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The Battle of GameStop

• throwaway0a5e 6y ago
  They're not winning. They're just minting a different set of losers and pushing the drawing out by a couple weeks. And Reddit being Reddit you can never really be sure whether organic interest is pumping the stock or if they are being manipulated by an astroturfing campaign. If day trading weren't a conflict of interest for me I'd be looking into doing something like that (and consequently not blabbing about it on HN).
  • vga805 6y ago
    the bull thesis has been laid out in detail for months and it's a good one, this is organic interest, Ryan Cohen and others coming over from Chewy was the most recent catalyst
    • fennecfoxen 6y ago
      People exist who in the past two days paid $150 for a share that most analysts think is worth about $14 — at a company with negative earnings for six of the last seven quarters, and minimal earnings growth over the past few years. I'm sure there was some bull case for the company, and it might have had a snowball's chance in hell around $14 or even $20/share. But at $60+ ? What on God's good earth is supposed to make the company worth that much?
      • vga805 6y ago
        good point, to clarify the bull thesis wasn't bullish to the current absurdity. i think the bull case is a good one but im not going to lay out the case here. check out the user RoaringKitty 's videos on youtube from a few months ago. (the stock was hovering around 4 then) right now though the chaos has nothing to do with the underlying value. now it's all about the squeeze. but that's never been part of the bull thesis
      • oceanplexian 6y ago
        The point of the post is that sentiment drives value, not the other way around. It’s a profound thesis and it makes the opinions of analysts irrelevant. If enough people want GameStop to succeed then it will. Ironically it’s the same thesis that wealthy SV investors go by when they decide to invest in a startup. Except the word invest is usually misleading. Most of the time they’re just looking for a vehicle to inject capital and influence, and the people and product are interchangeable parts used to achieve a a profitable outcome.
        • paxys 6y ago
          > If enough people want GameStop to succeed then it will More like – if enough people want GameStop to succeed then it has a slightly better chance of succeeding than if they didn't. Chances are that it is still a bubble that will eventually pop, like most others before it.
        • fennecfoxen 6y ago
          This is less profound than you think it is. The sentiment story is that if enough people want to pay $150 a share for approximately $0/yr in earnings, they will. What this glosses over is the reason for the sentiment, the question: "why do people want to pay this?" Traditional stories analysts tell would have people pay $150/share because they expect $8-$15/yr. This story is that people will pay $150/share because people want a way to say 'fuck wall street' and 'fuck analysts' and have unreasonable expectations of becoming wealthy. The former sentiment is sustainable in a way that the latter story kinda isn't.
      • totalZero 6y ago
        > most analysts Counterpoint: "Most analysts" are hum-drum Wall Street hacks who cover dozens of companies and don't really have a clue about how the lion's share of them are run. I remember a few years back there was one analyst who kept talking about how NAND keeps getting cheaper and that's hurting memory suppliers...but the analyst's metrics didn't normalize for advancements in NAND speed nor the maturing of capital investments, so the analyst was basically looking at totally expected price declines over time and interpreting it as for some kind of static commodity while claiming it as a bear thesis. A few of them are really clever and knowledgeable. The rest are chumps. It's extremely difficult to judge GME based on regular metrics because their long-term outlook is a function of strategy and their short-term survival is a function of COVID. Sure, the company sells stuff that you can buy online, and sure, they sell it at malls and other places where nobody goes these days, but its stock was over-shorted and this was going to happen sooner or later anyway. Maybe my numbers are off, so correct me if I'm wrong....At today's closing price, GME, which has $6B/yr revenue, is worth a sixth of BBY, which has 43B/yr revenue.
        • hoten 6y ago
          Comparing revenue might make sense if they were in the same slice of retail, but they aren't, so I think you can take zero value from such a comparison.
          • totalZero 6y ago
            Lol. "This is flawed so it is worth zero" is a bad argument even when you present an alternative, but it's downright lazy when you just mail in the criticism without suggesting something else. GME sells consoles and consumer electronics in addition to games, so I'd put BBY on the short list of comps for sure. But if you think the product mix is so different as to make them incomparable, that's ok. Pick a better metric and explain why GME was accurately priced at $260mm market cap when the company does billions in revenue. Then, go back and explain why AMD was worth $2/share in 2014. Then, go to every other heavily shorted name and wave your hands around looking for reasons to justify obviously overshorted valuations.
      • andreilys 6y ago
        It’s a short squeeze. Short selling investors who get margin called have to close their short positions, thus forcing them to purchase GME stock and driving it further up
      • phil_e_delphian 6y ago
        DoorDash has had negative earnings for all but 2 (1?) quarters it has existed, and trades at about $190 a share, despite direct competition from multiple functionally identical competitors. The market is broken, at least retail investors are benefiting for once.
        • tasuki 6y ago
          How much a single share costs really isn't interesting or important.
          • phil_e_delphian 6y ago
            Tell that to the investors holding >$200 GME shares right now
            • tasuki 6y ago
              I don't think you understand the point I was trying to make. The point wasn't that share price is completely meaningless, the point was that it's meaningless without more information. A share of AAPL now costs $139, a share of GOOG costs $1860. How would you compare the two companies based on that? How does the price of a single share relate to whether or not the company has positive or negative earnings?
        • fennecfoxen 6y ago
          DoorDash has a growth story that GameStop doesn’t. It’s pure fiction, mind you! But at least it exists. Either stock is terrifying.
          • phil_e_delphian 6y ago
            Agreed. The difference this time is that the gains are socialized this time, not retained in the fraternity of HF, PE, and IB. Which is exactly why Wall Street and financial media is denigrating it. They hate that they don't have the edge, or a monopoly on profits in this case.
      • dash2 6y ago
        One answer is given at gmedd.com, which presents analysis suggesting that even in the “bear case”, GME could be fairly valued at about $40/share. Disclaimer: I don’t know if their analysis is any good, but would like to hear your thoughts.
        • alisonkisk 6y ago
          Gamers is an WSB guy who made the domain to capitalize on the mania. The content is just goofy.
