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When you know CompanyA fires a bunch of people, the price goes up because of the perception that the company will have more capital to leverage. Knowing that an
by Supermancho 6y ago
When you know CompanyA fires a bunch of people, the price goes up because of the perception that the company will have more capital to leverage. Knowing that an event has happened or expect the consequence of an event (CompanyA gets sued for patent violation) to have an effect on the company, changes the stock price through participation. GME is an interesting case where the event is perceived to be a complex situation with an outcome that is believed to be good for participants, increasing participation and driving the price up. I don't see how it's special, other than someone with a lot of money made a plan that motivated participants to believe in that plan, then play against it.
- IgorPartola 6y agoThe difference is that the value of GME isn't in any way connected to its fundamentals here. It is only valuable because of the (supposed) overshorting. Basically, the way I understand it is that everyone is playing poker with tin poker chips. By themselves the poker chips are nearly worthless (tin is cheap), but because suddenly someone owes someone else a whole lot of these chips and there are real green dollars attached to that IOW, the tin chips suddenly are worth a lot. Once that debt is repaid, they become worth only what the tin is worth. In other words, when the guy that started it all (Roaring Kitty/DFV) testified before congress that the only reason he was buying GME was because he fundamentally thought they were going to be a profitable corporation, that was bullshit. He talks a whole lot about short squeezing the stock elsewhere, so his denial that that's why he did it seems to me to be a lie. On a personal level, he seems shady as hell and the whole thing seems like a setup for others to be left holding the bag.