GameStop Shares Plunge as Traders Dump Stock (theguardian.com) 160
Shares in GameStop plunged by 65% in early trading on Wall Street as the trading mania sparked by small investors, that sent its stock surging and cost hedge funds billions of dollars, lost momentum. From a report: The struggling Texas-based video game store chain has been the focal point of a battle by small traders, using forums such as Reddit, to punish Wall Street hedge funds that have bet on certain stocks falling in value. GameStop shares hit a high of $470 last Thursday but slumped to $80 shortly after the market opened. They recovered to $117 by mid-session, down 48% on their opening price. A year ago, shares in the 37-year-old chain, which plans to close 450 stores this year, were changing hands at $3.25 a share. Other heavily shorted stocks also targeted by amateur investors on influential forums such as WallStreetBets on Reddit are also in freefall. AMC Entertainment, the world's biggest theatre chain and owner of Odeon in the UK, lost 55% shortly after the opening bell on Wall Street. It later made up some of those losses to trade at $8 by mid afternoon.
Not a sale, a ladder attack. (Score:5, Informative)
This isn't traders dumping shares - the volume is way too low for that. It's being done by an illegal market manipulation tactic called a "ladder attack [thefocus.news]".
The volume and timing of the trades dropping the price in the last two days indicate a ladder attack, not a sell-off. Also, near-identical patterns can be seen in AMC, BB, and other similar stocks that are darlings of r/WallStreetBets [reddit.com]. If these were natural the volume and pattern of the sales wouldn't be so regular, and it wouldn't be happening with such consistency across this very specific subset of stocks.
I was watching a livestream earlier (Score:5, Informative)
from someone with access to a Bloomberg terminal on YT. They were showing the charts between GME and AMC mirroring each other almost exactly with a slight delay on AMC. It definitely looks like shenanigans.
Also Mark Cuban has an AMA on that subreddit which was interesting to read and read between the lines on what was said and not said.
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Re:Not a sale, a ladder attack. (Score:5, Insightful)
This isn't traders dumping shares - the volume is way too low for that. It's being done by an illegal market manipulation tactic called a "ladder attack [thefocus.news]".
Meanwhile, SEC continue investigating evil buy & hold Reddit manipulators.
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It's being done by an illegal market manipulation tactic called a "ladder attack [thefocus.news]".
...
I have been wondering what internet posters meant by ladder attack, so thank you for the link.
@Rizz, I do not mean to criticize your posting, but I do want to address its claims, based on my perspective. (For what it's worth, I do not work at a place with any axe to grind in the case of these meme stocks, but it is one where I get a very thorough perspective on modern markets. And I have been doing this stuff for decades. Personally, I am just enjoying watching the meme stock circus.)
If the linked descri
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The thing is, when these stocks have been going down there's a consistent pattern of the buy/sell being exactly the same number of shares (typically 100) each step of the way down, and by a consistent and even drop in price each time. When the stock has been going up, it's much more randomized - random jumps in price, and a lot of the trades are for only a few shares at a time. This seems to indicate that the downward-priced trades are organized, and not indicative of normal trading, and that the upward-pri
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The thing is, when these stocks have been going down there's a consistent pattern of the buy/sell being exactly the same number of shares (typically 100) each step of the way down, and by a consistent and even drop in price each time. When the stock has been going up, it's much more randomized - random jumps in price, and a lot of the trades are for only a few shares at a time. This seems to indicate that the downward-priced trades are organized, and not indicative of normal trading, and that the upward-priced trades are haphazard, as would be expected from normal trading by individuals.
100 shares has a particularly special meaning in the US equity markets. It is the increment for options trades, and is also the minimum "round lot" with more-stringent trade reporting requirements.
Let's hypothesize that a bunch of people bought calls options at strikes around 200. The folks who sold those options will see them as zero-delta when the stock price drops to 100, whereas back at $300 they were near 100-delta. Those folks will then sell in 100 share increments to match the delta of the options
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you think lots of 100 shares are changing the market in volumes of 76 million???? seriously! that might be possible with a low volume share, but GME is trading at 3 times normal volume, it is a massive volume and no way a serious of 100 share lots are going to have an impact, it would take lots in the thousands.
If the 100 lot orders are replenished with new 100 lots every time they trade, they effect can be very significant in moving the price.
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I get several entities selling the same stock back and forth at lower and lower prices, as well as flooding the market with short-lived sell orders that obviously can never be filled due to their duration.