      • PartiallyTyped 6y ago
        Counter Point $AMD was at $0.15, AMD was the only company besides Intel that actually had x86-64 patents. Intel would have never let AMD fail because they would be a monopoly and that is worse than leading a duopoly. Notice the bean counter Intel ceo, the yields getting worse over time, the performance not improving besides a 1-2% year over year and Intel getting complacent, repeatedly to screwing over the customer with requirement of buying a new motherboard with every new release. AMD was a steal for anyone in the know. Counter argument 2: Any price target posted by Citron was wrong. Counter argument 3: Why would any analyst give a proper price target when they can screw you over?
        • fennecfoxen 6y ago
          These remarks are presented for the interest of passerbys, not because the comment I reply to has merit and deserves them. Counterpoint 1: AMD was a chipmaker with skilled engineers on staff and a growth story where they could seize market share with better technology. Gamestop is a retailer with retail clerks on staff and a story where increasing competition from PC and console app stores slowly eats away at their market share. Exact same thing, right? Counterpoint 2: Saying the price target is wrong is one thing, and may in many circumstances be eminently defensible. Saying the correct price is $50-$150 is another. Counterpoint 3: This exemplifies the thinking going on here. "I don't understand the stock market and think someone is screwing us over. Let's define our own alternate reality, and gang up on them for revenge! Revolution!" Last time we saw that show was January 6. For a few people, who get out at the right time, this will be a much more successful revolution, but on the whole, it succeeds only with a transient disruption, and harm the individual would-be revolutionaries the most.
          • PartiallyTyped 6y ago
            > These remarks are presented for the interest of passerbys, not because the comment I reply to has merit and deserves them. Ouff. > AMD was a chipmaker with skilled engineers on staff and a growth story where they could seize market share with better technology. Gamestop is a retailer with retail clerks on staff and a story where increasing competition from PC and console app stores slowly eats away at their market share. Exact same thing, right? Do your due diligence this is just one, https://www.gmedd.com https://www.gmedd.com, there have been many others and they all converge to the same argument. GME is worth much more than the $10 PT given by analysts. > Counterpoint 2: Saying the price target is wrong is one thing, and may in many circumstances be eminently defensible. Saying the correct price is $50-$150 is another. Except citron was wrong in every single price target they have given by more often than not an order magnitude, except for 1. If you pay enough attention, you will see that many of the same 'pages' play both the bull and bear game, if only to come out and say they were correct. > Counterpoint 3: This exemplifies the thinking going on here. "I don't understand the stock market and think someone is screwing us over. Let's define our own alternate reality, and gang up on them for revenge! Revolution!" Had you done your due diligence and paid attention to the situation as it unfolded, you'd have seen that the market made sense, the stock was over shorted and in no way reflective of the actual price targets created by various models and analyses such as the one I linked above. > Last time we saw that show was January 6. For a few people, who get out at the right time, this will be a much more successful revolution, but on the whole, it succeeds only with a transient disruption, and harm the individual would-be revolutionaries the most. We saw that show in every single revolution. This only reinforces the belief that the average proletariat is getting screwed over and manipulated by the same class of people. Hint, it was the proletariat that paid for the greed, not the institutions, the hedge funds or the MMs. It is the proletariat that are stuck between a rock and a hard place, it is the proletariat that are getting manipulated into intra class wars.
      • delaaxe 6y ago
        There's a long term bull price target at $169: https://www.gmedd.com/wp-content/uploads/2021/01/GMEdd-GameStopValuation-20Jan21.pdf https://www.gmedd.com/wp-content/uploads/2021/01/GMEdd-GameS...
        • alisonkisk 6y ago
          > We have rounded the multiple to 15.2x in honor of Tylee, Cohen’s toy poodle and Cohen’s reputation as an aggressive, entrepreneurial founder. OK, I'll pay $300 for a stock that will be worth $169 in 4 years assuming that Ryan Cohen has 100% chance of using is legendary Ryan Cohen powers to seize digital game sale margins from all the walled gardens, because somebody on WSB bought a domain name and used orange and green highlights in a spiffy PDF.
    • JohnJamesRambo 6y ago
      Come on, that is what you’ve been trained to say. I heard the exact same phrases from my younger brother.
      • vga805 6y ago
        Trained by who? what are you talking about?
    • xiphias2 6y ago
      It works at the start, but the problem is that the people who want to sell their positions need to dump it on the losers and just keep pumping the price and making late comers lose lots of money. The reality of wealth building is that short term it’s always 0 sum game, long term it’s a way to get rich.
      • cortesoft 6y ago
        Well sort of... in this case, there are a ridiculous amount of short sellers... more than 100% of all the shares have been sold short. That means that there is in some ways infinite demand... every single share currently owned HAS to be bought by a short seller at some point, in order to return it to the borrowed actual owner... so as long as all the current owners hold fast, they can sell their shares for as high as they can go. It doesn't even matter if the company itself is worthless, the demand is there. You are right about the zero sum in this case, though... it just might be the short sellers who are left holding the bag.
    • Noos 6y ago
      I'm not sure if he can do much. Gamestop has the same problem that drove other retailers like suncoast, sam goody, strawberries, and many other ones out of business; you cannot survive the digitalization of your primary products. Gamestop relies on console systems and videogames both new and used to make the core of its primary business. These are what draw people into their locations and to their web site, and allow add on sales like memberships, warranties, collectibles, and accessories to be sold. They generally go to malls, either interior or open. The problem is the decrease in physical games over digital kills the primary reason to go into their stores, and also prevents middlemen from existing; there is no value add to getting a digital code from gamestop as opposed to steam, ps store, etc. It also murders the high value used game and console sales because now there is less product to trade in. That just leaves them with collectibles, which they've always been low quality and too expensive, accessories, and a tiny assortment of physical games that now they barely even have stock of. They "advertise" the top 100 games or so in their store, yet don't have stock of many of them ,and their used games are barely a shelf of them. The problem with being an internet retailer is amazon already does what they do better; it's an uphill battle where they have no real value add. Even Amazon seems to have less and less new physical games, and they have an infinite amount of chinese sellers dramatically lowering the price of game accessories. I don't see any way to be bullish on them because of their actual business. edit: its not just them. There's a regional game store chain where I live, and they suffer the exact same problems. They are desperately trying to carry anything and everything geek related just to fill the store with inventory; records, collectible card games, comics, manga, crt tvs, used movies, anime accessories, model kits, etc. They actually are losing the game store focus, as used product even in the retro market is dead now...very few retro systems and games.
