer numbers of disposable units. The Zerg approach to stock market gambling.