Wallstreet: The Short Squeeze of Gamestop, AMC, and other Stocks [2021]
- Thread starter AzBat
- Start date
Sure your.
Okay here we go. Lets say a beyond3d stock or b3d for short is valued at $10 today. You think that forums like this are old school and everyhting is just going to be reddit. So you come to me and say let me borrow that share you own in B3D. I say sure thing but you gotta give it back when I need it.
You take the B3D stock and just flat out sell it. You made 10 dollars but you still owe me a stock in b3d. Now you ride it out and wait. a few weeks later than that b3d stock is now worth $3. So you buy it and give it back to me. I now have my stock back and you made $7 . The end.
However the staff of B3D announced that they were going to start benchmarking again ! Now everyone is interested in B3D stock and not only are they buying it but holding onto it. So now instead of dropping to $10 its up to say $12. I don't really care about that $2 as to me I think it will still go up. So your okay for now but as the stock rises and more people continue to buy and hold there are only so many shares out there to purchase and they decrease everytime someone buys and holds. Now everyone wants B3D stock and it keeps rising and more people buy and hold and there is even less shares avalible to trade because its all in accounts. Now that $10 share is $100 and I go um Davros I really want my share back now so I can sell it for $100 bucks. Well you have to get me that share.
Now you made $10 on the share when you sold it but the new share is $100 so your loosing $90 bucks on that share you shorted.
But here is the great thing about these hedge fund traders. They shorted the stock over a 140%. So they were just passing around the same shares over and over again to sell. WSB and other investors bought and held and kept buying people were still buying even at $380 bucks because the original Mervin shorts were all low shorts going from $10-$40 they just kept buying and holding and the stock started to explode. Mervin thought okay its just a meme so they doubled down and shorted it again but this time in the $100-$200 range hoping to profit off the stock as it came back down. But the glorious idiots at reddit did it and held the line and it closed again at $320ish breaking multiple hedge funds backs. You can look and see but a lot of long postions closed in tech stocks which is why so many of them did poorly. They had to start covering the shorts.
Now here is the thing, if the government doesn't step in there is no limit in how high this stock can go. People bought and held and are still holding and the shorts don't want to pay up because they will go under. But this has happened before.
In march of last year blue apron went from 2.3 to $28 in one day for a 1100% gain. That was only shorted 50% , gamestop was over 140%
In 2008 this happened with Volkswagen during the collapse shares briefly went of 1000 pounds and hedge funds lost over $30b.
Now we have seen some shady stuff with gamestop . They have stops built into the market now but as you have seen Robin hood and other companies stopped the ability to purchase shares and robin hood and others canceled pending purchase bids . So they were able to bring the stock from $480 all the way down to $120 on Thursday but even that wasn't enough , people opened up accounts on the trading companies that were still letting them buy and just bought up stock there.
Robin hood was supposed to IPO later this year but I think any hope of that is done for them. Their google app store review was a 1.1 down from 4.6 until google started deleting reviews and people are fleeing the platform now for others that didn't pull the same stunt.
Now it gets complicated. Melivin got bailed out to the tune of $3b from Citadel on Wednesday According to Paul Gosar (he is a member of congress just don't know where) Citadel is responsible for roughly 40% of Robin hoods revenue. Its rumored that during the robin hood pause , Melivin doubled down on shorts whlie the stock was in the sub $200 range due to the trading being removed from robinhood.
So this is a big bloody mess all the way down and it shows that nothing was ever actually done after the last financial crisis and here we are on the door step of another one and the only thing that is ever really done is to punish the little guy.
What needs to be done is simply to remove shorts. The only value is for people to make money. It doesn't actually do anything for companies or long term investors. most hedge funds will continue to short stock until the company is dead
Promise to buy your mate a Maccy D's for a tenner, on the grounds that you think that when you do to buy said Maccy D's it'll only cost a fiver and you can pocket the difference. Which is great so long as Maccy D's is open and you don't have to go to the really posh place round the corner where the same shit sells for fifteen quid, at which point you lose money. But you know, Maccy D's is always open and cheap as shit so what could possibly go wrong??!
The next level bit is where you do the same thing with other people's money, because then the fiver you lose isn't actually yours. The people they are borrowing from actually have the money, and aren't pulling the same shady shit. And you're buying from a Maccy D's that doesn't actually exist, and your mate doesn't actually want the Maccy D's at all he just wants to flog it on to his questionable cousin for twelve quid. Cousin probably doesn't exist and if he does he's using money to borrowed from a mate (who may or may not have that money), probably doesn't want a Maccy D's anyway either. But he can flog it to someone else, or flog it to you and you can flog it to someone else who doesn't want it either.
If it all goes right everybody makes money. If it all goes wrong you can apply to the Government to get a bail-out paid for by the people working for minimum wage in Maccy D's.
On this, the fundamentals of Western financial markets are built.