Reality is the party is over and people want their investments////gambling money back, and are selling. If no one wants to buy the price goes down. I
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I came in to point this out. Each time I look at the buys, it's 100x100 at a time. It's not retail investors selling bunches of 100s
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What pump? This is not a pump and dump. This is a buy and hold (y'know, what you're supposed to do in a market).
If you don't know what's going on maybe you should STFU and quit spraying your ill-conceived bullshit around this thread.
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Buy and hold for what? For Gamestop to be resurrected and overtake Steam? No, it's a meme stock that someone made a ton of money on, and the rest will be left holding useless pennystock.
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Wallstbets (WSB) believes (who knows if they're right, I'm just learning about it) that there are still a huge number of shorts on the stock. The hedges are screaming from the rooftops, via their pals in the media, that they've covered their shorts. WSB does not believe this, and has bet against it. If they buy as much as they can and hold, they drive up the price and the short positions have to pay high interest to the brokers until they do cover their shorts, which they will eventually have to do. To c
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Why would hold massively overvalued shares once the shorts wash out?
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Awww.. .you think Reddit has "leaders". You are just delusional.
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While his weird obsession with imagining this to be some illegal "pump and dump" is weird and he's wrong, he's right on this one. No one takes you seriously, saying "well, uhh, if Antifa exists where is the leader then?!" is beyond silly.
"Antifa", in current parlance, means those shitty little groups of people we called "anarchists" back in the 90's. It's the same little black bloc wearing skinny jeans twats that have been doing the same shit for a long time. They are formed in various loose anarcho-communi
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Looks like it worked (Score:3)
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Re: Looks like it worked (Score:5, Insightful)
"I don't understand why anyone thinks that taking down a hedge fund "is good for all of us"
It is good to take down a hedge fund because their business model depends on disruptive market manipulation which is often illegal, and almost as often goes uninvestigated because hedge funds are major political donors.
We should not rest until they are all destroyed, and then we should go after the HFT fucks who make trading more expensive for everyone else.
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Re: Looks like it worked (Score:4, Insightful)
While having entities performing arbitrage where available does increase liquidity, there is little benefit to anyone (other than the HFT) to going from millisecond response rates to nanosecond response rates. If I offer a $10 sale on one side of the planet and someone else offers to buy at $11 on the other side, and it takes less than a second for us to find each other and trade for $10.50, I don't really see how the world is a better place for having the HFT's jump in and buy from me at $10 and sell to them at $11 with a time savings of 0.01 sec, Neither I nor the buyer really got much benefit for each of us losing $0.50
Re: Looks like it worked (Score:4, Informative)
Also, what the GP is missing is not that HFT led to zero-commission trades, but computerization led to both HFT and zero-commission trades.
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No, advances in technology is why those things happened. Hedge funds would be super happy if those things did not exist so they could keep the market an exclusive club under their control.
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When someone uses criminal methods to manage the funds of "all of us" and they get whooped doing so, that is overall a good thing. I don't mind even if one of my investments winds up being indirectly harmed by Melvin's losses. At least now I'm less likely to be directly or indirectly represented by a naked shorter on Wall Street in the future.
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Taking down a hedge fund is good for all of us. The worse they do, the less likely people are to give them money to play with. Did they have to sell some other stocks to cover their losses? Excellent, that's another opportunity for actual smart investors to pick up a value investment at a discount, and reduce the amount of hedge fund money in that stock. Not that anything of the kind happened here. A few billion dollars is a lot to a dying retailer, and a decent amount to a midsize hedge fund, but nothing t
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As opposed to supporting the other already rich many times lucky few who would have gotten a bit richer had it gone the other way?
In this case, the hedge fund that lost was at most a frog's hair short of illegal naked shorting and a short and distort scam. They were practically begging to lose while using a questionable combination of undeserved reputation and under the table political and financial connections to keep their tent propped up long enough to fleece the rest of the market. At the height of thei
Uh.... (Score:2)
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They Did the Research (Score:5, Insightful)
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It really seems like the media is wrong and there are more smarts in the WSB crowd than they'll acknowledge.
Try this experiment with ANY news article you find in ANY MSM, and you will find the same result. I.e., the MSM article got almost everything wrong, easily proven with a few hours of research with information available on the Internet. And the more recent/breaking the news then worse it will be.
It is no secret that the "instant news" model, journalist no longer have enough time to do any research or fact-checking on the news they report, unless that particular journalist had been knowledgeable when the n
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He cashed out 1/3 of his stock (currently, 1/2 of the value). Yeah, he left some millions on the table, but he took eight digits in profit. Good for him, I guess.
