Stock Market - Market Manipulation Exposed Worldwide by WallStreetBets!

phillw

bery_451 said:
As long there's disc drives in the new PS5 and Xbox consoles then the market is still there for Game GME.

I agree that physical discs still have some market share, because some people like owning them, some people don't have fast enough broadband to download a 50gb game and some people like buying presents they can wrap up.

However I don't know if enough people will buy them to support a bricks and mortar store and whether gamestop is that store & if it is, what price should the shares be.  In 2019 it was $4 a share, I'm not convinced the business has grown in value since then.

phillw

Deleted_User said:

Like it or not, by inflating the price all they are doing is screwing the short sellers who have to buy at some point when their positions end - hence why holding shares is their current run.

It's not the first rodeo for the hedge fund sellers, they probably shorted it like mad when it hit $400.
It will all come out in the next few weeks, but wallstreet almost certainly won this one with completely legal methods.

Loads of conspiracy theories on wsb though. It's about on par with #stopthesteal just replace votes with shares & it makes about as much sense.

Thrugelmir

phillw said:

Deleted_User said:

Like it or not, by inflating the price all they are doing is screwing the short sellers who have to buy at some point when their positions end - hence why holding shares is their current run.

It's not the first rodeo for the hedge fund sellers, they probably shorted it like mad when it hit $400.
It will all come out in the next few weeks, but wallstreet almost certainly won this one with completely legal methods.

The hedge funds that shorted originally took a huge hit.  The outright winners will be the ones that bought the stock (or options) then set the ball rolling on social media. 

phillw

bery_451 said:

How do you short 140% of a company stock  ? Sounds impossible.

If I think it's too expensive I'll borrow your share and sell it. Someone else sits there thinking, this share is too expensive I'll borrow the new guys share and sell it.

The gamestop shares that were returned when the price was $300 or over will have instantly been sold, because everyone knew the stock would tank. But the influx of retail investors then bought at $300 and their shares will have been lent out to the original hedge fund who then sold them again. It's very unlikely that it's going to hit $300 again as even pre covid it was trading at $4 a share.

It's very unlikely that wsb uncovered illegal activity from publicly available data. It's all just conspiracy theories.

phillw

Thrugelmir said:
The hedge funds that shorted originally took a huge hit.  The outright winners will be the ones that bought the stock (or options) then set the ball rolling on social media. 

Scion and DFV made a whole load of money, the pump and dumpers will have made money too. But it's looking like wall street saw what was happening and moved on it too.

They can see what is happening on the markets before the retail investors can and the retail investors are publicly saying they are holding until death. If big money didn't move, then they aren't doing their job.

EthicsGradient

Thrugelmir said:

EthicsGradient said:

Thrugelmir said:

Thrugelmir said:

itwasntme001 said:

Thrugelmir said:

itwasntme001 said:

Thrugelmir said:

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. 

Are you sure it is as simple as that?  You need SEC approval as well.  I think there are a number of regulatory hurdles to cross.

Ever used PrimaryBid in the UK? That's how easy it is these days. 

Nope but GME is a US stock not a UK listed one.

Looser principles in the US than the UK.  SEC aren't going to object to a capital fund raising issue. The whole purpose of the stock market is to raise capital. . 

GameStop raised $3 billion by issuing new shares. 

Are you sure? 3 days ago they hadn't, and I can't see any news saying they've done it since then:

But analysts say neither the recent hysteria nor constant headlines will have much effect on the business. Unlike AMC Entertainment - another shorted company that saw its stock shoot up, then raised $305 million by selling new shares - GameStop has taken no such measures.

https://www.sandiegouniontribune.com/business/story/2021-02-01/gamestop-struggles-to-stay-afloat-despite-stock-surge

Read it on one of the US business news feeds. 

When? Are you sure it wasn't the $3 billion investment that Robinhood got? https://www.cnbc.com/2021/02/03/why-investors-were-willing-to-write-robinhood-a-3-billion-check-during-the-gamestop-chaos-.html

BananaRepublic

phillw said:

bery_451 said:
As long there's disc drives in the new PS5 and Xbox consoles then the market is still there for Game GME.

I agree that physical discs still have some market share, because some people like owning them, some people don't have fast enough broadband to download a 50gb game and some people like buying presents they can wrap up.

However I don't know if enough people will buy them to support a bricks and mortar store and whether gamestop is that store & if it is, what price should the shares be.  In 2019 it was $4 a share, I'm not convinced the business has grown in value since then.

Streaming gives instant access to almost every music album available with no need to wait for a disk to arrive in the post. If you get bored of an album, no problem. If you don’t have storage space for 100’s of disks, no problem. Music and video games on physical disks is a dying market. Along with much of the rest of the high street. Unless they diversify, $4 is expensive. 

idkwhattosay

Well they're bringing over AWS Eng Lead as CTO and they announced they're reforming GameStop to digital-first company, so looks like they have a plan. I honestly don't see a negative future for the company of 55k employees. If companies couldn't make that transformation Wallmart would've been first out of business. Also, to make a point if everybody wanted to buy from Amazon there would be no Asda or HMV. Clearly there is a market for "offline" shopping of electronic goods.

Apodemus

idkwhattosay said:

...there would be no Asda or HMV. Clearly there is a market for "offline" shopping of electronic goods.

...except that HMV Group PLC was voluntarily liquidated in December 2020...

Sunrise Records continues to operate a number of the old stores under the HMV brand, so while I suspect HMV is actually a very good analogy to GME's likely future, it is perhaps not in the same way that you imagine!   

bery_451

Reaper said:

bery_451 said:

How do you short 140% of a company stock  ? Sounds impossible.

2 ways:

Imagine you lend me some shares and I sell them to somebody else. That somebody can now lend them out to another hedge fund who sells them. So the same shares have now been shorted twice.

The other way is a "naked short" in which a hedge fund sells shares they don't own and has to go out and buy some before the settlement date. However I believe there are some restrictions on this method to stop things getting too crazy.

This sounds illegal, its like a ponzi scheme or a scam. Why do the financial regulators allow this?
Its like me selling my house or car twice, getting double sales revenue for a single item!