GameStop Jumps After Hours As Elon Musk Tweets Out Reddit Board That's Hyping Stock (cnbc.com) 118
Tesla CEO Elon Musk seemed to rally behind GameStop's epic surge on Tuesday, tweeting out a link to the Reddit board that's largely hyped the stock. CNBC reports: Shares of GameStop, which jumped 92.7% Tuesday, were up more than 60% in after hours trading following Musk's tweet, which linked to the "wallstreetbets" Reddit chat room that has more than 2 million subscribers. The Tesla CEO tweeted "Gamestonk!!" The stock surged earlier in the day after Social Capital's Chamath Palihapitiya said in a tweet that he bought GameStop call options, betting the stock will go higher. The degenerates over at r/wallstreetbets don't appear to be very fond of CNBC's coverage of the investing forum. In an open letter to CNBC, u/RADIO02118 writes: Before you spend another day hosting your shill hedge fund buddies to come on the air and demonize r/wallstreetbets I hope you read this.
Your contempt for the retail investor (your audience) is palpable and if you don't get it together, you'll lose an entire new generation of investors.
I keep thinking about these funds that are short GME like your boys at Melvin Capital / your coverage of this subreddit and I'm getting madder and madder.
These funds can manipulate the market via your network and if they screw up big because they don't even know the basics of portfolio risk 101 and using position sizing, they just get a bailout from their billionaire friends at Citadel. Then they have the nerve to turn us into public enemy #1 just because we believe in an underdog company getting a second chance.
We don't have billionaires to bail us out when we mess up our portfolio risk and a position goes against us. We can't go on TV and make attempts to manipulate millions to take our side of the trade. If we mess up as bad as they did, we're wiped out, have to start from scratch and are back to giving handjobs behind the dumpster at Wendy's.
Seriously. Motherfuck these people. I sincerely hope they suffer. We want to see the loss porn.
Your contempt for the retail investor (your audience) is palpable and if you don't get it together, you'll lose an entire new generation of investors.
I keep thinking about these funds that are short GME like your boys at Melvin Capital / your coverage of this subreddit and I'm getting madder and madder.
These funds can manipulate the market via your network and if they screw up big because they don't even know the basics of portfolio risk 101 and using position sizing, they just get a bailout from their billionaire friends at Citadel. Then they have the nerve to turn us into public enemy #1 just because we believe in an underdog company getting a second chance.
We don't have billionaires to bail us out when we mess up our portfolio risk and a position goes against us. We can't go on TV and make attempts to manipulate millions to take our side of the trade. If we mess up as bad as they did, we're wiped out, have to start from scratch and are back to giving handjobs behind the dumpster at Wendy's.
Seriously. Motherfuck these people. I sincerely hope they suffer. We want to see the loss porn.
Death knell for Gamestock (Score:3)
How do you know when a stock is over-hyped? When people on REDDIT are the force behind it going up.
Yeah, no. Time to buy puts.
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The share price might well go up, quite a lot even. But eventually the speculative inflows will stop, and then the smart money will head for the exits, and you'll be seeing Reddit posts about how someone has lost their kids college fund, or their retirement savings.
Or not. Maybe it will be the first bubble to just never pop.
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If BTC can keep going, why not GME?
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Buying the stock for profit at this point is very risky, and frankly foolish.
However, those with some extra funds wanting to squeeze short sellers can do whatever they want, and they are already successful. It is not about the money, it is about sending a message.
Re:Death knell for Gamestock (Score:5, Informative)
This is not about Gamestop though. This about Melvin Capital having been found out to have a huge number of shorts against Gamestop. They've already had to get bailed out by 2 other hedge funds to cover losses.
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so what? it's a game and they are losers. if you can't take the heat, stay out of the kitchen.
Re: Death knell for Gamestock (Score:5, Informative)
Not quite.
