Posted on 01/27/2021 6:50:03 PM PST by SeekAndFind
Users of the subreddit r/WallStreetBets are fighting back against the multi-billion dollar hedgefunds in a rather creative way. GameStop became one of the most shorted stocks on Wall Street last week, after a newsletter from a short seller, Andrew Left of Citron Capital, encouraged people to short the company. Gamestop had a short interest of 102% of its shares, making it one of the most shorted on the market.
To “short” a company is to bet on the price of the stock falling, in simple terms. The hedgefunds would borrow shares of the company from other investors, sell the shares on the markets at the current high price, then buy them back at the expected future low price, and return them to the investors, pocketing a profit.
In response, the users of the subreddit saw a perfect opportunity to “own” the hedgefunds, as the newsletter from Left allegedly noted some of them buying GameStop stock. By buying GameStop stock, they could initiate a “short squeeze,” sending the price of the stock up, and forcing the hedgefunds to buy more of the stock to cover themselves.
Who is winning the war:
Most shorted names exploding higher, as top hedge fund position plummet pic.twitter.com/aEGnf5eCbH
— zerohedge (@zerohedge) January 27, 2021
The stock was then bought enmasse, with GameStop ending up as the most traded equity on the planet on Tuesday, beating out Apple, Tesla, and Microsoft. As a result, the price skyrocketed by hundreds of percent, and one of the hedge funds, Melvin Capital Management, had to be bailed out for $2.75 billion. The stock price went even further up after Elon Musk, the CEO of Tesla, tweeted out “Gamestonk.”
THEY DID IT: $GME was the most traded equity on the planet today w/ $20b in volume, more than $SPY, $AAPL and even the Mighty $TSLA. Surreal. pic.twitter.com/UxJPttsg4t
— Eric Balchunas (@EricBalchunas) January 26, 2021
Other stocks from “failing” companies that were targeted for shorts have also been boosted by the self-proclaimed “degenerates.” These include AMC, the cinema company who have been shut since the pandemic, BlackBerry, the makers of the popular phones from 10 years ago, and Nokia, another previous mobile phone giant.
Understandably, many on Wall Street and in the traditional financial media were very upset with the action taken on the GameStop stocks, comparing it to “cheering on hackers” defacing websites. NASDAQ’s Adena Friedman even claimed that they would halt trading on certain stocks if they match “social media chatter” with “unusual” stock activity, and a number of trading exchanges banned trades on GameStop and other stocks.
One Wall Street hedgefund trader told the New York Post that the situation was a “bloodbath,” and expressed his frustration that the “unwashed masses have figured out how to play the shorts” and beat them at their own game. “It’s f**king carnage,” he added.
Jennifer Epstein, Bloomberg’s White House reporter, asked Jen Psaki about what the Biden administration’s response to the rise in GameStop stock was, and asked if there had been “any conversations with the SEC about how to proceed.” Psaki replied by repeating that the Biden administration had appointed the first female Treasury Secretary Janet Yellen, and that Yellen and the White House economic team would be “monitoring the situation.”
Biden White House Press Secretary asked about GameStop, AMC and Blockbuster stock market drama.
She responds by reminding everyone that they have the FIRST FEMALE treasury secretary & says they’re “monitoring the situation.”pic.twitter.com/Lu2PR6NAdd
— The Columbia Bugle 🇺🇸 (@ColumbiaBugle) January 27, 2021
With the subreddit potentially coming under threat, WSB Chairman, an unofficial Twitter account for the subreddit, argued that if the subreddit was taken down for its role in the short squeeze, then “they better take down every single Wall Street hedge fund that has been endlessly using gangster tactics to make a quick buck.”
If they take down WallStreetBets, they better take down every single Wall Street hedge fund that has been endlessly using gangster tactics to make a quick buck.
