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I think the funniest part of this entire phenomenon is that Robinhood is now taking money from the rich and distributing it to the masses in a more literal sens

I think the funniest part of this entire phenomenon is that Robinhood is now taking money from the rich and distributing it to the masses in a more literal sense. At least for now. On a more serious note, I don't get how a stock can be 140% shorted. Does that mean once you return a portion of the shares you borrowed you have to rebuy part of it and return it again? Also when would these short sellers get margin called?

xadhominemx 6y ago
Yea money is flowing from hedge funds who are short to retail investors as the stock runs up, but once it inevitably moves back down it will be the retail bag holders inflicted with massive losses.
- curiousgal 6y ago
  Wouldn't the short sellers have to buy all of what they shorted from the retail investors?
  - xadhominemx 6y ago
    Short sellers cover their borrowed shares. They are not left with any stock after they close their trade.
- ericmay 6y ago
  People say that, but plenty of hedge funds and other investors will lose money too. It’s not “hedge fund win, retail loses”. There is a mix. Not just do some of the shorts (maybe many?) lose money, some of the hedge funds on the buy side will get caught too if this comes down fast enough.
taylorwc 6y ago
Here's a pretty good explanation of that how that can happen: https://nope-its-lily.medium.com/gamestop-power-to-the-market-players-part-1-d8863f2f8604 https://nope-its-lily.medium.com/gamestop-power-to-the-marke...
- curiousgal 6y ago
  Well that paints a completely different picture!
- cwkoss 6y ago
  Hmm, i wonder how accurate this article is, particularly around melvin capital's positions. If they only had put options, why did they need a $2.5B bailout this week? I was under the impression they also had short positions or sold naked calls in order to get into as much trouble as they seem to be in based on the bailout announcement. Or were their put options' value being used as basis other leveraged investments? Don't understand how they could have lost $2.5B on just put options.
  - jdjfktkrnj 6y ago
    Indeed. WSJ: > Melvin Capital Management, which managed $12.5 billion at the start of the year, had lost nearly 30% for the year through Friday due largely to its array of bets against companies including GameStop, said people familiar with the fund. Quite interesting that parent article, as detailed as it is, somehow missed a much reported 30% drawdown.
jariel 6y ago
No, in the end, it will be the mob who will lose money, and it will invariably go into the pockets of more institutional vested interests who end up picking up the pieces cheap. Really Roobinhood is feeding fish to whales, over time.

xadhominemx 6y ago

Yea money is flowing from hedge funds who are short to retail investors as the stock runs up, but once it inevitably moves back down it will be the retail bag holders inflicted with massive losses.

curiousgal 6y ago
Wouldn't the short sellers have to buy all of what they shorted from the retail investors?
- xadhominemx 6y ago
  Short sellers cover their borrowed shares. They are not left with any stock after they close their trade.
ericmay 6y ago
People say that, but plenty of hedge funds and other investors will lose money too. It’s not “hedge fund win, retail loses”. There is a mix. Not just do some of the shorts (maybe many?) lose money, some of the hedge funds on the buy side will get caught too if this comes down fast enough.

taylorwc 6y ago

Here's a pretty good explanation of that how that can happen: https://nope-its-lily.medium.com/gamestop-power-to-the-market-players-part-1-d8863f2f8604 https://nope-its-lily.medium.com/gamestop-power-to-the-marke...

curiousgal 6y ago
Well that paints a completely different picture!
cwkoss 6y ago
Hmm, i wonder how accurate this article is, particularly around melvin capital's positions. If they only had put options, why did they need a $2.5B bailout this week? I was under the impression they also had short positions or sold naked calls in order to get into as much trouble as they seem to be in based on the bailout announcement. Or were their put options' value being used as basis other leveraged investments? Don't understand how they could have lost $2.5B on just put options.
- jdjfktkrnj 6y ago
  Indeed. WSJ: > Melvin Capital Management, which managed $12.5 billion at the start of the year, had lost nearly 30% for the year through Friday due largely to its array of bets against companies including GameStop, said people familiar with the fund. Quite interesting that parent article, as detailed as it is, somehow missed a much reported 30% drawdown.

jariel 6y ago

No, in the end, it will be the mob who will lose money, and it will invariably go into the pockets of more institutional vested interests who end up picking up the pieces cheap. Really Roobinhood is feeding fish to whales, over time.