GameStop

[intellect]

There is also a wider conversation on the power of some of these tech companies; from Twitter suspending Trump to Robinhood suspending trade. They are making a lot of these arbitrary decisions without any oversight.

That said, while the people that started this might have altruistic motives, movements like this tend to attract the worst in people.

Rules changing have been around for the longest time. In the 1980s, short sellers  shorted tin on the London Metal Exchange due to its secular decline as cheaper/better substitutes were emerging. On the opposite side of the trade was the Malaysian Government who attempted to corner the market to support its own tin industry. The Malaysian Government could have succeeded if not for the LME's rule change to allow the shortists to pay a fine rather than deliver the physical tin on due date. The price of tin crashed as a result and resulted in huge financial losses for the Malaysian Government and its associates.

OTOH, it seems like similar "retail revolution" are mushrooming up across regions and they are not far away from SG!

GameStop phenomenon spreads to Malaysian glove stocks

https://www.businesstimes.com.sg/consume...ove-stocks

Any supporters for battled nationalistic stocks like Keppel Corp, Sembmarine and SIA? 

Buying Keppel at constant interval. 

[weijian]

This is the man himself:
https://www.wsj.com/articles/keith-gill-...opular_AMP

There is a technical aspect that is not related to short covering per se but people tend to forget: stock recall

For those who had lent out the shares and suffered enough, or in this case rebounded enough, they will initiate a recall and once done they will sell next week. That’s why sometimes short sellers are forced to buy back shares only to see them tank the next week

Another reason why shorting is hazardous cause you don’t have such arbitrary forced action if you are long

And in this case with such overwhelming short ratio, my guess is any stock recall would have amplifying effect and the concerted buying on momentum would have fed itself beyond a week.

I reckon recalls are done, and there are more sellers than buyers in the past week, especially with the limits on retail.

Now that the stock has dropped and limits removed, it is anyone's guess what happens next.

GameStop Wraps Up Worst Week Ever, Leaving $18 Billion Hole

Stock fell 80% this week for its worst such drop on record

https://www.bloomberg.com/news/articles/...emium-asia

[Wildreamz]

It's to be expected, as short interest wind down from 140% to ~34% of float as of yesterday.

https://www.fxstreet.com/news/gamestop-g...2102041530

The end game has always been to cash out at the top, as shorts are forced to buy back as cost of shorting (collateral, interest etc.) goes through the roof. Robinhood's decision to limit buying completely (instead of margin requirements, like other brokers) indeed hurt the late-to-the-party Wallstreetbets Redditors a bit (by capping the top). So did a series of bans on social media (https://www.businessinsider.com/discord-...gme-2021-1 ; https://www.theguardian.com/technology/2...top-frenzy).

I believe there will a series of class action lawsuits. Populist American politicians will also seize the opportunity to make a statement. Short sellers will also re-evaluate the risks of crowded shorts.

All in all, great lessons for all parties.

[specuvestor]

Actually limiting buying is ironically to protect new investors and the margin lenders, not hurt those late to the party

[Big Toe]

It may not be retail investors fully responsible for the surge even though they did take part and hyped it up.
It may well be a case of Wall Street Vs Wall Street from the data cnbc reported. By the time retail investors got in the game, the big fish who initiated this had already left the party.

https://www.cnbc.com/2021/02/05/gamestop...shows.html

[LionFlyer]

It may not be retail investors fully responsible for the surge even though they did take part and hyped it up.
It may well be a case of Wall Street Vs Wall Street from the data cnbc reported. By the time retail investors got in the game, the big fish who initiated this had already left the party.

https://www.cnbc.com/2021/02/05/gamestop...shows.html

Sounds like every pump-and-dump play. Whether it was engineered or a grassroots effort, the party will end and you will not want to be the last person at the end of musical chairs.

[specuvestor]

Retails provided the spark in this case. The stage was set but the show might not happen without a spark

Like commodities, it is the marginal demand and supply that matters.

Yes what's fun about investing is that it is free to watch... and learn from others' mistakes as life is too short to learn mistakes ourselves

It actually reminded me of MMORPG players coordinating to kill the Big Boss… if you play online games you will understand what I mean. Like the movie Ready Player 1. So it is familiar for these gamers / "investors"

But there are fundamental / technical reasons as well cause 1) the amount shorted is more than the shares outstanding which is insane 2) Mike Burry of the “Big Short” fame was actually long the stock in 2020 as there is residual value in the stock. So there are underlying reasons that just needed a spark or catalyst. OTOH it would have disappeared into the night if there were no sparks.

In any case shorting is an asymmetric bet so it has to be very diversified not concentrated. Worst time to get out of a position, long or short, is when one is forced out. Like March 2020 for equities if one is on margin. But short is even worse cause the upside is unlimited while downside for long is limited to your investment.

That's why I don’t believe in market neutral strategies which are inherently lerveraged to multiply the alpha. Shorting sounds sexy but it can actually be hazardous to one’s financial health cause the risk / reward is asymmetric.

This is not to say I condone short sellers who create panic in stocks that snowballed into self-fulfilled prophecy when there is liquidity / working capital crunch, as I've posted elsewhere. I appreciate activists that uncover wrong doings, but not raiders for their own benefit. Cause it is also asymmetrical that it is much easier to destroy credibility than to build it.

[cyclone]

GameStop to elect Cohen as chairman following annual meeting

By Reuters Staff
APRIL 8, 20216:41 PMUPDATED 32 MINUTES AGO

(Reuters) - GameStop Corp, which has been part of a recent Reddit-driven trading frenzy, said on Thursday it intends to elect Ryan Cohen, the videogame retailer’s biggest shareholder and board member, as chairman following its annual meeting.

Shares of GameStop were up about 3% in premarket trading.

The company also said it was nominating six people to stand for election to its board at the annual meeting of stockholders on June 9.

More details in https://www.reuters.com/article/us-games...SKBN2BV1NU

[weijian]

I reckon recalls are done, and there are more sellers than buyers in the past week, especially with the limits on retail.

Now that the stock has dropped and limits removed, it is anyone's guess what happens next.

GameStop Wraps Up Worst Week Ever, Leaving $18 Billion Hole

Stock fell 80% this week for its worst such drop on record

https://www.bloomberg.com/news/articles/...emium-asia

After falling 80% in Feb2021, the stock price bounced back up (in a way) by March. With the recent deflation of growth stocks, this meme stock follows but its market cap is still way above the times when it was a "value stock".

Who Really Got Rich From the GameStop Revolution?

Amateur investors took the stock market by storm a year ago, buying up shares of meme stocks like GameStop and AMC Entertainment. Many remember it as a revolution against Wall Street, but in the end, they largely just lined the pockets of major financial firms

https://www.wsj.com/articles/who-really-...1643432418

[specuvestor]

Hence the old adage that in the short term the market is a voting machine; in the long term it’s a weighing machine

Nonetheless it takes attitude as well as aptitude to get out while winning:

https://www.channelnewsasia.com/business...er-2475011