The reasoning is solid (short squeeze), however there's no end-game. The goal is literately *screw* the hedge funds so they go bankrupt or are forced to liquidate their positions in other stocks (thus you might say other stocks they are shorting will have to go up as well)
So what happens when the hedge fund can't cover their shorts? You think they're going to get a bail out? No. All those banks holding those shorted loans from their retail investors have to cover it.
So the end game here is that someone stands to profit from shorting the stock massively when everyone decides to dump it when they get bored. As long as it's not Melvin, they won't care. It otherwise ends up as a ponzi scheme, where there's no liquidity, and those holding, can now no longer sell because there's no buyers except at the still-solvent short sellers.
At any rate, I think anyone buying it at greater than book value is insane, but honestly, I don't care if people lose money on this stock, it's obviously not going to be a long-term investment. It's book value is still only around $5, and right now it's around $48. So if things hold for till next monday, that will hopefully just screw the hedge funds.
That said, I still don't see an end game, so if the stock hits $1000, how are you going to unwind the position if the shorts still will only buy at $5?
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They're only putting in tiny amount of money, don't worry about the redditors. The dipshits are the greedy hedge fund managers, kept shorting and short far beyond what they have assets to cover. Their stupidity and recklessness has now been exposed, they are the only bad people in all this. They and the people that back them are going to get their ass whooping.
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I bought a share because it is more entertaining for the money than anything they actually sell. Which I assume is some kind of hunting equipment.
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I bought a share because it is more entertaining for the money than anything they actually sell. Which I assume is some kind of hunting equipment.
They sell doorstops I think. Some sort of gamification is involved based on the name, but I'm too lazy to google them to figure out what it is.
Re:Death knell for Gamestock (Score:5, Informative)
I personally think this whole situation is hilarious. A bunch of Reddit trolls screwing over multi-billion dollar professional hedge funds because they can. And everyone who hates hedge funds cheering them on.
This is the real Occupy Wall Street. Not a bunch of people camping out in a park and waving signs; these people are literally fleecing the targets of those protest signs, ordinary people with their stimulus checks and a hardcore "For The Lolz!" attitude.
Everyone - including them - knows that GameStop isn't worth a small fraction of its price. That doesn't matter. What matters is getting the hedge funds margin called. Then they're forced to cover their short positions, forced to buy the stock. Which just pushes it up further. Individuals choose when to bail, and some may pick their timing better than others, but the effect of transferring money from the multi-billion-dollar shorts to the WSB longs is overall very real.
And the hedge funds deserve it. Anyone who leaves themselves exposed to unlimited downside has only themselves to blame. Buy protective calls for your shorts next time, idiots.
I've been cracking up watching this whole thing unfold. I want to give every one of the WSB people who pulled this off a big (socially-distanced) high-five.
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What might not be hilarious is the SEC kicking in the doors of redditors at 4am alleging some sort of fraud. Social media destroying democracy was all very well and good, but now it's come for people's /money/
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The SEC picking on individuals, pour encourager les autres, is entirely my point. Punishing random individuals in a high-profile way is part of the playbook for giant corporations and has been for decades (remember the RIAA hauling people into court for copying music?).
Re:Death knell for Gamestock (Score:4, Insightful)
As much as I would love for GameStop to do well in years to come, I just do not see them doing better than Blockbuster in the long run.
I do not game a lot, but the little I game are campaigns only and of games that are at least 1y old that I purchase used, preferably the full editions with the DLC bundled in. This model works for me, but is at odds with the all online model the manufacturers are pushing for.
I know GS is working on deals, but I really do not see how used games are going to fit long term in that model. I might be missing something with the current price rally because I don't see how GS will compete in a global market agains giants like Amazon. They do not fit in the Apple App Store model today, why would they be part of the PlayStation Store in the long run?
Yep, not getting it.
Re: Death knell for Gamestock (Score:4, Interesting)
It's not quite as mad as it sounds, because the hedge funds have Gamestop shorted at 130% of their available shares. The goal is to get them margin called because they can't be fully covered with options which will force them to buy the shares at the going price. Because so many are being held it's driving the price higher as the hedge funds try to unwind their positions but can't get the shares. The hedge fund can't give up, they have to fulfil the shorts.
