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This was one scenario were the shorts really did have it wrong. GameStop's financials were and are pretty solid. There was no reason to short the stock so heavi

This was one scenario were the shorts really did have it wrong. GameStop's financials were and are pretty solid. There was no reason to short the stock so heavily, which is why they're in the trouble that they're in right now. You should watch Roaring Kitty's video from June 2019 I believe (maybe its 2020?) on YouTube about this. He goes into great detail, with something like an hour of analysis on why $GME is a reasonable investment. Remember also, Dr. Michael Burry was buying into $GME (it was 5% of his fund in fact). Other big institutional investors like BlackRock, etc. had major positions as well.

kace91 6y ago
>This was one scenario were the shorts really did have it wrong. GameStop's financials were and are pretty solid. Honest question: do you really think that rational analysis of the viability of a stock is relevant at this point? It seems to me that gme just happened to end up being the battlefield in which the wsb people acted
- kzrdude 6y ago
  The rational analysis was the basis. What's happening the last weeks is just the noise of WSB once it came through. Now it's a lot of noise and a lot of money that's going to be lost by people wanting to get in on this -- far too late. A rational forum would be everyone marvelling at what was already pulled off, not this free-for-all where everyone's pretending there's a big battle going on right now and pretending there is anything to gain left.
dan-robertson 6y ago
BlackRock own a large position in basically every US equity. The reason is that their funds generally want to be exposed to the entire market or some large subsets of it. They aren’t stating some opinion about the value of GameStop by owning 10% of it as they own about 10% of the entire stock market. If you see regularly someone’s name on the front page of the New York Times you might infer something about them. If you see someone’s name in the phonebook that is less interesting as (ok, not actually true but hopefully you get the point) everyone is in the phonebook. BlackRock is the phonebook.
- lexapro 6y ago
  I read this a lot on yahoo finance, reddit and other investing related discussions, that somehow Blackrock or Vanguard having a big position means they know something and is a positive sign for a stock. There are a ton of articles and documentaries about Blackrock being some secretive bank that "secretly" owns a big chunk of worldwide assets, which fuels this belief in my opinion. And while it's true that they own a lot of assets, they don't own it directly and are actually a rather boring business. They are completely passive most of the time.
ThomPete 6y ago
and Tesla
kzrdude 6y ago
> You should watch Roaring Kitty's video It's from 2020. I just want to add that he's humble about his analysis too. He explains his case in a lot of great detail and still writes "bullish on gamestop, perhaps foolishly so".
davewritescode 6y ago
Someone explained to me (perhaps incorrectly) that GMEs market cap was less than the value of it's real-estate holdings. Now GameStop isn't a great company but it's not bleeding as badly as you would expect and it has a turnaround plan that's it's executing. It never should've been shorted as much as it was without hedging the other side of the bet. What was Melvin going to do if GameStop found a way to be wildly profitable in e-commerce? This is fundamentally terrible risk management coming back to bite people in the ass. This time it was a Reddit internet mob but it could've been anything.
- cbozeman 6y ago
  Right. GME market cap was $250 million at a time when the company had literally $1 billion in assets. For people wondering, "Well why didn't some behemoth like Sequoia Capital or BlackRock just swoop in and load up?" When purchasing such large blocks of a company, 5%, 10%, 15%, etc., there's a lot of paperwork involved. Retail investors don't have to file with the SEC when they YOLO $200,000 on GameStop at $4 a share. They can shrug and say, "We like the stock."
ballenf 6y ago
> GameStop's financials were and are pretty solid. But aren't stock prices almost entirely about future performance? So will GME's business model work tomorrow? I think the answer is yes. They're the best option for buying used peripherals that I've found. I can get it right away, can exchange easily if a problem and can see the item before I buy (or at least when I pickup). I've just wasted too much time trying to see through the Amazon reviews gaming, do what feels like national security background checks on eBay sellers or go through the hassle of FB marketplace. Maybe it's just me, but as a casual gamer and fan of legacy consoles, I like shopping at Gamestop. Whether online with "at the door" pickup or in the store. The locations around me have employees that seem genuinely happy. Maybe they're good at hiding their misery. If Gamestop would expand into more hobby shop items, it could really take off. Board games, miniatures, etc. And why don't they stock energy drinks (my locations don't anyway)? Post-pandemic add small cafes with rentable game systems. I think people will be desperate for actual human interaction once that's possible again. Finally, with this ongoing retail apocalypse maybe their leases will get cheaper.
- NamTaf 6y ago
  > But aren't stock prices almost entirely about future performance? So will GME's business model work tomorrow? Yes, and that's sort of Roaring Kitty's point in that video. He interpreted the negativity about it as being way too extreme for the financials of the company. It was basically saying the company was going to fail tomorrow, whereas his analysis said to him that it still had several reasonable years ahead of it which the share price didn't reflect.
- cbozeman 6y ago
  > But aren't stock prices almost entirely about future performance? This depends on what kind of investor you are. Do you believe the market is entirely rational and depends on the underlying fundamentals of a company? Or do you believe that the stock market is ultimately irrational and trades solely on hope and fear? Frankly, I don't see how anyone can disagree that the market is entirely irrational and solely emotionally based, and the reason is because humans are irrational and emotionally based. We rationalize our positions after we've taken them, not before, I'm totally convinced of this, mostly thanks to Sam Harris, and to a lesser degree, Richard Dawkins. We want to believe that we logically poured over the facts and figures and we arrived at the only inescapable conclusion possible. Were that true, everyone would arrive at similar conclusions. Despite what some people have said the past several years, there are no such thing as "alternative facts". A thing is either true, false, or unknown. Smarter people than I have made cases on both sides of this argument, but for me, I see it happen every day, all the time, all around me. I watch it happen in finance. I watch it happen in book publishing. I watch it happen in development. I, for one, am a believe in what I call the "emotional market hypothesis". Hell, Tesla is a perfect example. There's absolutely no reason for a stock to be trading at 1660 times its earnings, but Tesla is. That's its Price-To-Earnings ratio right now. The stock is fueled by hope. Elon is the personification of that hope, for better or worse.
TLightful 6y ago
Tend to agree with this. People seem to be pushing this as the moment the little people took control. This is a flash in the pan. And don't get me wrong, I almost always support the underdog.