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Some of the pro-gamestop arguments I've seen:
1. new consoles came out, which should be good for them
2. they got rid of underperforming stores
3. new leadership with loads of e-commerce experience
I have bought zero shares of GME; I don't care what it is worth. I don't know a lot about stocks, so I choose not to gamble.
Yeah, there are loads of memes and groupthink, but there are some interesting insights and research if
Next up (Score:3)
The hedge funds that lost billions make billions more this week by reshorting gamestop.
Taking gamestop from $150 to $10 a share would make up everything they lost the week before and give them billions more In profit.
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In one of his posts, Mark Cuban basically said let them think they won, they will reshort, when they do, then come back harder. Paraphrasing.
He also said he doesn't do business with hedge funds, again paraphrased.
So it was a Short term problem. (Score:2)
For the normal long term investor, this would just have been a blip. With all these people saying they are Robin Hood and Heroes for the little guy. It will end up just being a tiny glitch in the market, where some people lost some money and some made some.
If this was better organized to a point where penny stocks or better planned to be pumped up and continued as they will drop and go down, it may have been a game changer. But it just turned out to be white collar hooligans.
I asked the question on Reddit yesterday (Score:2)
WHY ? (Score:2)
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Gamestop stock has been going up for months. Announcing they're closing a bunch of stores and putting someone who knows something about electronic retailing on your board indicates that you're aware your business model is crap and are doing something about it.
The $100+ price is due to market stupidity, but the rise prior to that was due to the market thinking Gamestop has some kind of future.
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This right here.
GameStop is in the middle of reinventing itself. And the closed stores aren't a sign of it exiting markets, or even really being worse off than they used to be - the pandemic hit all retailers, and GameStop has done better weathering the storm than most. In a lot of cities GameStop had a dozen stores (they had four stores in the Mall of America alone, FFS), so their choice to close some of them and consolidate business in larger cities during the pandemic is hardly surprising.
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It could be, if the shops they closed were unprofitable.
I personally think they're doomed, and have been ever since they took the games for older systems out of the stores. That stuff got me into the store, where I would buy more stuff. Now I don't go there.
But they were doomed ANYWAY because games are going more and more digital. These days lots of physical game sales are really just license sales, because you have to have some launcher (like Steam or Origin) so you might as well have bought it through the
It's just a casino game at this point (Score:5, Insightful)
I guess I can add this to the list of things I didn't get in on before people came to their senses. I do regret not turning on a few Bitcoin miners early on...but this whole pump and dump thing isn't super sustainable.
It may feel good to wipe a few hundred million off the balance sheets of hedge funds...I'm not really sad for them given what they do to real companies with real futures. But just like daytrading in the First Dotcom Bubble, all the retail investors are going to get picked off eventually. Investment banks, hedge funds and the like have access to way more tools than the average band of Reddit posters...including just waiting everyone out, taking the loss and moving on.
The thing that kind of bugs me is that GameStop really does have no future. The latest console generations are almost at the point where they've convinced people they don't need to buy games on discs...Sony very heavily marketed the PS5 diskless version, as did Microsoft. I give it one or two more generations before there's no way to buy or trade games off PSN or XBox Live. In this case the hedge funds were right, and although they used a short to amplify their winnings, they were at least following fundamentals. When you start crossing over into casino gambling and totally ignoring reality, that's where I start getting a little upset. People forget that (at least in the US) everyone's retirement is all bound up in the stock market and these banks have created all sorts of crazy derivatives that will fall apart if there's too much market volatility, just like in 2008 when banks couldn't find any more greater fools to buy bad mortgages.
If anything, hopefully banks and hedge funds have learned that enough people rallying behind one person telling them to go all in on GameStop actually is enough to move the market and they had better not have unprotected positions like that again.
Someone tell WallStreetBETS (Score:3)
It's a subreddit devoted to treating the market as a casino. Of course they know it's a casino game. But, it didn't start as a short squeeze, it started as a value play.
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It may feel good to wipe a few hundred million off the balance sheets of hedge funds...