      • alisonkisk 6y ago
        If this is correct, then why did Chewy succeed against Amazon? Granted, dogfood is waaaay different than selling digital games outside a walled garden. No one can lock you out of your dogfood.
  • trap_chateau 6y ago
    I think I'm convinced of manipulation. The memeing and the gameifying investment, calling each other retards (because you, user, you don't know _anything_) and the long obscure unfalsifiable ramblings about predictions or valuable investments hitting the top of the page, it all just seems a little fishy to me.
    • electriclove 6y ago
      No, it really is just random people rallying together. What is fishy is who is on the other end of the play and getting a black eye for once.
    • doggosphere 6y ago
      https://www.reddit.com/user/DeepFuckingValue/ https://www.reddit.com/user/DeepFuckingValue/ A bit of luck, a bit of smarts. Build it and they will come?
    • EdwardDiego 6y ago
      /r/wsb has always struck me as being an offshoot of 4chan, with their self-labelling as autists and retards. And 4Chan a) isn't dumb, but they like doing dumb shit and b) they love brigading. Pool's closed etc. But what's interesting is how the institutional outrage is merely fuelling the brigading. The institutional investors crying in the media only confirms WSB's beliefs that they've found a weak spot in the institutions, so they're going to stick it in harder. I admire their attitude, but not enough to put my money in to what feels like an giant troll.
      • ALittleLight 6y ago
        The tagline for WSB is "It's like if you gave 4chan a Bloomberg terminal." Personally, I'm buying in the money puts expiring in 2023. No way Gamestop is doing better now, or has a better future now, than it did five or ten years, yet their stock's at an all time high? These hijinks may continue for some time, but I doubt it'll last years, price will settle and I'll hopefully make a modest profit.
  • dannyw 6y ago
    Melvin capital has been forced to take multiple capital injections and bail outs, to avoid being margin called. Short sellers have mark to market losses of over $6 billion, and should the momentum continue, they will be forced to sell at the worst times (infinity short squeeze). Wall St are looking like they will be the losers.
    • electriclove 6y ago
      Oh I wish but Wall St creates the rules so I wouldn't be surprised if they find a way to save their butts on a short squeeze.
      • alexeldeib 6y ago
        Isn't that what's happening? Melvin Capital sold a share of their revenue stream for billions in cash to avoid being margin called. That's not exactly "winning" but it's a way to save their butt at a lower loss, perhaps. https://www.zerohedge.com/markets/first-casualty-big-short-squeeze-melvin-capital-gets-275bn-bailout-citadel-point72-after https://www.zerohedge.com/markets/first-casualty-big-short-s...
        • electriclove 6y ago
          Yup. It looks like several of their other short holdings have been feeling the squeeze as well: FIZZ, AMC, SPWR, etc https://www.zerohedge.com/markets/here-are-all-melvin-capitals-crushed-put-positions https://www.zerohedge.com/markets/here-are-all-melvin-capita...
    • thepasswordis 6y ago
      Good.
    • kasey_junk 6y ago
      Melvins “bail outs” were agreements with other firms. “Wall St” is doing fine on this. Citadel must be loving their Robinhood order flow right now.
  • oceanplexian 6y ago
    Is Melvin Capital winning with their short position? When they’re contractually obligated to repurchase millions of shares and there are no shares left to purchase, what do you think is going to happen? There are winners and losers, but in this case the loser could very well be an investment firm with 12B in assets. Some wealthy investors are about to have that wealth redistributed. I think that’s the point.
    • thefreeman 6y ago
      "no shares left to purchase". what?? 160 million shares changed hands today. there will never be no shares left to purchase.
      • jaycroft 6y ago
        Flow and stock are different.
      • ZephyrBlu 6y ago
        They shorted more GME shares than the amount that currently exist. That's what "no shares left to purchase" is referring to.
  • pmorici 6y ago
    They essentially drove one of wall streets very successful hedge funds of recent years to near failure they had to make a deal for an emergency investment today to stay afloat. I’d call that winning.
    • jeffbee 6y ago
      They will probably use the infusion of money to just ride out this raid and make a mint when the wsb bubble pops, which it inevitably will. To say that the hedge fund is "near failure" is the same as saying they did not fail. If they bridge this gap they win double.
      • aerique 6y ago
        I don't know. Just making the hedge fund managers shit their pants is good fun.
      • PartiallyTyped 6y ago
        They need to buy the stock back and pay interest. They shorted the stock at say 20, or 30. Now they will have to buy it back at 90 and pay interest on it. They have repeatedly resorted to market manipulation to drive the price down and cut their losses, but people are not selling, there do not exist enough shares for them to close their position. They screwed up royally, they doubled down, from 128% shorted stock to 140% shorted stock, then they resorted to blatant market manipulation, using the media and painting a false narrative.
        • jeffbee 6y ago
          Why do you think they need to close their position? They need to meet margin requirements, which they can do by raising cash. Closing their position is the worst of their options and I don’t see why they would take it. Everyone who is short has to pay the vig every day, so that hasn’t changed.
          • PartiallyTyped 6y ago
  • shouldiquitamzn 6y ago
    They are winning. That’s what people don’t get. This whole dumb money never wins mantra is what’s driving WSB. It’s a bucking of that false narrative. People working on Wall Street aren’t gods, but it’s their job to convince you they are
    • tom-_- 6y ago
      There is no "they". WSB is a public subreddit. Traders, pms, hedge fund guys all participate and win often bigger because they have more to play with. They pump and dump and ride the emoji rockets like everyone else. There are only the winners, which include the $60k/yr nurse, the $600k/yr FAANG principal, and the $6M/yr Senior PM who timed their call options right. And the losers which include the same but timed it wrong. The engineers and finance folks who lost will have a bad week. The lower-middle income earners will have a bad year.
• johnwheeler 6y ago
  That site on an iPad is no bueno
• ralusek 6y ago
  It's market hot potato/ponzi scheme. You buy in to capitalize on growth, funded by increased interest in the meme, and try to cash out before the meme isn't funny anymore.
  • beervirus 6y ago
    I guess TSLA is still funny?
    • ralusek 6y ago
      Yup
  • Wronnay 6y ago
    This. Currently its GME, next comes BB and before that it was SPY / TSLA...
