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Gamestop is nowhere near bankrupt. One of the reasons that the trade took off is that Gamestop still has cash on hand and has reasonable (if declining) revenue.

Gamestop is nowhere near bankrupt. One of the reasons that the trade took off is that Gamestop still has cash on hand and has reasonable (if declining) revenue. On their current trajectory they will go bankrupt, but it could take years. On fundamentals they could be a $20 stock but they were at $4 and still being heavily shorted, which made some people angry.

Apocryphon 6y ago
I don't think people were angry that the price was undervalued, the anger came about when it became apparent that hedge funds had been over-shorting the stock to the point of potential naked short selling.
- klodolph 6y ago
  I have heard no claims of naked short selling that came with any evidence. Not saying that it hasn’t happened, just that there are other explanations which seem to be more relevant / explicatory here.
  - XFrequentist 6y ago
    What other explanation is there for more than 100% of GME stock being sold short (genuine question)?
    - fractionalhare 6y ago
      Briefly: a share which has been sold short can be sold short again by the person who buys it from the borrower/short seller. In practice, this often occurs due to regular market mechanics when a particular company is a hot short target. All that's required is a widespread consensus that the company's financials suck (in not so few words).
    - rspeele 6y ago
      Alice lends his 1 stock to Bob. Bob sells it to Charlie (but is still on the hook to return it) Charlie lends his 1 stock to Dave. Dave sells it to Eddie (but is still on the hook to return it). There is only 1 stock being traded here, but there are two loans (shorts) out on it with obligations to return it.
      - Apocryphon 6y ago
        Sounds like a precarious series of transactions to base an economy around.
        notahacker 6y ago
        Wait until you hear about the US dollar...
        deleted 6y ago
        [deleted]
        rspeele 6y ago
        That's finance! What's really fun is that Alice and Charlie may not even know that they've lent their stock. Their broker, having a substantial amount of the stock pooled across all accounts they manage, may lend it out and still let Alice and Charlie trade their "share" -- since if Alice wants to sell, the broker can always sell on of the other shares from their pool. As long as the broker keeps a decent amount of shares still in their possession, and as long as all accountholders don't try to liquidate at the same time, it's fine. Even if you DID try to liquidate your position and whoopsie, the broker actually lent out all their shares and there are none left for them to sell, the broker could buy your share obligation with cash and you wouldn't know the difference between that and selling it to another shareholder. This is the type of thing that gets some people's back up. It all sounds very "precarious" as you say. There is a reaction that says, whoa, that's way too complicated and abstracted, this whole thing is a house of cards just waiting to collapse. But it's kind of like a long-lived piece of software, which accumulates complexity from the need to deal with a complex world. Only new programmers have the urge to tear it all down and start from scratch -- because old programmers have found that the "new" system ends up reinventing the complexity of the old as it discovers the same problems and missing features of the "simple" approach. Today you see this happening with cryptocurrency.
  - Apocryphon 6y ago
    Claims do not have to be true for people to get angry about it. I'm attempting to explain the narrative of emotion, not what necessarily happened in the market. I'm responding to the last sentence about "which made some people angry."
  - tomp 6y ago
    Apparently this is proof: https://www.nyse.com/regulation/threshold-securities https://www.nyse.com/regulation/threshold-securities From this comment: https://news.ycombinator.com/item?id=25946012 https://news.ycombinator.com/item?id=25946012
- deleted 6y ago
  [deleted]
sandworm101 6y ago
>> On their current trajectory they will go bankrupt, but it could take years. A company with declining revenues, but lots of cash on hand, is ripe for takeover and liquidation. That places GameStop right alongside the quintessential takeover target: New England Wire and Cable. That was a good movie. Whether from bankruptcy or takeover, this could be the last party for GameStop.
- Centigonal 6y ago
  Kieth Gill (AKA u/deepfuckingvalue AKA Roaring Kitty), the original GME bull on WSB, mentioned a PE takeover as a potential exit in his first GME video in July 2020 [1] https://www.youtube.com/watch?v=GZTr1-Gp74U https://www.youtube.com/watch?v=GZTr1-Gp74U
  - wp381640 6y ago
    They’d be silly not to wait for it to go bankrupt and purge the huge lease obligations and debt
- deleted 6y ago
  [deleted]
kryogen1c 6y ago
> Gamestop is nowhere near bankrupt > On their current trajectory they will go bankrupt ...what? this whole thing started because some high-profile redditors were bullish on GME, and then it turned into an anti-1% movement once the short positions were discovered. so, there are two activities: speculation and investing. the whole problem here is that unwitting retailers were tricked, thinking they were investing when really they were "speculating" (more accurately called a pump and dump scheme). now its morphing into this "jail the oligarchs" nonsense because the people that lost money think they were wronged, when really it was their own damn fault the whole time.
- ncallaway 6y ago
  > > Gamestop is nowhere near bankrupt > > On their current trajectory they will go bankrupt > ...what? This doesn't seem hard to reconcile. If I leave Seattle driving east my current trajectory takes me to New York. But I'm not yet near New York.
fit2rule 6y ago
Gamestop could pivot and turn into a data-crypt. That'd make their stock skyrocket.