kace91 6y ago

>This was one scenario were the shorts really did have it wrong. GameStop's financials were and are pretty solid. Honest question: do you really think that rational analysis of the viability of a stock is relevant at this point? It seems to me that gme just happened to end up being the battlefield in which the wsb people acted

kzrdude 6y ago
The rational analysis was the basis. What's happening the last weeks is just the noise of WSB once it came through. Now it's a lot of noise and a lot of money that's going to be lost by people wanting to get in on this -- far too late. A rational forum would be everyone marvelling at what was already pulled off, not this free-for-all where everyone's pretending there's a big battle going on right now and pretending there is anything to gain left.

dan-robertson 6y ago

BlackRock own a large position in basically every US equity. The reason is that their funds generally want to be exposed to the entire market or some large subsets of it. They aren’t stating some opinion about the value of GameStop by owning 10% of it as they own about 10% of the entire stock market. If you see regularly someone’s name on the front page of the New York Times you might infer something about them. If you see someone’s name in the phonebook that is less interesting as (ok, not actually true but hopefully you get the point) everyone is in the phonebook. BlackRock is the phonebook.

lexapro 6y ago
I read this a lot on yahoo finance, reddit and other investing related discussions, that somehow Blackrock or Vanguard having a big position means they know something and is a positive sign for a stock. There are a ton of articles and documentaries about Blackrock being some secretive bank that "secretly" owns a big chunk of worldwide assets, which fuels this belief in my opinion. And while it's true that they own a lot of assets, they don't own it directly and are actually a rather boring business. They are completely passive most of the time.