    • DSingularity 6y ago
      Are you just guessing it is BB because of recent price action?
• dvt 6y ago
  > The same emotion that caused us to root for the thieves in Ocean’s 11 is what makes Wall Street Bets so enticing. Put frankly, Millennials are tired of getting fucked by the man. When you’re underemployed with $100,000 in student loan debt, your financial situation feels overwhelming. You really don’t want to take the advice of your parents or CNBC talking heads [5] to invest 10% of your salary for a 4% annual return. At that point, what’s another $5,000? Might as well buy some short-dated GME calls. Well put. I was explaining to a friend of mine a few weeks ago why cynicism is so prevalent in our generation: we graduated in 2008 where banks, not our parents, got the bailouts; we got stuck with thousands in student debt; the dream of marrying a pretty wife and having a few kids, working for a company for 40 years, and retiring in Cabo is a relic of the 1950s; we lived with our parents until our 30s, and in spite of being so "connected," we are more lonely, have less friends, and are having less sex than previous generations; unless, I guess, you count the COVID shutdowns screwing young people yet again. It's a never-ending shit-show. At least some of us are getting rich in /r/wallstreetbets.
  • gruez 6y ago
    >It's a never-ending shit-show. At least some of us are getting rich in /r/wallstreetbets. This is sad because most of what you've said can be applied to lotteries as well, which historically has been criticized as being a "tax" on the poor. The end result is the same: people putting themselves in a worse place financially (on average), just so they can cope with their bleak existence.
    • pmorici 6y ago
      I wouldn’t compare what happened with GME to the lottery at least not for the people who understood why they were doing what they were doing.
      • viraptor 6y ago
        It's still a lottery. They didn't know if there would be enough real following or if most people were just trolling. Even if they estimated that well, they still had no idea where the peak was.
• 0b01 6y ago
  Citadel can see 80% of retail orderflow such as Robinhood and is massively long since last Friday as can be seen from the calls they are selling. Now it is likely the steam has run out(gamma cascade) so they are placing their bets on the opposite side by taking over Melvin which is massively short without causing too much market impact.
  • jaycroft 6y ago
    Were those calls purchased by retail, or by someone trying to cover a short?
  • finolex1 6y ago
    I may be wrong, but there is an information firewall between Citadel Securities (the market maker that pays for order flow), and the Citadel LLC (the hedge fund that is bailing out Melvin Capital)
    • RONROC 6y ago
      I've seen comments about the supposed "information firewall" a couple of times in various threads related to the GME WSB fiasco across a few different websites. I am not a financial professional, but I am not stupid. Anyone who believes that 1. this firewall exists, 2. is up to snuff (ie. working like it should), and 3. is not being constantly undermined formally or informally is sorely mistaken.
    • alisonkisk 6y ago
      Right, and Google Search never intentionally or accidentally makes changes to help Google Ads.
  • mizzack 6y ago
    The steam didn't run out. They changed the rules. Bid/Ask spread on GME options is now $20 until 3/19.
    • delaaxe 6y ago
      Max bid/ask spread and only on options > $100
• paxys 6y ago
  "Winning" because they collectively own millions of dollars of a worthless stock?
  • ffggvv 6y ago
    its okay they'll try to sell before it crashes and leave some other chump holding the bag. "taking on wall street"
    • paxys 6y ago
      Those chumps will likely be other WSB members
      • thrwyoilarticle 6y ago
        That is not consistent with the holdings of WSB members and the amount of volume.
    • phil_e_delphian 6y ago
      this a profound (intentional?) misreading of how a short squeeze functions. the shorts are the ones who end up "holding the bag" in that they are contractually obligated to buy shares at current (higher) value in order to cover their position. hence the "taking on wall street" angle - institutional shorts are the chump, not the retail investors (and the institutions going long with them)
      • ffggvv 6y ago
        no it’s not. the squeeze is what makes the price rise, but once the wsb people start taking their profits, there will no longer be a shortage of shares and it’ll work in reverse, cascading down. it doesn’t just magically stay high forever after the shorts are covered. same cascading down effect can happen if gamestop simply issues new shares even now there’s people on reddit who said they FOMOd in at 150 price point
        • 6y ago
• dannyw 6y ago
  Isn’t the underlying problem here that hedge funds have shorted more stock than the float? They got themselves in this mess. Don’t be so greedy, you short more than shares that trade.
  • abbbccdefd 6y ago
    It's disturbing and dishonest how the media is painting an image where the day traders on WallStreetBets are the villains and the hedge funds shorting this stock to over 100% of float for over the past year and also purchasing large numbers of puts so market makers naked short to hedge are the victims. The float has been over 100% shorted for over a year. The shorts could have easily covered or trimmed their position when the stock was trading in the $3-$4 range this spring and summer for a profit but they chose not to. Book value was estimated to be $10 at that time. News came out that improved GameStop's situation and its future appeared less bleak. There should have been short covering on each of those pieces of news: GameStop paying off debt early, Ryan Cohen first buying 5% of the company, then 13%, then joining the board with 2 other CHEWY executives, the new PlayStation and XBox consoles releasing and always being immediately sold out, the microsoft profit sharing deal, huge ecommerce growth yoy, etc. But the shorts chose not to cover at all! Short float remained the same at over 100% as more new people bought into the company on the good news. Many people may not know this but a new CEO was hired 2 years ago: George Sherman, and he's been doing a good job of turning around the company by doing unsexy things like shutting down unprofitable stores like where there's 2 GameStops in a single mall and improving their supply chain logistics and ecommerce business. 95% of all GameStop stores are 4 wall ebitda profitiable was what they said on a conference call 2 years ago. I would also like to point out GameStop is a highly cyclical business. It depends a lot on the 7 year playstation and xbox console cycle. Look back on the historic stock chart. People think it's failing because revenue declines year over year then the stock goes parabolic in the new console release year. It's like the console cycle isn't priced in until it hits people in the face.
    • glohbalrob 6y ago
      yes this is 100% accurate. All these dummies laughing at ARK/Cathie Wood while she talked about Tesla/AMD/Biotech innovation years ago. WSB is far more educated compared to MSNBC/Jim Cramer crowd.