There's a time to walk away, and the trick is to do it before the hedge funds get it below 100%, which is when they can reasonably expect to short the stock again and wait for the crash.
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The rally has nothing to do with GameStop's fundamentals, and everyone involved knows it. This is an organized effort to screw over professional short-sellers who were betting against GameStop. The fact that GameStop is a slowly-dying company is irrelevant. Short sellers and hedge funds aren't exactly popular, and in the case of GameStop they've been particularly egotistical and dismissive of retail investors.
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The long game in many spheres of American business isn't broad economic growth, it's driving an individual company's growth by using their products to lock out other players completely or at least gain a cut of every business transaction associated with their product. Basically its just a giant reallocation of existing revenue and wealth, not creating new revenue and wealth.
With software, the model used to be you had third party applications sold to third party distributors who sold them to end users. Now
Re: Death knell for Gamestock (Score:2)
When there are over 130% sold shares itâ(TM)s a good bet people will need to buy whatever to get out of the hole they dug.
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Legit. I expect to see an expose' about Gamestop on Hindenburg research any day now.
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"We can't go on TV and make attempts to manipulate millions to take our side"
Who needs TV when you have Musk and social media?
(And nobody who's ever given a handjob behind a dumpster is on a Reddit investment board writing about it. Sounds like some rich kid who worked at Wendy's for a summer, mounting a frenzied bid to claim underdog status.) "And then... Elon Musk liked my post!"
Why is this reposted here, can't we stop rewarding this social-media retardation? This is even worse than the unnecessary Trump
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A 92.7% boost in a day is not due to well reasoned and introspective examination by investors. Just saying.
Now there is some reason for what's going on, a tug-of-war game between the shorts and the long-trousers, or some other sartorial game. But a change that large should normally be worrisome.
Re:Death knell for Gamestock (Score:5, Insightful)
Time to dust off some old gems: "The market can remain irrational longer than you can remain solvent". Also, "In the short run the market is a voting machine, in the long run it's a weighing machine".
Right now, the market is behaving irrationally because a thundering herd of redditors is stampeding over the shorts. Right now the market is voting to value a money-losing company at $10 billion or more. In the long run, it must return to value.
The time to get in on this was last year. Sure, there might be some upside left, it might even hit the $1000/sh target people are throwing out there, but it's all speculation. If you want to "get in on this", use money that you can afford to lose. Think of it as a Covid-safe trip to Las Vegas, because that's exactly what it is.
Buy puts? Buy calls? It's like picking red or black.
Do away with short selling (Score:2)
Re:Do away with short selling (Score:4, Insightful)
I respectfully disagree. Shorts have their place. They have historically been experienced traders, and because there's so much risk they tend to do DD before putting on the position. The hedge funds that are getting blasted here were initially correct, but then the didn't keep up their DD and so they're paying for it. I might go so far as to say that brokerages should stop making shares available for shorting under some circumstances, or reign in the naked shorting, but I wouldn't want a market with no shorts.
There are some excellent shorts out there that prick bubbles and call attention to things that over-valued, it's just that these shorts are stupid. They got bailed out of squeeze, and then more stupid shorts piled in to the same trade that forced the first set to get bailed out. That's really stupid... unless.
...the fix is in? I mean, let's look at what happened. A bunch of bums nobody's ever heard of just walked in to a high-stakes poker game run by the mafia and beat them fair and square... for now.
That's why I'm not getting in on either side of the trade. Either the mafioso are going to prison, or the Joes are getting concrete overshoes, metaphorically speaking--I don't think anybody's really doing anything illegal or getting killed. It's just that there are going to be big winners and big losers, it's just tricky to say who will be on which side and when. It'll make a great movie, but a lousy night's sleep so I'm just popping popcorn.
Really Slashdot? I put too many ellipsis in my post and it triggers the Lameness filter for ascii art? I guess I should have just posted a big ascii swastika instead.