ThomPete 6y ago

and Tesla

kzrdude 6y ago

> You should watch Roaring Kitty's video It's from 2020. I just want to add that he's humble about his analysis too. He explains his case in a lot of great detail and still writes "bullish on gamestop, perhaps foolishly so".

davewritescode 6y ago

Someone explained to me (perhaps incorrectly) that GMEs market cap was less than the value of it's real-estate holdings. Now GameStop isn't a great company but it's not bleeding as badly as you would expect and it has a turnaround plan that's it's executing. It never should've been shorted as much as it was without hedging the other side of the bet. What was Melvin going to do if GameStop found a way to be wildly profitable in e-commerce? This is fundamentally terrible risk management coming back to bite people in the ass. This time it was a Reddit internet mob but it could've been anything.

cbozeman 6y ago
Right. GME market cap was $250 million at a time when the company had literally $1 billion in assets. For people wondering, "Well why didn't some behemoth like Sequoia Capital or BlackRock just swoop in and load up?" When purchasing such large blocks of a company, 5%, 10%, 15%, etc., there's a lot of paperwork involved. Retail investors don't have to file with the SEC when they YOLO $200,000 on GameStop at $4 a share. They can shrug and say, "We like the stock."

ballenf 6y ago

> GameStop's financials were and are pretty solid. But aren't stock prices almost entirely about future performance? So will GME's business model work tomorrow? I think the answer is yes. They're the best option for buying used peripherals that I've found. I can get it right away, can exchange easily if a problem and can see the item before I buy (or at least when I pickup). I've just wasted too much time trying to see through the Amazon reviews gaming, do what feels like national security background checks on eBay sellers or go through the hassle of FB marketplace. Maybe it's just me, but as a casual gamer and fan of legacy consoles, I like shopping at Gamestop. Whether online with "at the door" pickup or in the store. The locations around me have employees that seem genuinely happy. Maybe they're good at hiding their misery. If Gamestop would expand into more hobby shop items, it could really take off. Board games, miniatures, etc. And why don't they stock energy drinks (my locations don't anyway)? Post-pandemic add small cafes with rentable game systems. I think people will be desperate for actual human interaction once that's possible again. Finally, with this ongoing retail apocalypse maybe their leases will get cheaper.

NamTaf 6y ago
> But aren't stock prices almost entirely about future performance? So will GME's business model work tomorrow? Yes, and that's sort of Roaring Kitty's point in that video. He interpreted the negativity about it as being way too extreme for the financials of the company. It was basically saying the company was going to fail tomorrow, whereas his analysis said to him that it still had several reasonable years ahead of it which the share price didn't reflect.
cbozeman 6y ago
> But aren't stock prices almost entirely about future performance? This depends on what kind of investor you are. Do you believe the market is entirely rational and depends on the underlying fundamentals of a company? Or do you believe that the stock market is ultimately irrational and trades solely on hope and fear? Frankly, I don't see how anyone can disagree that the market is entirely irrational and solely emotionally based, and the reason is because humans are irrational and emotionally based. We rationalize our positions after we've taken them, not before, I'm totally convinced of this, mostly thanks to Sam Harris, and to a lesser degree, Richard Dawkins. We want to believe that we logically poured over the facts and figures and we arrived at the only inescapable conclusion possible. Were that true, everyone would arrive at similar conclusions. Despite what some people have said the past several years, there are no such thing as "alternative facts". A thing is either true, false, or unknown. Smarter people than I have made cases on both sides of this argument, but for me, I see it happen every day, all the time, all around me. I watch it happen in finance. I watch it happen in book publishing. I watch it happen in development. I, for one, am a believe in what I call the "emotional market hypothesis". Hell, Tesla is a perfect example. There's absolutely no reason for a stock to be trading at 1660 times its earnings, but Tesla is. That's its Price-To-Earnings ratio right now. The stock is fueled by hope. Elon is the personification of that hope, for better or worse.

TLightful 6y ago

Tend to agree with this. People seem to be pushing this as the moment the little people took control. This is a flash in the pan. And don't get me wrong, I almost always support the underdog.