Let's play this forward a few months. Assume Game Stop prices drop back to where they were before this all started, a few dollars a share. Who gained and who lost? A bunch of hedge funds who couldn't hold on will lose a lot. The hedge funds who did hold on might make a little, might lose a little. They definitely lost fees they paid while they kept borrowing new shares to extend their contracts. And the little people who were the lasts ones just before the price peaked (that is, the ones who bought last wee
Shocked Pikachu face (Score:2)
Did anyone not see this coming? Yes, the market can be amazingly irrational and totally defy the shorts--for a while. And as the saying goes, "The market can be irrational longer than you can stay solvent." But sooner or later, gravity wins.
Currently sitting around $90 (Score:2)
I'm not sure what a "realistic" price of GME should be right now. But considering it was in single digit dollars before the hedge funds were punished for their greed, I think anything above where it started is a success. Anyone who was a legitimate investor of Gamestop is still ahead, and by a lot, now that the short positions have been effectively destroyed.
Nothing to See here (Score:2)
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Assuming this is all the hedge funds dumping stock (Score:3)
Re:Pump and dump is a crime (Score:5, Funny)
Doesn't matter if you hate the nominal victim. It's still a crime.
My heart bleeds for the hedge funds ...
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The hedge funds may have lost money on the way up, but they're now making money on the way down. In fact, they're making more money with the stock being so vastly over bought than they were when the stock was barely double digits.
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I'd bet the worker-bee employees at gamestop are pretty concerned right now too. Not the teenagers at the stores as much as the people in their 30s and 40s that work for the company sales, marketing, IT, accounting etc that have mortgages to pay and kids to feed.
How are the worker-bee employees affected by gyrations in the stock?
Re:Pump and dump is a crime (Score:4, Informative)
Part of the endgame plan caused by the shorting being done by the hedge funds was to guarantee that GameStop couldn't do a stock offering to expand their business into new areas, or shore up their cashflow. This is a common tactic hedge funds use - prevent a company from using stock to avoid bankruptcy, then all the short positions can be filled for pennies on the dollar.
And I think we can agree that the worker-bee employees are certainly affected by a bankruptcy, or an aggressive restructuring that includes cutting jobs and store closures.
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Yes sir. Except for Dogecoin.
Re: Pump and dump is a crime (Score:2)
Money is not backed by silver or gold, but you can definitely buy silver or gold.
Re:Pump and dump is a crime (Score:4, Interesting)
It's actually not. Lying to accomplish the pump is a crime.
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I guess you don't know what insider trading actually is.
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The people getting rich off this already dumped their stock after pumping it up with all the Reddit rubes. The fact that they've convinced so many people to buy and hold as part of some sort of moral righteousness shows how successful they were at the pumping part of this.
At least the people in the 80's had to cold call people individually, now you just need a few people posting on Reddit: https://www.youtube.com/watch?... [youtube.com]
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Pump and dump is when you're holding but want to unload so you pump the stock with the intention of dumping when it goes up. That did not happen here. This was people pumping with truthful information and buying themselves.
Since then, market conditions have changed and so the smart money is now selling.
On the other hand, the hedge funds have been busy with a poop and scoop trying to get shares cheaply in order to exit their short position. For the most part, they failed there.
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Physical media is dead in countries with decent internet. My country’s equivalent of gamestop has diversified into selling rubber ducks and other plastic collectables with just a few games for sale. Reddit should be focusing on real issues like solving the house price issue.
Well if you bought on January 4 at 17ish, and sold at or near the peak at 369 on January 28, you could probably have bought a house.
Just saying.
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And the sucker who bought your shares at an all-time-high (more likely to be a normal person than a seasoned investor)
No.
Sucker in this case would be the hedge fund doing the shorting, forced to buy up shares at any price. Personal petards practicing poetic properness.
Granted, they can't really be called investors, being parasites that they are, but they are most definitely not "a normal person" either.
Re:Fed up of hearing about this company (Score:4)
This has nothing to do with Gamestop as a company.
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Reddit should be focusing on real issues like solving the house price issue.
Good luck on that. I've been hearing grumbling about housing prices for years, and never seen a single realistic proposal for how to lower housing prices. Everything suggested I've seen is a knee-jerk reaction to some group the poster hates, without thinking through the amount of collateral damage it will cause, or the end effects of the proposed policy.
"Nobody should be able to own property!" ...OK, so my house is no longer mine? Some rando can just walk in and tell me he lives here now, and I can either r
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The market already does that. If the housing prices make it economically feasible to build new that already happens. You literally just said that your proposal to "fix" things is "do what's already happening".
Re: Fed up of hearing about this company (Score:4, Informative)
No, the market is prevented from doing that in most cases. Most cities fight against higher density housing. That is a major force in housing costs in literally all of the most expensive housing markets in America for example.