— WSB Chairman (@WSBChairman) January 26, 2021
Some did come to the defence of the GameStop investors however. Speaking on CNBC, Chamath Palihapitiya, the CEO of Social Capital, was asked whether there was anything wrong with “the integrity of the system” for the stock to go up so much.
“The lack of integrity in the system is the precursor that cause GameStop to be sold short 136%, and for people to pile on and destroy a company in front of our eyes. That feels pretty wrong, and pretty un-American if you ask me,” Palihapitiya replied. “The fact that [GameStop] shouldn’t be allowed to exist because all of a sudden we decide that they should be obliterated into the ground, that feels pretty wrong to me.”
Billionaire CEO Chamath Palihapitiya debates against CNBC's Scott Wapner on people investing in Gamestop stocks pic.twitter.com/MHtvcB9umw
— SOUND (@itsavibe) January 27, 2021
The Hill’s Saagar Enjeti highlighted that short sellers had been manipulating the market for years, using the media to “force massive runs on well meaning companies all so they can make billions on the flip side… leeching off the American financial system,” and now they were upset at having the game flipped back on them by what he describes as the financial markets first “populist uprising.”
When Hedge Funders and others loot our markets its all good. But when retail investors destroy a hedge fund then all of a sudden CNBC analysts start calling for regulation, blame foreign powers, and talk "fundamentals"
I call BULLSHIT: https://t.co/DzoUsyy1T6 https://t.co/SxSksAu6oT
— Saagar Enjeti (@esaagar) January 27, 2021
Of course, the second biggest winners of the whole situation, just behind the users of r/WallStreetBets, are those who are simply sitting back and watching everything unfold with a bucket of popcorn.
It’s a state of the art video game distributor pic.twitter.com/372VHBWuQV
— LeftyCrypto🌹 (@LeftyCrypto) January 26, 2021
Pov: you just bankrupt a hedge fund pic.twitter.com/JdcUF21oYV
— puma (@OpticsPolice) January 27, 2021
businessmen after having a 2 hour crying fit because of redditors: pic.twitter.com/SNTNvDvVBF
— atrophy wife 🎀 (@zuza_real) January 27, 2021
That's why I have a Mac...
I read this on another site:
“This is going to get even more interesting. There are reports of other hedge funds in the same situation as Melvin Capital. It’s reported short sellers lost over $14 Billion today alone on GameStop stock.”
If true, I’m happy!
But as the bankers are always so fast to tell us. It’s not real money it’s numbers in a computer
It’s also happening to other stocks like AMC. Popcorn time!
These are the same vultures who contribute heavily to our Democratic National Socialist enemies. It’s that big club we ain’t in.
They also contribute to Republicans. They’ve always played both sides of the fence.
So I can’t buy Game Stop tomorrow morning?
Did you ever notice that the ads to buy silver are run by those selling it?
I say, if it’s such a good buy, why are you selling it?
Yep, don’t doubt millions of Millennials armed with their $1800.00 “Stimmy Checks” and the WeBull/Robinhood Apps!! I may just join in on the fun! Power to the people and all that! ;-) Next up AMC, SLV, and the crypto “DOGE” (Dogecoin...already pumping, beware the dump).
LOVE IT!!!!
Because economy or something....😂
Just like "votes" in a Demonion "voting" machine...
Um what is this honor that you speak of.😏
Best post of the year! I love this. Just bought 100 shares of AMC to join in the fun. I don’t care if I lose it all. I have to help these guys. But you know what? I’m NOT going to lose!
You’re gonna have to work on your stutter.😁
Libs eating libs
Plus, the bill will come due. The company will never have that value so the people that drove up the price will get stuck with the bill when the price crashes.
Not just gambling but destined to fail.
True, but each person (that’s the difference) will lose a couple hundred bucks.
It took a while for me to figure out how the shorts could be 140+% of the float. Apparently what happens is that hedge fund A borrows $10 worth of stock that it sells to buyer B, and then A turns around and re-borrows the stock back from B to sell to C, and so on, until the original $10 of stock is leveraged several times.
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