• IIAOPSW 6y ago
  I've wrote this elsewhere. The thing that's clicked for me after reading the comments on wsb is that populism, amplified by the modern internet, is going to radically change the finance world in a similar way to how it radically changed our political landscape. These people aren't just investing in GME to enrich themselves. They are doing it to spite the people who they percieve as rigging the game. They are doing it to poke in the eye of "mainstream media talking heads" whom they view as part of the controlled narrative of oligarchs. Does any of this sound familiar? This is a once in a life time black swan. No one is factoring in populism in their investment thesis yet. Whoever can figure out populism well enough to predict it first stands to gain a lot of money.
  • 0b01 6y ago
    In fact, Citadel Securities has gained a lot money from the $GME event. Citadel Securities pays tens of millions of dollars for Robinhood order flow.
    • Centigonal 6y ago
      Is Citadel really making a lot of money from the GME squeeze? I know they rebate Robinhood for order flow (I've even commented about it [1]), but I thought events like this were hard for MM firms to capitalize on because of the unpredictable nature of the price action and the high cost of hedging (there are no shorts available, how do you even delta hedge in that situation?). Am I missing something? [1] https://news.ycombinator.com/item?id=25217794 https://news.ycombinator.com/item?id=25217794
      • 0b01 6y ago
        It's very hard to miss the most actively traded option of the day.
      • gpm 6y ago
        Citadel is a market maker on the nyse... They can naked short GME.
      • deleted 6y ago
• shouldiquitamzn 6y ago
  I’ve made millions on WSB options plays. I can finally quit my job and stop being a cubicle slave. The visceral reaction from the media on this is disgusting. Major hedge funds got caught on the wrong side of this, and have been making a huge stink about it. CNBC to the rescue, demonizing young middle class Reddit investors. This whole thing has opened my eyes to how even my FAANG compensation is peasant money, it’s too little even as someone in the top few percent of incomes. Capital > labor
  • taway0125210 6y ago
    Here's my account, that might be survivorship bias. I also traded tech stocks and cryptos and was able to significantly beat the market on the former and quit (also from Amazon) a few years ago. I invested in NVidia after recognizing GPU shortages due to ML continuing hype. I switched to AMD after recognizing their Zen CPUs are slowly beating Intel. I switched to TSMC after realizing their accomplishments are significant part of M1 and Ryzen advantages. My stock portfolio's growth is over +50% yoy over last five years on average (geomean). The way I explain this to myself is that trading firms focus on economic fundamentals, which can not show upper hand in a specific technology. They are trying to recognize the later, but it requires understanding tech news articles, and best NLP AI methods are not there yet, whereas our brains can handle that task, especially if it is withing our own expertise. If that theory is right, you can beat the market, but you have to be real expert in the area you are trying to trade in, and probably a few linked areas too.
    • shouldiquitamzn 6y ago
      So funny you say this. The two stocks that got me started were Shopify and data dog. I knew datadog was a great freshly IPOd cloud play, Shopify would boom due to the lockdowns. So I put a ton of money in Shopify calls at the March bottom, then rolled the profits into Data dog, then Apple and so on. It was absolutely my understanding of e-commerce that gave me the confidence. Also how lockdowns related to the cloud. It’s only been lately that I’ve taken shots on MEME stocks. Deep tech understanding, scouring cathie woods ARKK etf has been very profitable. But I think from a broader perspective, I’ve made huge leveraged bets on VTSAX/SPY/IWM on stimulus news. Very obvious that financial assets will inflate with each extra fed move.
• marklubi 6y ago
  They might be being rude... But are they winning? Probably. The banks and hedge funds are playing the same games they've been playing for years and years. Someone new has entered the picture and changed the game.
• hendzen 6y ago
  The only person really winning here is Ken Griffin.
  • pyrrhotech 6y ago
    Damn, here I was thinking /u/DeepFuckingValue was winning by turning 53k into 13M, more than any of the jealous fucks here will make in their lifetime working their miserable engineering jobs and afraid to take any risks in life https://www.reddit.com/user/DeepFuckingValue https://www.reddit.com/user/DeepFuckingValue
    • nceqs3 6y ago
      Ken Griffin made $6 billion during the pandemic. https://www.bloomberg.com/billionaires/profiles/kenneth-c-griffin/ https://www.bloomberg.com/billionaires/profiles/kenneth-c-gr...
      • pyrrhotech 6y ago
        Yea and Elon Musk made 170B. Meanwhile, the average HN user probably made somewhere around 200k. I made 1.3 million last year. I know it's not a lot because I know people several orders of magnitude richer than myself, but I also know that there are risks worth taking in life, and no one becomes Elon Musk, Ken Griffin, DeepFuckingValue or even myself by calmly working a desk job. You have to have balls to really succeed in life. There's an argument to be made that it's not worth it, that you are happy enough with your low 6 figure existence, but the sentiment here clearly shows that's not the case. The sentiment here shows that people are not happy in their FANG and other engineering jobs, and they are in fact incredibly jealous of Musk, Griffin and the newly rich WSBers, and instead of admit that jealousy, they make up lies claiming that the WSBers aren't winning, when it's clear as day they are in this moment and big hedge funds are the losers. I'm not saying WSB will continue to win, I think hedge funds will get their shit together and not get themselves into a GME-like position again in the near future. However, let's call a spade a spade while it lasts. DeepFuckingValue and his WSB brigade have scored a HUGE win, many becoming overnight multi-multi millionaires, and instead of bash them, why not celebrate them for a day.
• Clewza313 6y ago
  A couple of hedge fund managers shorting GME may have gotten kicked in the nuts, but Wall Street as a whole is laughing all the way to the bank. A friend of mine working at a high-frequency trading co says 2020 was their best year ever and by a long shot, because volatility plus clueless retail investors (yes, that means you, /r/wsb'ers YOLOing on Robinhood) means arbitrage and frontrunning rakes in money.
  • ALittleLight 6y ago
    If only regulators would get rid of useless parasites and criminals like high frequency traders.
    • goodmattg 6y ago
      I can't tell if this is in jest... if you're actually interested, the role of HFT in markets is hotly debated. The HFT side argues that they improve markets by providing liquidity - and that's true to an extant, spreads have narrowed drastically over time. And yes, there is the opposite side arguing they are purely "parasites", and exchanges like LTSE have been built specifically to counter HFT (Flash Boys, etc.) Perhaps I don't like the word "criminals" being thrown around so loosely.