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Part of the point of all this is that shorts have the effect of suppressing investment into companies. I think we need to reset our understanding of the purpose of a stock market, which should be to drive investment into companies. In prioritizing financial return ahead of financing work, we've put the cart before the horse. Of course, people in the financial industry don't like this concept.
There is a place for shorts. People should be allowed to have short positions. However, such bets should be treated
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Part of the point of all this is that shorts have the effect of suppressing investment into companies. I think we need to reset our understanding of the purpose of a stock market, which should be to drive investment into companies.
I can't agree with that. It should be to wisely allocate resources. suppressing investment into badly run companies or companies doing economic activity that is of declining value in the market place is good thing because it drives the investment dollars to places where growth can occur and wealth can be generated.
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I think that exchange encompasses well the friction between the idea that the market is about finding equilibrium and the idea that the market is about decreasing the cost of capital.
In a world where money is in practice an unlimited resource, time is the resource we lack, and what we should optimize toward.
Re:Do away with short selling (Score:4, Informative)
Adding on, it's not just that short sellers sometimes pop bubbles that need to be popped, they sometimes expose fraudulent companies. See Syntax-Brillian [wikipedia.org], a Nasdaq-listed U.S. manufacturer of TVs in the mid-2000s whose resellers included Best Buy and Costco and marketing partners included ESPN. The short sellers did channel checks and couldn't reconcile wholesale inventory reports with the 10-K/10-Q filings, and published their findings online. The company's auditor (EY) looked into it and eventually found the irregularities. Ultimately the shorts were proved right and were rewarded with a stock price that collapsed below $1 before going to zero in bankruptcy.
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It's penny and steamrollers ... I don't really see the economic advantage in allowing the option market and unlimited upside/downside future contracts in general, they obviously cause instability. Short selling based on stock borrowing okay, but the borrow contract should have a cash settlement clause with a cap based on the stock price at the initial borrowing point.
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Re:Death knell for Gamestock (Score:4, Insightful)
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It comes to an immediate end if Gamestop decides to issue a few million new shares tomorrow to take advantage of the imbalance. When the crash back to $20 begins it will only take minutes.
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Hell, Blackrock owns over 13% of the company's stock, how long do you think they're going to sit on the $1.5 billion in paper profit made in the last week before unloading?
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also somewhere around 130% of the available shares of gamestop have been shorted.
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The reason to buy GameStop is to give a big middle finger to Wall Street establishment.
How does it do that? They can afford to watch you suffer. And gamestop is 100% not coming back from the brink of disaster. Consoles going to digital delivery will definitely kill them off. If not today, tomorrow.
Re:Death knell for Gamestock (Score:4, Informative)
How does it do that? They can afford to watch you suffer. And gamestop is 100% not coming back from the brink of disaster. Consoles going to digital delivery will definitely kill them off. If not today, tomorrow.
Hedge fund Melvin Capital had enormous short positions. So much so, they shorted more stock than exists. Conventional wisdom says the "The house always wins". However, that doesn't seem to be the case in this instance. Two hedge funds have taken massive losses. [marketwatch.com]
It will all come crashing down eventually, but some big players in the market will be taken out first.
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The reason to buy is not to make money, you will almost certainly lose.
Considering the volatility, it's easy to make money if you simply watch the stock.
this morning i bought at $275 and sold at $350.
only a 27% increase, but it's a wonderful return for a clicking a couple buttons in an hours' time.
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No it is not. You have failed to understand several aspects of investing. One of the simplest is to take GOOD risks. If you truly believed that both puts and calls are a flip of the coin, then you can in fact buy both (Straddle).
But I do not think that is so. I am looking an a hugely over-priced reaction caused by mass stupidity. The chance of this thing maintaining it's huge price increase is small.
It's not a sure thing, by an means. But the potential reward far outweighs the risk. You don't hav
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But I do not think that is so. I am looking an a hugely over-priced reaction caused by mass stupidity. The chance of this thing maintaining it's huge price increase is small.