Apocryphon 6y ago

I don't think people were angry that the price was undervalued, the anger came about when it became apparent that hedge funds had been over-shorting the stock to the point of potential naked short selling.

klodolph 6y ago
I have heard no claims of naked short selling that came with any evidence. Not saying that it hasn’t happened, just that there are other explanations which seem to be more relevant / explicatory here.
- XFrequentist 6y ago
  What other explanation is there for more than 100% of GME stock being sold short (genuine question)?
  - fractionalhare 6y ago
    Briefly: a share which has been sold short can be sold short again by the person who buys it from the borrower/short seller. In practice, this often occurs due to regular market mechanics when a particular company is a hot short target. All that's required is a widespread consensus that the company's financials suck (in not so few words).
  - rspeele 6y ago
    Alice lends his 1 stock to Bob. Bob sells it to Charlie (but is still on the hook to return it) Charlie lends his 1 stock to Dave. Dave sells it to Eddie (but is still on the hook to return it). There is only 1 stock being traded here, but there are two loans (shorts) out on it with obligations to return it.
    - Apocryphon 6y ago
      Sounds like a precarious series of transactions to base an economy around.
      - notahacker 6y ago
        Wait until you hear about the US dollar...
      - deleted 6y ago
        [deleted]
      - rspeele 6y ago
        That's finance! What's really fun is that Alice and Charlie may not even know that they've lent their stock. Their broker, having a substantial amount of the stock pooled across all accounts they manage, may lend it out and still let Alice and Charlie trade their "share" -- since if Alice wants to sell, the broker can always sell on of the other shares from their pool. As long as the broker keeps a decent amount of shares still in their possession, and as long as all accountholders don't try to liquidate at the same time, it's fine. Even if you DID try to liquidate your position and whoopsie, the broker actually lent out all their shares and there are none left for them to sell, the broker could buy your share obligation with cash and you wouldn't know the difference between that and selling it to another shareholder. This is the type of thing that gets some people's back up. It all sounds very "precarious" as you say. There is a reaction that says, whoa, that's way too complicated and abstracted, this whole thing is a house of cards just waiting to collapse. But it's kind of like a long-lived piece of software, which accumulates complexity from the need to deal with a complex world. Only new programmers have the urge to tear it all down and start from scratch -- because old programmers have found that the "new" system ends up reinventing the complexity of the old as it discovers the same problems and missing features of the "simple" approach. Today you see this happening with cryptocurrency.
- Apocryphon 6y ago
  Claims do not have to be true for people to get angry about it. I'm attempting to explain the narrative of emotion, not what necessarily happened in the market. I'm responding to the last sentence about "which made some people angry."
- tomp 6y ago
  Apparently this is proof: https://www.nyse.com/regulation/threshold-securities https://www.nyse.com/regulation/threshold-securities From this comment: https://news.ycombinator.com/item?id=25946012 https://news.ycombinator.com/item?id=25946012
deleted 6y ago
[deleted]

sandworm101 6y ago

>> On their current trajectory they will go bankrupt, but it could take years. A company with declining revenues, but lots of cash on hand, is ripe for takeover and liquidation. That places GameStop right alongside the quintessential takeover target: New England Wire and Cable. That was a good movie. Whether from bankruptcy or takeover, this could be the last party for GameStop.

Centigonal 6y ago
Kieth Gill (AKA u/deepfuckingvalue AKA Roaring Kitty), the original GME bull on WSB, mentioned a PE takeover as a potential exit in his first GME video in July 2020 [1] https://www.youtube.com/watch?v=GZTr1-Gp74U https://www.youtube.com/watch?v=GZTr1-Gp74U
- wp381640 6y ago
  They’d be silly not to wait for it to go bankrupt and purge the huge lease obligations and debt
deleted 6y ago
[deleted]

kryogen1c 6y ago

> Gamestop is nowhere near bankrupt > On their current trajectory they will go bankrupt ...what? this whole thing started because some high-profile redditors were bullish on GME, and then it turned into an anti-1% movement once the short positions were discovered. so, there are two activities: speculation and investing. the whole problem here is that unwitting retailers were tricked, thinking they were investing when really they were "speculating" (more accurately called a pump and dump scheme). now its morphing into this "jail the oligarchs" nonsense because the people that lost money think they were wronged, when really it was their own damn fault the whole time.

ncallaway 6y ago
> > Gamestop is nowhere near bankrupt > > On their current trajectory they will go bankrupt > ...what? This doesn't seem hard to reconcile. If I leave Seattle driving east my current trajectory takes me to New York. But I'm not yet near New York.

fit2rule 6y ago

Gamestop could pivot and turn into a data-crypt. That'd make their stock skyrocket.