Stock Market - Market Manipulation Exposed Worldwide by WallStreetBets!

DiggerUK

This thread has come about because a lot of wannabe Gordon Gekkos' are making out that they believe greed is bad and that an opportunity to be noisy and naughty due to teacher being out of the class room has started.

It is nothing of the sort, all thats happened is that everybody involved wants to be a get rich quick day trader. Instead of being honest and acknowledging the truth, they are instead putting up a lot of virtue signalling guff claiming to be raging against the system.

Day trading is what it is and it is the most dangerous way to invest outside of a casino..._

Zola.

For sure, it's super volatile... I got in last week when it dropped to £140, its now at $320, but who knows what way it will go over the next couple of weeks.  Down eventually but I hope to have the sense to pull out if it goes over 5/600. Prepared to gamble just this once... 

Thrugelmir

Zola. said:

Did anybody buy a GameStop share? I did just for the sheer gamble and hype around it, a fascinating story. I got a share at £140, prepared to lose it all but I want to see where this rabbit hole goes.... !   The next couple of weeks will be interesting. 

Market value of a share based on company fundamentals is around $13-$15.  Only going to end one way. Once the novelty wears off. 

quirkydeptless

DiggerUK said:

This thread has come about because a lot of wannabe Gordon Gekkos' are making out that they believe greed is bad and that an opportunity to be noisy and naughty due to teacher being out of the class room has started.

Greed is good (for traders who can exploit that), but being greedy yourself isn't 

Malthusian

Zola. said:

Did anybody buy a GameStop share? I did just for the sheer gamble and hype around it, a fascinating story. I got a share at £140, prepared to lose it all but I want to see where this rabbit hole goes.... !   The next couple of weeks will be interesting. 

I bought a tub of popcorn which serves exactly the same purpose and was a hundredth of the price.

If the actual objective was to make £360+ for free you would probably have been better served putting £139 of your money on a roulette wheel and using the rest for the popcorn. The house edge of a pump-and-dump or any other money game (in this case, the amount of money taken off the table by those who bought Gamestop shares before the campaign started) is almost certain to be much wider than on a transparent game of chance.

Malthusian

Thrugelmir said:

Round up 4.5 million users find $20 billion and start buying up shares. Share price rises. The Company issues new shares and starts selling them into the market. Raising fresh capital. Doesn't make the fundamentals of the underlying business any better. Apparently an announcement is expected that a significant number of stores are going to be closed.

Would any of the bros actually buy any of the company's new shares though?

If the music's stopped by the time Gamestop gets its share offer off the ground, the pump doesn't actually do them any good.

One bro buying a share off another bro (or off someone that bought the share off a hedge fund going short) doesn't put any more money into Gamestop; as you point out, they need a capital raising for that.

Gamestop announcing that they're going to issue new shares would likely send the Redditors running for the exit, as they tried to cash out before the share offer diluted the value. Gamestop announcing that it's going to try to take some money off the table would result in the remaining players all trying to grab their share before it does.

Thrugelmir

Malthusian said:

Thrugelmir said:

Round up 4.5 million users find $20 billion and start buying up shares. Share price rises. The Company issues new shares and starts selling them into the market. Raising fresh capital. Doesn't make the fundamentals of the underlying business any better. Apparently an announcement is expected that a significant number of stores are going to be closed.

Would any of the bros actually buy any of the company's new shares though?

Why wouldn't they.  The shares placed (at a discount) simply get sold on to fulfill buying orders. 

HansOndabush

Zola. said:

Did anybody buy a GameStop share? I did just for the sheer gamble and hype around it, a fascinating story. I got a share at £140, prepared to lose it all but I want to see where this rabbit hole goes.... !   The next couple of weeks will be interesting. 

You can get out at around $330 today; I suggest you do so. As previously said, Gamestop will revert to fair value which isn't much more than $10 and that assumes it doesn't go bust.

itwasntme001

Malthusian said:

Thrugelmir said:

Round up 4.5 million users find $20 billion and start buying up shares. Share price rises. The Company issues new shares and starts selling them into the market. Raising fresh capital. Doesn't make the fundamentals of the underlying business any better. Apparently an announcement is expected that a significant number of stores are going to be closed.

Would any of the bros actually buy any of the company's new shares though?

If the music's stopped by the time Gamestop gets its share offer off the ground, the pump doesn't actually do them any good.

One bro buying a share off another bro (or off someone that bought the share off a hedge fund going short) doesn't put any more money into Gamestop; as you point out, they need a capital raising for that.

Gamestop announcing that they're going to issue new shares would likely send the Redditors running for the exit, as they tried to cash out before the share offer diluted the value. Gamestop announcing that it's going to try to take some money off the table would result in the remaining players all trying to grab their share before it does.

This all assumes that there will actually be new equity issuance.  Big reputational risk for the banks to carry this out.  Imagine writing up prospectuses on GME stock issuance at $330 or $180 or even $50.  Everyone knows it is not worth much more than $20.  If you try to issue it that low, it will be seen as the banks helping out the hedge funds.  I doubt anyone would want to be near that sort of reputational damage.

Thrugelmir

itwasntme001 said:

Malthusian said:

Thrugelmir said:

Round up 4.5 million users find $20 billion and start buying up shares. Share price rises. The Company issues new shares and starts selling them into the market. Raising fresh capital. Doesn't make the fundamentals of the underlying business any better. Apparently an announcement is expected that a significant number of stores are going to be closed.

Would any of the bros actually buy any of the company's new shares though?

If the music's stopped by the time Gamestop gets its share offer off the ground, the pump doesn't actually do them any good.

One bro buying a share off another bro (or off someone that bought the share off a hedge fund going short) doesn't put any more money into Gamestop; as you point out, they need a capital raising for that.

Gamestop announcing that they're going to issue new shares would likely send the Redditors running for the exit, as they tried to cash out before the share offer diluted the value. Gamestop announcing that it's going to try to take some money off the table would result in the remaining players all trying to grab their share before it does.

This all assumes that there will actually be new equity issuance.  Big reputational risk for the banks to carry this out.  Imagine writing up prospectuses on GME stock issuance at $330 or $180 or even $50.  Everyone knows it is not worth much more than $20.  If you try to issue it that low, it will be seen as the banks helping out the hedge funds.  I doubt anyone would want to be near that sort of reputational damage.

No need for a prospectus.  The Company will have previously obtained authorisation at an AGM to issue shares. The shares will be placed directly. To hedge funds even.