Why would anyone consume fiction in 202X when the world is this energetically daft all the time.

Naturally.

The GME stock peasants revolt apparently continues.

So far:

WSB subreddit doubled its membership to over 4 million users in a day

WSB subreddit was flagged multiple times for hate speech eventually taken down but came back.

WSB Discord server was taken down for hate speech and I believe is still offline.

Multiple analysts are crying on news channels about how a group of invest Andy's from the internet are distorting the market without realising how that completely invalidates their whole facade of the market being some logical stable place where only sensible people make money and everyone plays fair.

Occasional absolutely based interviews slip through the net when some analysts are asked for their input:


Throughout the day Melvin Capital were repeatedly falsely reported as having covered their short position, in an attempt to get people to sell their shares.

GME stock is now almost at $350 per share, Melvin have to cover their short position by Friday when their returns are due on their short option. All of WSB is now a flood of posts from people asking everyone to hold, or posting telling financial institutions how they ruined their families in 2008 and this is payback, telling the SEC to suck their collective dicks, or just chanting "together ape stong" and spamming diamond hand and rocket emojis.

Collective action by "the little guys" you love to see it.

People will eventually start asking what pension funds etc. are tied up in people like Melvin Capital, but I think they are going to be surprised by how that attempt at emotional blackmail falls on deaf ears because most of the people going in on GME have no pension, no savings and had a $600 stimulus cheque a few months back they had to find some way to make work for them during the pandemic.

Right now there are people paying off medical bills, college loans, finally getting enough for a deposit on a house, etc. off the back of this and I think a lot of them don;t give a shit if the generations that preceeded them, who already own homes and have savings and have pensions are financially impacted if an irresponsible hedge fund basically exposed itself to infinite loss by shorting a business this hard, when the stock price was that low already.

So fuck wall st gamblers obviously but surely the issue is gonna be when this all dies down and the GameStop stock is overpriced to make Tesla look like good value?

hylian_elf wrote:

I wonder if we will see any regulatory change from this farce.

Yeah was going to say I reckon this is being written as we speak. And it’s not going to go in Reddit’s favour.

Funkstain wrote:

So fuck wall st gamblers obviously but surely the issue is gonna be when this all dies down and the GameStop stock is overpriced to make Tesla look like good value?

Yeah. Unless I am missing something there will eventually be a group of redditors who lose big time. The stock is massively over inflated even if GameStop does survive and flourish.

Who would actually buy those shares?

I think you’d be a nutter to give money for them.

I think the issue that is specific to the GME situation is that when the hedge fund goes under because it can't pay the buy back on the shares it shorted, their broker becomes liable, if the broker can't pay, the bank will have to step in, if the bank can't step in, the government will have to pay. 

The issue that is happening is that the hedge fund and the market cannot regulate the price on GME stock back down because they have shorted it so much that no one has any stocks to sell, all the stock is tied up in borrowing for the short positions. The drabs of stocks coming back in each day are snapped up by people who want in and it's making the price climb until on Friday when the hedge fund short position comes due, they cannot pay and go bust.

Roujin wrote:

I think the issue that is specific to the GME situation is that when the hedge fund goes under because it can't pay the buy back on the shares it shorted, their broker becomes liable, if the broker can't pay, the bank will have to step in, if the bank can't step in, the government will have to pay.  The issue that is happening is that the hedge fund and the market cannot regulate the price on GME stock back down because they have shorted it so much that no one has any stocks to sell, all the stock is tied up in borrowing for the short positions. The drabs of stocks coming back in each day are snapped up by people who want in and it's making the price climb until on Friday when the hedge fund short position comes due, they cannot pay and go bust.

Hang on - is the government on the hook every time for any bets made or am I reading that wrong. Essentially make enough bad bets and you pass the buck all the way until only big government can step in?

Sounds like... Socialism...

Amazing.

Assuming the stock price stabilises after the weekend, then thanks to all the publicity they’ll probably still be able to sell at a higher price than they bought – even if that’s back down to something realistic it’ll still be a profit.

RedDave2 wrote:

Roujin wrote:

I think the issue that is specific to the GME situation is that when the hedge fund goes under because it can't pay the buy back on the shares it shorted, their broker becomes liable, if the broker can't pay, the bank will have to step in, if the bank can't step in, the government will have to pay.  The issue that is happening is that the hedge fund and the market cannot regulate the price on GME stock back down because they have shorted it so much that no one has any stocks to sell, all the stock is tied up in borrowing for the short positions. The drabs of stocks coming back in each day are snapped up by people who want in and it's making the price climb until on Friday when the hedge fund short position comes due, they cannot pay and go bust.

Hang on - is the government on the hook every time for any bets made or am I reading that wrong. Essentially make enough bad bets and you pass the buck all the way until only big government can step in? Sounds like... Socialism...

Not exactly, is my current understading. If you just lost all your money because you invested in a stock and it went to zero, that's your loss. 

With a short however, you were loaned the stock in the first place, it didn't belong to you. So Melvin Capital borrowed stock from a broker, paying them a fee to do so. Melvin Capital then sold the stock they borrowed and planned to repurchase it a week later or whenever the price had come down further. Making them money, they sold at $4, they rebuy at $3 and the stocks go back to the broker. Melvin capital however, borrowed a lot of stock from a broker or brokers and instead of rebuying that stock on Friday at less than $4, they are now going to be forced to pay $350 per stock because they have to return the stock they borrowed back to the broker.

If they cannot afford to pay 350 a stock and go under, then as far as people have explained it, the broker they borrowed from (that fee the broker makes for lending out the stocks is their money they make on the risk something could go tits up) is still on the hook for the stocks, because the broker probably didn't own the stocks either, they just look after stocks for the actual stock owner.

It's baffling that this is allowed to happen in the first place.  It's further baffling that the people in charge of Melvin are allowed to say on the air that they've covered their shorts to try and force the retail investors into a firesale.

Surely not.