      • ALittleLight 6y ago
        The comment I'm replying to uses the word frontrunning to describe their activity. Frontrunning is a crime. Hardly a loose use of the word to describe the perpetrators of crime as criminals.
        • deleted 6y ago
          [deleted]
  • thrwyoilarticle 6y ago
    S&P 500 returned 18.4% in 2020. Congratulations to your friend.
• thepasswordis 6y ago
  >We can remain retarded longer than they can remain solvent. There is a tremendous amount of spite involved here. They hate the boomers, and they hate the institutional wallstreet investors and hedgies. And why shouldn't they? These people play with our lives and get fantastically wealthy by gambling with our retirement accounts. I saw that some hedge fund got wiped out today by this. Sorry I won't be shedding any tears over that. Maybe the hedgies should have to learn to code.
  • Spivak 6y ago
    > These people play with our lives and get fantastically wealthy by gambling with our retirement accounts. I’m actually kinda confused by this. Are we not rooting for them in some respect? As long as I make money too and my retirement account grows what do I care if they take some off the top? The returns I get are way better than I could get on my own.
    • samjmck 6y ago
      > As long as I make money too and my retirement account grows what do I care if they take some off the top? You should care because for long term investing, an actively managed fund is very likely to underperform the market. The vast majority of hedge fund managers aren't doing anything that you couldn't do yourself, i.e. pick a few stocks out of the S&P 500 and hope that they outperform the market. > The returns I get are way better than I could get on my own. Look into index based ETFs. They simply track an index so your performance is equal to the market's, so no handpicking stocks or gambling. They are traded like stocks, so you can probably buy them with your broker. The best part about them is that they have almost no fees - the most popular ETFs cost 0.10-0.20% per year. If you're American and believe that the American stock market will continue to outperform the rest of the world, then an ETF like SPY (tracks the S&P 500) would be a good bet. If you'd like something more diversified, have a look at funds tracking indices like the MSCI World or FTSE All-World.
      • valzam 6y ago
        Quick note: There is also FTSE Developed World, which has outperformed All-World over the last few years AND has a lower TER than most All-World indeces. You can always hold 10% Emerging Markets + Developed World.
• zappo2938 6y ago
  The jury is still deliberating whether WSB is an effective cartel or not. At the end of the day, the members total investment is so small that it doubtfully makes any difference. It is probably more analogous to Ed Thorp's Beat the Dealer. He devised an algorithm to count cards. Ran a simulation on a computer at MIT, got bankrolled, and went to Reno to test it in person. Why didn't he continue counting cards in Nevada? Because hedge funds are more lucrative per effort. Nonetheless, after he published Beat the Dealer casinos greatly benefitted rather than a situation where they lost revenue from Blackjack card counters. Thousands of people believing that they could make a fortune using his system went to the casinos. Between the free drinks and the inability to focus, people lost fortunes instead. Moreover, Blackjack remained hugely popular. You never hear about people losing money in Vegas, only about that one time someone won big. It's the same with WSB, sort of. They do lose money and lots of it. Moreover, they post the losses. It is only during squeezes like with Tesla do we hear about it in the media. Still, at the end of the day, they invest a very, very small sum of money and can't have much influence. I thought for a while that maybe there were outside influences driving memes to get the cartel to behave a certain way, but decided they are not much of a force.
  • jlos 6y ago
    >> You never hear about people losing money in Vegas, only about that one time someone won big. It's the same with WSB, sort of. I'm not sure about that. This guy[0] lost his life savings investing in ornamental gourd futures. Its actually a pretty comical account simply to me because it seems so absurd. [0]https://www.reddit.com/r/wallstreetbets/comments/kzoh1c/i_am_financially_ruined_agricultural_futures/ https://www.reddit.com/r/wallstreetbets/comments/kzoh1c/i_am...
    • dash2 6y ago
      That’s a joke account, as you can see if you check out his posts in their entirety. Great troll though.
    • zappo2938 6y ago
      It's the guys own fault not investing in tulips.
• ralph84 6y ago
  Retail investors are supposed to buy and hold all of the stocks, because they couldn't possibly be smart enough to pick the good ones. Hedge funds are supposed to be allowed to naked short the stocks they don't like into oblivion, transferring wealth from retail investors to hedge funds. The hysteria and pearl clutching at this wealth transfer being reversed is hilarious.
  • jefftk 6y ago
    > Hedge funds are supposed to be allowed to naked short the stocks they don't like into oblivion Naked shorting has been illegal for a decade: https://money.cnn.com/2008/09/17/news/companies/sec_short_selling/index.htm https://money.cnn.com/2008/09/17/news/companies/sec_short_se...
    • dash2 6y ago
      Right, but it must have been happening anyway, because there’s more shorts than shares available to buy. (I think?)
      • necubi 6y ago
        Wrong, see Matt Levine's explanation of this from today: https://www.bloomberg.com/opinion/articles/2021-01-25/the-game-never-stops#footnote-3 https://www.bloomberg.com/opinion/articles/2021-01-25/the-ga... > This does not necessarily mean a lot of people are doing evil illegal nefarious naked shorting! Really, I promise! There is no special limit on shorting at 100% of shares outstanding! Here is an explanation of how options market makers (discussed below) are allowed to short without a locate, but I want to offer an even simpler explanation. There are 100 shares. A owns 90 of them, B owns 10. A lends her 90 shares to C, who shorts them all to D. Now A owns 90 shares, B owns 10 and D owns 90—there are 100 shares outstanding, but190 shares show up on ownership lists. (The accounts balance because C owes 90 shares to A, giving C, in a sense, negative 90 shares.) Short interest is 90 shares out of 100 outstanding. Now D lends her 90 shares to E, who shorts them all to F. Now A owns 90, B 10, D 90 and F 90, for a total of 280 shares. Short interest is 180 shares out of 100 outstanding. No problem! No big deal! You can just keep re-borrowing the shares. F can lend them to G! It's fine.
• ffggvv 6y ago
  literally everyone defending wsb has a green username
  • vga805 6y ago
    green means a new account? ive never actually known what that meant
  • cblconfederate 6y ago
    perhaps because they are afraid?
  • hoten 6y ago
    what does green mean? EDIT: ah, new account.