It won't, and everyone knows it won't. This is only happening because someone noticed that a group of hedge funds were massively overexposed - they were facing losses on their shorts after a CEO change at Gamestop last year that bumped stock from $20 to $40 and instead of either hanging tough or accepting that sometimes you lose, they went all in on the short and naked shorted it for well over 100% of the actual available stock. So the retail investors are just sucking money out of the hedge fund until they
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Especially with short positions. The most you can lose by buying shares is the absolute value of the shares you bought. There's no limit here.
I suspect this will remain overvalued for some time. I reckon this is a large number of investors with a small amount of spare cash and nothing to spend it on. They don't care about losing a couple of hundred dollars.
Re:Death knell for Gamestock (Score:5, Interesting)
In a way, the reddit gang is actually saving GameStop.
For all the faults GameStop is, being massively unprofitable or deeply in doubt is not one of them. There is no reason for its stock price to be as low as $3 . The only reason why the price is so low, is the short seller short-selling _!40%_ of the existing float.
In another words, the short sellers are trying to kill GameStop the company, both by destroying others' confidence in the company, and by denying GameStop access to capitals (to re-vitalize). Eventually GameStop will enter an unescapable death spiral and close up shop, laying off all its workers.
By pushing up the price and getting rid of the short sellers, the reddit gang allows GameStop to (eventually) find its true valuation and re-capitalize the company. This should be a good thing for the market, and for the society.
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Gamestop has been in an inescapable death spiral for years at this point, for the simple reason that it is fundamentally unable to justify its business model, and therefore existence, in a digital world. That's why the sellers have been shorting its stock - because they expect it to fold, not because they're trying to kill it. They don't have to kill it, because the free market will.
Except now a bunch of idiot redditors, probably the same people who mortgaged their houses to buy BTC just before it crashed,
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There is no reason for its stock price to be as low as $3
What should it be, $4?
puts (Score:1)
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Pull up a chair, and get some popcorn... (Score:3)
Fools (Score:3, Interesting)
Elon has plenty of resources, why does he need Reddit to help him? Because he is smart enough to not use his own money in this game. Have fun doing work with your money for the benefit of a billionaire.
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Re:Fools (Score:4, Informative)
It's funny how people assume some sort of secret motive to Elon's tweets, no matter how ridiculous they are. FYI: he has no position in GameStop. He has no position in Etsy. He has no position in Signal (nor can you). He is not Satoshi and has no horde of Bitcoins, or DogeCoins, or anything else. He's not an "investor"; he's an entrepreneur. He puts his money into his companies. He does not maintain investments outside of his companies.
On the other hand, he famously (A) enjoys memes, and (B) dislikes short sellers, so nobody is surprised that he's tickled by watching Robin Hood rob Prince John blind. The whole situation is hilarious to watch.
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And the reason that he - as well as people like myself (despite having some minor short positions) - tend to hate hedge funds and professional short sellers is that they don't just passively bet against companies - they try to kill companies. They look for companies that are going to need to raise money, and by piling in, create an environment that makes it difficult for them to raise the money that they need - crushing the stock value so they can't do it via a capital raise, discouraging financial institu
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** via an equity offering
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If you respond to Elon's calls to fight short sellers with your own money then you are a fool. You are exactly right, and that is my point, Elon got someone else to spend the money.
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Um, not an expert but why a fool I wonder. If you like GS and invest then I would expect you can keep them afloat and even make money if/when their stock goes higher. I am guessing Tesla fans also hate short sellers enough to do so and would consider it justified vengeance not mindless optimism.
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> If you like GS and invest then I would expect you can keep them afloat
You must have a BIG pile of money that you are willing to lose.
Its okay to be a professional gambler, but understand that its a gamble. This GameStop thing is truly a game.
Say one or more hedge funds are hurt here, who gains?
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I don't think Elon has much to gain financially from this whole thing. His money is almost completely tied up in his own ventures.
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This is Elon helping himself, with someone else's effort and cash. Elon is trying to take advantage of the situation. The fact that he commented and then more buying happened is a sign of fools with money. GameStop fundamentals do not support the stock price, at some point that will correct itself. I know where I will stand when the chips falls.
