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> why don't institutional players use this strategy? They do. It is a very high risk endeavor though and missing the mark could lead to bankruptcy and succes

> why don't institutional players use this strategy? They do. It is a very high risk endeavor though and missing the mark could lead to bankruptcy and success could mean action from the SEC. But catching someone in a short squeeze is pretty damn profitable. Part of the success here probably has to do with underestimating the influence of wsb. This isn't the first time they've taken down short sellers (Telsa), but it's the most high profile time.

Miner49er 6y ago
Yes, two examples: Porsche in 2008 with Volkswagen and Martin Shkreli with KBIO in 2015. Neither faced any significant legal consequences and both made a huge return. https://www.marketwatch.com/story/kalobios-short-sellers-facing-squeeze-as-ceo-shkreli-says-will-no-longer-lend-stock-2015-11-27 https://www.marketwatch.com/story/kalobios-short-sellers-fac...
- elliekelly 6y ago
  The only reason Shkreli got away with it was because the DOJ brought (unrelated) criminal charges. If the DOJ hadn’t stepped in the SEC absolutely would have. The VW situation happened on a wildly different Wall Street and under a wildly different SEC. Things have changed since 2008 and pursuing that strategy today would be significantly more risky from a regulatory perspective. The SEC sent a clear message with Phil Falcone.
ssharp 6y ago
It's not easy to generate the kind of momentum you need to pull off something like what's been happening. WSB has been pushing GME for months. Then things got heated with them and the major shorts, it brought more attention to it, and GME shot up quite a bit. That amplified the story even more, which brought it more demand for GME. That cycle has just continued, building more and more interest each time. I don't believe the story has come close to reaching its peak yet either. I suspect there will start to be some major headlines still this week, which will bring in more speculative interest. Then, at some point, the story fizzles. The gains stop and the price will collapse. It's going to be an interesting week or so watching this all play out.

Miner49er 6y ago

Yes, two examples: Porsche in 2008 with Volkswagen and Martin Shkreli with KBIO in 2015. Neither faced any significant legal consequences and both made a huge return. https://www.marketwatch.com/story/kalobios-short-sellers-facing-squeeze-as-ceo-shkreli-says-will-no-longer-lend-stock-2015-11-27 https://www.marketwatch.com/story/kalobios-short-sellers-fac...

elliekelly 6y ago
The only reason Shkreli got away with it was because the DOJ brought (unrelated) criminal charges. If the DOJ hadn’t stepped in the SEC absolutely would have. The VW situation happened on a wildly different Wall Street and under a wildly different SEC. Things have changed since 2008 and pursuing that strategy today would be significantly more risky from a regulatory perspective. The SEC sent a clear message with Phil Falcone.

ssharp 6y ago

It's not easy to generate the kind of momentum you need to pull off something like what's been happening. WSB has been pushing GME for months. Then things got heated with them and the major shorts, it brought more attention to it, and GME shot up quite a bit. That amplified the story even more, which brought it more demand for GME. That cycle has just continued, building more and more interest each time. I don't believe the story has come close to reaching its peak yet either. I suspect there will start to be some major headlines still this week, which will bring in more speculative interest. Then, at some point, the story fizzles. The gains stop and the price will collapse. It's going to be an interesting week or so watching this all play out.