Buy shit you neither need nor want, using money you haven't got. What can possibly go wrong??!
itsmydamnation
Veteran
I don't see him playing /u/deepfuckingvalue aka Roaring Kitty
Mathew Mcconaughey is perfect.
Tommy McClain
its worth watching what started it all,
his statement at the end , ( around 52 minutes) re huge short positions , "what are you thinking!!!" ROFL......
green.pixel
Veteran
Why on earth would you lend someone your shares ?
So they have possibility to make money from nothing. They also charge a fee for the borrowing.
Clarification: It's not the person doing the lending, it's the large brokers that do the lending, using the shares of the people.
Taken from https://www.investopedia.com/ask/answers/05/shortsalebenefit.asp
Another reason is that it can happen behind the scenes without you knowing it unless you forbid broker from loaning your shares. Big part of the "market manipulation" argument is the instructions on how to forbid loan sharing to drive stock price up and squeeze short shellers.
ChuckeRearmed
Regular
Personally I am not sure. There are not many people who would do that ideologically.
I will more believe that people got some nice returns already - more than they invested - so they don't care anymore about the remaining amount.
The stock is worth however much people are willing to sell and buy it for.
explain Trump supporters
I think this is like the 4th time I link to this article , but its the first time for a couple of years (but its as true now as it was then)
http://news.bbc.co.uk/2/hi/americas/8474611.stm
Why do people vote against their own interests?
ChuckeRearmed
Regular
Define their own interests. I personally in favor of less social policies and governmental support and for more money to people and let them decide what to do. Republicans represent the industrial capital,while democrats represent banks and financial elites. But politics is politics.explain Trump supporters
I think this is like the 4th time I link to this article , but its the first time for a couple of years (but its as true now as it was then)
http://news.bbc.co.uk/2/hi/americas/8474611.stm
Why do people vote against their own interests?
I was talking about stock quotes and not selling for profit.
Yup
Federal level should control interstate commerce , protect our country from invaders , regulate industry (food safety , wall street and the like) Sate should have power over the relationships between it and other states and counties with in and other counties within it . Counties should deal with the different towns inside of it and of course the town you live in should control that.
Federal has way to much power now what's good for someone in California may not be good for someone in NJ. Its the same inside of the state. Something good for a person in Newark NJ wont be good for someone in seaside heights or Atlantic city or Paramus.
SEC didn't even make a case against Shkreli for actually organizing a short squeeze and taking his shares off the loan market by having an important enough account at a broker where he could do so. A million stand alone complex day traders who can't even prevent their stocks from being loaned out and which are protected by both the first amendment and plausible deniability can't really be touched.
Putting a limit sale order on the stock in this case is perfectly reasonable and the broker needs to take into account the large chance of profit taking and counterparty risk regardless ... it will have next to no effect on the cost of loaning a share (ie. sky high).
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I was under the impression i looked up the price and paid that ?
for example i looked at nasdaq.com (is that the right place) and it says Iconix Brand Group, Inc. is $2.82 a share why would I pay anything else
if I have shares in iconix and am prepared to sell them why would I take anything other than $2.82 does a seller contact me and say "I will offer you $2.50 a share or I will offer you $3.00 a share"
If I'm selling and prepared to accept $2.50 a share where to I inform buyers of this ?
I feel and wonder the same things, kept me away from the markets as they still seem to be based on make-believe to me too much.
You give a market order and you get it for whatever the broker deems necessary to buy it. If a human is involved within reason, if no human is involved not necessarily. Unless it's a limit order.
Think of it as a giant auction with multiple brokers. You can set a price you are willing to sell or buy at. Your broker will take your offer and try to match you with someone who would like to make deal with you. For example some stock could be valued 2$ today. You might say I'm willing to sell with 10$ and make the offer valid for 2 weeks. If someone during that 2 weeks period is willing to buy with 10$ your stock could be sold with that price.
If a lot more people want to sell the stock than buy the price typically starts to go down. You might really, really want to sell your stock but best offer is 1$. You have to take it then. Other people see price sliding and they also really, really want to get out and then get 0.5$, 0.25$. Trading stocks can get crazy and irrational. Stock value is not always tied to the real value of the company, sometimes it's other factors driving the game. Basically folks try to set the sales price to little bit lower than market to get a sale done, but as more people want to sell than buy the price keeps going down and down.
It gets more complicated once you think about shortselling, puts/calls and so on. Basically you can loan a stock and sell it today with 2$. However eventually you have to give the loaned stock back. When you give it back if the stock value is 1$ you made 1$profit as you can buy the said stock cheaper than you sold it and give it back. On the other hand if the stock value then is 102$, you just lost 100$. If you are on the losing side of short selling you have to convince broker you can pay up the loss as it keeps adding up or be forced to liquidate while you still can,... Typically this is done forcefully before you run into situation you cannot pay yourself out of. In theory the loss can be infinitely large.
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