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These guys don't give a fuck about underdogs or GameStop.
Definitely not, they want to stick it to the hedge funds. So it's all very entertaining.
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No they're using the stimulus payments and extra no-questions-asked unemployment supplements from the gov't. They're doing this with your tax dollars (assuming you're not on the dole too and pay any).
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Cheap stock? At -4.6 EPS? Gamestop was already a dead company and this stock price movement does nothing to help for the company unless they immediately issue a ton of new stock to take advantage of the move and that would allow the shorts to cover and tank the stock back down to $20. Stock being bought on the market today was already sold by the company to the person you're buying it from (usually several times before getting to you).
OMG (Score:4, Funny)
Ewwww, omg that's fucking disgusting. Who the fuck goes to Wendy's?!
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They don't GO to Wendy's, that's just the best place to give handjobs.
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A.K.A. a "very friendly handshake".
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"The degenerates over at r/wallstreetbets" (Score:1)
Are we reading a story or somebody's temper tantrum?
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That's what they call themselves. Degens, retards, and autists.
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Yes, but this story is targeted to a wider audience. Rather than just dumping "The degenerates over at" they could have changed it to "The self-proclaimed "degenerates" over at". Otherwise the slang bleeds over outside their little bubble
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If they want it to bleed over, they might as well do it in an identifiable way. For me, an outsider, it reads like the editor has some sort of beef with that group.
Second 'opinion' piece today. (Score:3)
Just tell the story. Otherwise go on Twitter where you will fit right in.
America keeps finding more ways to shame and kill (Score:1)
Jail time (Score:1)
Funny, lol (Score:2)
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That's the point. The folk on r/wallstreetbets are attacking a hedge fund and making money doing it. The reason they can do so is that GameStop had a relatively small valuation of 1.25 billion USD, hedge funds had (rationally) shorted the stock, the hedge funds exposed their position expecting to scare holders of the stock into selling, and there were enough suckers with no understanding of the fundamentals willing to buy stock based on Reddit rumours. Its as scary as it is brilliant.
LOL (Score:1)
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Do you understand how a short stock sale works, and what happens when you get a margin call or it expires? And then what happens if too large a fraction of the stock has been shorted? These guys may be doing this (buying actual stocks and listing them for sale at a highly inflated symbolic price like $420) for the lulz, but they may end up with a profit anyhow. For some of them it's better entertainment to buy a single share than they could buy with that money at Gamestop anyhow.
https://en.wikipedia.org/w [wikipedia.org]
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Most of the idiots buying the stock are also doing so on margin. When the bottom falls out it will happen very quickly as everyone rushes the exits and the majority will end up ruined.
It's all a scam (Score:1)
Game stop if finished. (Score:2)
Yuck (Score:1)
Now would be the time to short (Score:2)
If a stock is 3x is greatest value, now would be a good time to short it.
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They actuallly had two other funds back them up, so when this dies down they'll be fine.
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I'm enjoying watching this (Score:4, Insightful)
That said I'd like to correct a misconception - the folks doing this aren't standing up for a particularly huge loss, unless they've borrowed to invest, which would be stupid - they're pulling this off by buying stock which means they can only lose as much as you've paid in, unlike short sellers where the potential loss can and does get hundreds of times bigger than what they've originally put in
The point down thread about mafiosos getting jailed or people ending up with concrete boots is one of the smarter things I've read on Reddit (just that i'm out of points) - personally I believe this will be a one-time loophole as the people in charge of this rigged game have the government in their pockets - however given the whole thing was entirely public, accusations of insider trading are literal horseshit. What we're seeing is the losers tossing a fit because "It's not fair!" when they aren't the ones fleecing others.
You know what would solve this problem (Score:2)
Suddenly, we disincentivize speculation, short selling and all the other foul phenomena that stock market brings, including company over-focus on looking good on paper, in favour of sustainable profit. Wouldn't it be nice?