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Yeah the problem is not that difficult to figure out. Lots of people are invested in housing prices only going up as much as possible.
On one hand you have limited supply, constrained by density limits, historical preservation, NIMBYs, racism, classism, the abovementioned "housing as investment" people, and sometimes economics of development.
On the other hand you have ever increasing demand because apparently you're a failure if you don't own a house, people moving to from bumfuck villages to nicer locations
Re: Fed up of hearing about this company (Score:2)
" Those pesky current residents of cities keep ruining it for the rest of us who want to move there."
Yeah! And since they were there first*, everyone else can suck it.
* not actually first
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Gee if this were an actual discussion about the housing market it would be great to write a long-winded reply about the low-cost housing market here. But it's about Gamestop so, not even gonna waste time on it.
But if you think supply/demand is the only factor in housing then you're nuts. There's so much more involved. Why do you think so many oversized houses were involved in the 2007/2008 real estate crash? When there was an obvious "oversupply" of housing in some markets?
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No, the market is building poor quality McMansions, selling them when times are good, then foreclosing on them when times are just OK, and then allowing them to return to nature rather than selling at a reasonable price.
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Increasing interest rates by a few percent would do it. It would create a bunch of damage, but only to people who made poor financial decisions buying a house they couldn't afford.
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Only if they were dumb enough to do a variable rate loan, and not lock in on a fixed rate. And with the current rates, you'd have to be a complete fucking idiot to do that, and your Realtor would have to be absolute trash to let you.
You could move mortgage interest rates up by 100% and it wouldn't touch 99.99% of home owners - it would just prevent new sales from happening.
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You could move mortgage interest rates up by 100% and it wouldn't touch 99.99% of home owners
It's the product of about 2 minutes of Googling and is referring to the UK, but Experian seems to think [experianplc.com] that half of British mortgages are variable rate. The US is probably not that different. Far more than 0.01% of homeowners are going to be impacted if interest rates skyrocket.
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Sure, there is a trivial way to fix housing prices. Make teleworking more normalized, and people will congregate less in the same few cities, and second tier cities will do great. Much cheaper.
Also, deal with vacant housing in major cities.
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Get rid of people. The fewer people the less expensive housing will be because there's an oversupply. Witness what happened after the plague went through Europe.
The 450,000 dead from covid doesn't get there, in case you were wondering.
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Shareholders are the owners of GameStop.
If GameStop released more shares to lower existing share value, and give money to people who wanted them bankrupt, it would get them mass sued by shareholders.
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Just because they're not acknowledging the situation does not mean they're not planning on making use of it. Also, just because you haven't heard of what they're planning for the future doesn't mean they don't have any.
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Re:Robinhood Users Are In For A Lesson (Score:5, Insightful)
You're making the same mistake everybody else is. You're assuming these guys are stupid, or don't know what they are at. The fact that we are even talking about this proves otherwise-
The media spent the last week fomenting disdain for these guys just as soon as things started working out for them.
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... Every time they buy, that information is sold to a hedge fund and these people are making that hedge money on the bid/ask spread. They're making these hedge funds millions in the process because they're paying a shitty brokerage.
It's slightly different from that, in a way most people would probably say is worse. It's not just the information that has been sold to Citadel Securities (not the hedge fund, but still a big institutional player). The actual orders are executed by Citadel, in a process known as "paying for order flow".
The basic fact that the minimum bid-offer spread of $0.01 is much larger than the amount of money Citadel is able to make by being the market maker for RobinHood's retail transactions. So CS and RH mak
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I bought in as a value bet after reading some good DD in December - 500 @ $18. At that point, I valued the stock at $60 - Ryan Cohen getting on the board is huge.
Then I stepped up as I could see the momentum building. At my peak, I had over 1,500, at an average buy in price of $41.
I sold a quarter to cover the money I initially put in, and to help family by a house.
I still have 1250. Even if the other retail buyers can't trigger the short squeeze (and, while hard, it's not impossible), and it crashes
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You're making the same mistake everybody else is. You're assuming these guys are stupid, or don't know what they are at. The fact that we are even talking about this proves otherwise-
The media spent the last week fomenting disdain for these guys just as soon as things started working out for them.
WSB is making the same mistake about hedge funds, assuming they are stupid. The groupthink is thick in there.
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Except playing roulette with client money is precisely what they're hired to do.
What hedge fund managers need to be jailed for is market manipulation.
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Re: Lose billions (Score:2)