  • Miner49er 6y ago
    I'll defend it if you want. I browsed WSB a ton in 2016/2017, while in college. Doubled my initial investment (not much) in a year, and most importantly, learned a ton. I'm still trading now, but don't browse there as much and still have success. I guess maybe I'm one of the lucky ones? I have a friend who browsed the sub back then as well. He bought some of the meme stocks at the time (mostly AMD) and has been holding since. AMD was ~$7 then and is now ~$94. Yeah, there's a lot of dumb crazy bets on there, and it has become a bit different since options trading started on Robinhood, but it's still a great place to learn things and get investment ideas. Most of the meme stocks have seemed to perform well (outside of biopharmaceuticals they memed about back then).
  • thrwyoilarticle 6y ago
    That will increase the level of useful information: lots of people here are refusing to let their complete ignorance of WSB stop them from commenting on it.
• tempsy 6y ago
  I can make $200k selling covered calls every month with a few million in capital. Options prices are crazy right now. It makes you think about how silly money is.
  • jeffbee 6y ago
    OK but this is not exactly risk-free. You are on the hook for the downside risk of whatever you own behind those calls. Selling covered calls comes with a lot of exposure.
    • tempsy 6y ago
      it’s safer than just holding stock which is what 99% of people do...so how is that more exposure than your average long retirement account?
      • jeffbee 6y ago
        Well yeah. Obviously :-)
      • WA 6y ago
        OT @ tempsy: I need to say thank you. I found WSB through a random comment of yours about Tesla/WSB in January 2020, read a lot about options, liquidated my portfolio in February, bought puts on SPX and DAX and made €400k after taxes in a few weeks. It's kind of crazy that your random comment on HN lead me down this path. That's why I'm a reader of HN since 2008 or so – exposure to randomness ;)
      • a_imho 6y ago
        I'm not able to follow the logic. Why is it safer? Isn't the exposure from the options additive to holding stock?
        • jeffbee 6y ago
          Yes the exposure is much worse. If you are long a stock you can sell it whenever you feel like it is about to lose value. When you sell covered options you may be forced to hold the stock until the contract expires. That’s the whole point of the call: the buyer pays you the premium and in exchange you are taking all of the risk for the duration of the contract.
• tinyhouse 6y ago
  Today I noticed that Bad Bath and Beyond rallied 40% in the morning with no major news. It closed only +1.5%. I was wondering what's going on. I think that's one warning sign not to invest in companies that often flactuate greatly with no major news. It often happens with small companies so it's good to stay away from such companies. But BB&B seem to have a market cap of a few billions so it's not expected.
  • abbbccdefd 6y ago
    Melvin was also heavily short Bed Bath and Beyond, they probably covered some of their shorts this morning because they were overall down a lot.
  • Miner49er 6y ago
    A lot of of heavily shorted stocks are up a ton recently. BBBY, GME, DDS, FIZZ, TR.
  • thysultan 6y ago
    Maybe cause $BB&B is close to $BB, either the bots are mistaking it for $BB or the WSB "retards" are. Either way there's a bit of a "rocketship emoji" drive for $BB on WSB.
  • thrwyoilarticle 6y ago
    Jim Cramer barely stopped to breath between mentioning BB&B yesterday.
• mbg721 6y ago
  When everyone pouring their life-savings into index funds stops working, it's going to hurt very hard.
  • thrwyoilarticle 6y ago
    We pour our money into index funds with the understanding that they will continue to perform like one American index did for 2 decades during a time when a) index funds didn't exist b) index funds didn't make up 50% of all invested money c) the internet wasn't widespread. If your retirement plan can't accommodate Nikkei-tier growth, you are Wall Street gambling.
• Rapzid 6y ago
  Such an epic pump and dump. Winners and losers. Prob no better time to short GME.
  • thrwyoilarticle 6y ago
    It would probably be a better time to short GME when your broker hadn't banned it.
• anonymouse008 6y ago
  Am I the only one who sees WSB and thinks, "yep, this is what trading floors would look like without compliance and HR"?
  • konjin 6y ago
    This is what it looks like anyway. You just don't put it in any form that can be subpoenaed.
    • anonymouse008 6y ago
      Hahah, exactly These guys are sophisticated little buggers: https://www.reddit.com/r/wallstreetbets/comments/l528pz/gme_endgame_part_3_a_new_opponent_enters_the_ring/ https://www.reddit.com/r/wallstreetbets/comments/l528pz/gme_...
    • thrwyoilarticle 6y ago
      Unless it's a Bloomberg terminal chat, in which case shitpost away.
• belval 6y ago
  I feel like a lot of the commenters here either never actually went on /r/wsb or are trying to glorify it with a narrative that is absolutely disconnected from the real thing. They are not somekind of community trying to "stick it to wall street", they are mostly just random people shitposting all the time, posting their gains and losses. Right now it's GME, before it was SPY/TSLA/NIO. No need to overthink it. Sure the GME thing has an actual borderline smart twist to it which gives the entire community a different spin, but it's still just an outlier in the wsb timeline.
  • TheFattestNinja 6y ago
    But isn't that kind of the point of the discussion? A bunch of shitposters band together and manage to align themselves with someone with resources and interests to create a "movement" that is self-sustaining. The article makes parallelisms with the Capitol attack and other forms of self-fulfilling prophecies. Enough believers is the fuel, someone with resources makes a spark, things ignite.
    • thrwyoilarticle 6y ago
      WSB didn't create it. A billionaire founder created it and retail came along for the ride. The differences in holdings, excluding the anomolous millionaires, are enormous. Attributing this to WSB is calling them more powerful than they are.
      • belval 6y ago
        Precisely, /u/DeepFuckingValue which started this thing on WSB literally has only $15M in GME on a $5B cap. In the grand scheme of thing that's not significant.
  • nexus2045 6y ago
    What I like about wsb is it is fueled by endless optimism and celebrates wins and losses equally, with a sense of humor that the rest of Reddit or the internet cannot tolerate anymore. In the comments of a good due diligence (DD) post, you usually find people saying "I don't understand anything, but I'm in". And frankly speaking, that's fun. There's no politics or moral posturing on there. HN, on the other hand, is a gold mine for skepticism, almost like a "code review" but for ideas, which can get a bit negative at times. I will continue to visit both communities.
