The Wall Street Bets phenomenon is changing markets

From Tracy Alloway, Bloomberg:

Investors on Wall Street Bets — the Reddit forum dedicated to "making money and being amused while doing it" — have set their sights on exploiting a financial system which is perceived to have locked them out for years. Outsized investment gains were the preserve of professional traders and big banks with access to inside information and big balance sheets. Much to the growing horror of the financial establishment, r/wallstreetbets then figured out a way to capitalize on this system and bend it to their own will. In doing so, Wall Street Bets and other retail trading communities are changing the way markets work in some pretty big ways.

Full article at on Twitter: https://twitter.com/tracyalloway/status/1353854240960040961

 

Is this the old Rivkin report dialed up to 11?

Basically a herd of people buying something because they are told the value will rise and by buying it the value rises therefore securing the prediction to be true?

Add in a big slice of "up you" to short sellers/ establishment and thats potentially quite powerful.

 

Stock Investors Are Hunting for the Next GameStop on Reddit and Twitter

“What’s funny is I don’t know anything about stock charts, I literally have no idea about finance,” Janavey said. “I go off of what accounts I follow on Twitter, research the tickers on Twitter and if it makes sense to me, I buy it. I can’t read charts or anything like that. I go purely by being on social media.”

Full article at: Bloomberg

 

It is populism coming for the Street - the people vs the elites. As I understand it, they’ve potentially put a multi billion dollar short seller completely out of business by turning the tables.

Time will tell if this is a one off or a new feature of the market.

 

Disruptors trying to distort the market.

 

This touches on one of their view points - when big money does its the free market doing its thing, but when retail investors do its “distortion”.

 

I got my tip from WSB......hopefully the funds go bankrupt.

 

https://www.reddit.com/r/wallstreetbets/

This is incredible.

 

The cult hero of wsb

Where he was a year ago: https://www.reddit.com/r/wallstreetbets/comments/ex040l/gme_yolo_monthend_update_jan_2020/
August 2020: https://www.reddit.com/r/wallstreetbets/comments/ik5mvp/gme_yolo_monthend_update_aug_2020/
December 2020: https://www.reddit.com/r/wallstreetbets/comments/kny2rx/gme_yolo_yearend_update_dec_31_2020/
14 Jan 2021: https://www.reddit.com/r/wallstreetbets/comments/kxeq23/gme_yolo_update_jan_14_2021/
2 days ago: https://www.reddit.com/r/wallstreetbets/comments/l4xje1/gme_yolo_update_jan_25_2021/
1 day ago: https://www.reddit.com/r/wallstreetbets/comments/l5nphz/gme_yolo_update_jan_26_2021/
Today: https://www.reddit.com/r/wallstreet...gme_yolo_update_jan_27_2021_guess_i_need_102/

 

Got my popcorn ready, this will be nteresting......

 

LMAO Love it.
The memes are gold too



Could it also be the ultimate pump n dump... more popcorn please.

There's a lot of money involved here.
If you look at the volume when it started rising, it sure ain't pocket change.

So where is the money coming from? This is more than a bunch of kids trading.
My guess is a small number of people holding a large amount of bitcoins, sold some out and are now using the $$ to play on Wall St.

And they probaby sold out of GME and made a nice little stash.
Money makes money.

 

In this case, "heavily shorted" meant they shorted 140% of the actual stocks in existence.

 

This

 

Here's the whole sequence of his updates

https://www.reddit.com/user/DeepF******Value/

 

For those out of the loop, Gamestop owns EB Games here in australia and is basically the same model over there. Their P/E was 10, indicating that their market cap was undervalued compared to their assets at a ratio of 10:1. They also recently got a new CEO who is looking to push the company in a new direction (looking to move to the digital space, and use stores to build PCs, looking to disrupt amazon and newegg).

When you take all of this into account, it's no surprise that the stock price eventually shot up. On top of this, some hedge funds have been shorting gamestop which has led to it being over-shorted at a rate of 140%, hence why some funds have begun to collapse as the stock price moves upwards.

The current stock price, with a dilution of stock (only 5%), would see gamestop be able to not only wipe their debt, but also take on enough new capital to expand the business, which is also driving the price higher.

Then you have the autists at WSB who are riding it up for the me. One guy bought calls that expired last friday and is edging closer to $50m as we speak (starting with a $50k position).

 

Yes, they cornered the stock and forced a short squeeze.

Short sellers have been accused of doing the same in the opposite direction - i.e. take a short position, release a report about their concerns about the company, and profit from the reaction. In Australian, a recent example is RFG: https://www.smh.com.au/business/companies/court-blasts-short-seller-for-false-rural-funds-group-allegations-20200212-p5401t.html#:~:text=Rural Funds Group achieved a,particulars or were materially misleading".

Hence why some are arguing the retail investors are simply doing what the Street does, but in their case it is just more public.

A perspective from Chamath Palihapitiya:

Source: Chamath Palihapitiya closes GameStop position, but defends investors' right to sway stocks like pros

 

I think there was something like 2 or 3 million subscribers to that Reddit thread. Lots of small wallets combined make one big whale when moving together, then everyone else jumps on when they see the stock moving.

We may also find out later that there were other hedge funds going long to take advantage of the situation.

 

TYR another example on the ASX attacked by a short seller releasing exaggerated negative information this month.

It´s good to see a short seller get a dose of their own tactics in reverse, but a lot of small investors will get burned also when Gamestop suddenly comes back to earth.

 

NOKIA and AMC entertainment are next.