• glohbalrob 6y ago
  People and the media is not stating the simple fact that they short interest has been over 100% since June. I bought a bunch and told all my friends/family about it and everything laughed at me. Now those people asking me what they think about it. Likely they started short positions around $10 in 2019, had a nice profitable trade, started to bleed out then doubled down and increased position as it picked up momentum. Now they are far over their head and from the looks of things, stock is going to $200. Lots of people made tons of money shorting tesla. Until they didnt and stock kept doubling.
• Kosirich 6y ago
  Can someone extrapolate what happens (hopefully) in a half a year when we get to herd immunity and the economy opens fully when a lot of these people (I'm guessing) will decide to cash-in in their stocks in order to go to a nice vacation, get a new car ect. Can we expect some sort of economic recovery followed by hyperinflation?
  • spoonjim 6y ago
    There are not enough people who have made lots of money through this to have a structural economic impact.
  • lambdatronics 6y ago
    Interesting point. I recall some analysis that the froth in the market is being driven by (1) reduced spending -> increased investing, at least for those who kept their jobs (2) cancellation of sports, leading to more speculation as a substitute form of entertainment. If that's correct, then yeah, we could potentially see a slide. I suspect it won't be massive, and it could be counterbalanced by economic growth that happens at the same time due to the reopening. Don't forget that the stimulus/bailout/money-printing is also driving the market up too.
  • imtringued 6y ago
    If you predict hyperinflation then which goods do you think will we have a shortage of? Because that is what inflation is. Too much spending and not enough things to buy. post WW1 Germany both had a broken economy and a massive amount of foreign debt. What makes you think that similar events will take place? What prevents the economy from simply recovering in 1 or 2 years?
  • elindbe3 6y ago
    Some self-acknowledged idiots making a few million on the stock market isn't going to have any measurable impact on the entire economy. And it'll be balanced out by a few hedge fund millionaires having to sell their third yacht.
• deleted 6y ago
  [deleted]
• dang 6y ago
  Recent and related: https://news.ycombinator.com/item?id=25908084 https://news.ycombinator.com/item?id=25908084
• nromiun 6y ago
  It's like everyone has forgotten the past meme stocks of /r/wsb. GME is not something out of the ordinary. They do this all the time. First someone will pick a stock to pump and if it rises some people win and some will be left holding the bag. Remember the SPY puts at the beginning of 2020? The Chinese coffee startup that got delisted? NKLA? How PLTR pump lost the energy?
  • WA 6y ago
    I've been a member of WSB since January 2020 and this is not entirely accurate. If you look closely, it is unclear whether WSB is actually what drives a pump. Quite often, something happens, a stock gains insane valuations and WSB finds it after the fact and spins some narrative or tries to profit even more. The SPY puts weren't at the beginning of 2020. I was actually one who took a huge profit from being early with SPY and DAX puts, but I also lost some money later on when SPY puts were still the rage. The fascinating part is that you don't really know if WSB is actually the pumper. With smaller caps, that might be true to some extend. They banned mentioning of small caps with less than 1 billion in market capitalization a while ago for this reason. WSB pumps and dumps: SPCE, LL Certainly not: MSFT, SPY drop in Feb/March 2020, TSLA, AAPL Probably not: HTZ Unclear about the extend: GME, BB, PLTR So, is WSB a driver of stock prices or is someone else driving the prices and blaming it on the "retards" on WSB? This happened in July/August 2020 with tech and one culprit was Softbank.
    • nromiun 6y ago
      > The SPY puts weren't at the beginning of 2020. That was just a rough estimation. I have been following them for the last few years and my point is that they don't always win. Before 2020 (where every stock market on earth started giving huge profits) they were mostly known for their losses. In fact the only WSB stock still worth buying is TSLA. Everything else is pumped, dumped and gone.
      • WA 6y ago
        Funny that you say this. TSLA is the mother of all pump and dumps, but it'll take a while for this to play out. Not driven by WSB of course. But yeah, they don't always win for sure. Still, there are a few gems in that sub if you know where to look imho. Do they have a crystal ball? Certainly not. But it's interesting for its different perspective.
• AzzieElbab 6y ago
  I kind of understand how one can make money betting against overexposed short sellers, I still have no idea how GameStop can survive as company.
• deleted 6y ago
  [deleted]
• cwhiz 6y ago
  WSB isn’t doing anything that isn’t typical on actual Wall St. The market is, and always has been, a ridiculous game. WSB is just showing the world. But the folks on actual Wall St would prefer no one else can see how the sausage is made.
• stevievee 6y ago
  Where is the evidence that most of the volume came from wsb users? Genuinely curious because I don't know the details. Is it possible that a third party saw the situation and joined in?
  • justaman 6y ago
    Robinhood is the app of choice for WSB users. Robinhood also leans heavily towards the younger crowd. Robinhood released numbers recently on how many people have tsla, gme, pltr and other stocks in their portfolio. Google it.
    • stevievee 6y ago
      That is just a generic trend. It doesn't explain who participated in the past 3 days of volume.
• de_nied 6y ago
  Louis Rossmann's take: https://www.youtube.com/watch?v=4EUbJcGoYQ4 https://www.youtube.com/watch?v=4EUbJcGoYQ4
• stevespang 6y ago
  So succinctly: Put frankly, Millennials are tired of getting fucked by the man. When you’re underemployed with $100,000 in student loan debt, your financial situation feels overwhelming. You really don’t want to take the advice of your parents or CNBC talking heads [5] to invest 10% of your salary for a 4% annual return. At that point, what’s another $5,000? Might as well buy some short-dated GME calls
• cdiamand 6y ago
  I cover this chatter as a sideproject. Wallstreetbets is seeing higher levels of chatter than when the coronavirus broke out. I think it may be the highest level this year. https://topstonks.com/stocks/gme https://topstonks.com/stocks/gme
• vannevar 6y ago
  This is essentially a crowd-sourced Ponzi scheme. But is it really so different from the market at large right now? It's more clearly identifiable in that there are explicit signals in the message board. But the primary signal is probably the stock trajectory itself, just as it is with the broader market. People are buying mostly because people are buying, and the higher the price goes, the more sensitive it will become to perturbations, until something---maybe a tiny fluctuation in some obscure part of the market---causes it to collapse.