How much evidence is there that the "reddit onslaught" actually moved the price, as opposed to them being the stalking horse for more sophisticated actors with more capital exercising a vanilla short squeeze strategy?
So many conspiracy theories on both sides these days. Don't forget Ocram's razor. I don't think there are many sophisticated actors here at all. I'm speaking as one who did DD on GME back in September and throw some money in (thought it was a great opportunity mainly because of Cohen +
the upcoming console super cycle with a tiny chance of squeeze thrown in) It was a smart discovery by WSB and got a bit more than average attention but then it kept growing.. every week more DD's posted and more attention. Now the entire sub is so dedicated to GME its actually annoying.
I think it really is the simple dumb story of a really bad bet by a hedge fund getting called out online and a with more and more jumping on the wagon and with the hedge fund making more and more dumb mistakes. And everyone is underestimating the redditors who, behind the emojis and crap talk, are actually pretty smart. Collectively they can, and did, cause this.. no need to invent other actors to explain it.
It's virtually guaranteed that this stock popped up on the radars of the funds who run momentum trading strategies. And it would be very weird for a lot of them not to jump on that bandwagon (at the very least because it's their mandate to do so).
Feedback loop for sure. A movie will be made on this. YOLO!
I can see GameStop putting an end to some of this by issuing non-voting shares to one of the hedge funds that is current shorting, giving them a known out and pocketing a huge investment for M&A.
that's what i've been thinking about too-- at what point is it economically expedient for GameStop to sell shares directly to the shorts to bail them out? doesn't seem much weirder than all the credit default swap silliness that's happened for the past few years.
they cannot just make whatever stocks they want up. they are limited there on the number they can emit. plus, not sure if they get to choose who gets to buy the shares.
also, why would gamestop bail out the same people that wanted to drive it into the ground?
2-3 weeks ago when share prices were around $17, GME had a market cap of less than 1.2B. WSB has 7.6 million users now, but I assume it went up a lot recently. Say 2 million of them bought some GME. To buy 50% of the shares a couple weeks ago it would have only taken $296 each. So they could ABSOLUTELY get prices moving significantly. Now of course lots more people have jumped on now. But that 20B volume number is after they got the price to ramp up!
Well considering it's currently at 7.8 million subscribers, and a week ago it was 2.1 million subscribers [1] I'd love to know how 4 million redditors subscribed without opening reddit
Don't know about that. I have never in my life bothered with stocks, and now I bought a share with all the spare money I could afford to lose. Me, a complete outsider. I can say at least 1M of the members hold stocks. And probably many more. I only got in the sub to watch how things unfold, intent on buying from the beginning. I don't think anyone would bother following WSB just for the giggles. Most of the posts are for the sole purpose of reaffirming our collective choice of holding GME.
Thats assuming all of wsb bought in on it. There are plenty of casual followers there that did not. Alternatively, there are plenty of non-wsb-ers that followed the hype.
Best number should be Robin Hood consumer. I read somewhere that 56% of RH subscribers were owning GME. I dont do stock trade, not sure whether this means every one has atleast one or the company let you group the $$ amounts too.
I keep seeing this metric everywhere, it's irrelevant, $GME became a meme stock, people are joining the sub to check out the fun, not to invest. Max 1% of them are really investing anything of value.
Cannot confirm, I joined to watch things to eventually buy, and I bought. I never bothered with stocks before. I also know many like me, in my real life circle, who did the same. A good chunk of WSB holds GME, is my estimate.
Retail has 10x leverqge with out of money call options, don't forget that. Of course hedge funds need to sell and hedge those options that create the huge volume
I do not agree that Occum's razor is much help here.
AFAIK this is completely unprecedented. A crowd of whomever and bankers with clients money at stake, disagreeing so absolutely about fundamental values. A mass action making the third corner of a very strange triangle.
The explanation you offer (it's sensible, except it is not one hedge fund) is no more or less complex than a conspiracy. What ever is going on there are a lot of moving parts.
I wouldn't call it a conspiracy theory or call this out as an example of Occam's razor.
> Collectively they can, and did, cause this.. no need to invent other actors to explain it.
The thing is, people imagine this requires a lot of capital to pull off. How did WSB get so many people to invest so much into GME as to hit a hedge fund so hard? Do so many people really have that much money just to throw away? There is a need to explain this, and inventing other big actors does explain this much better for people.
As I noted in a similar thread a couple days ago..
When all of this started last fall, the price was bouncing between $5-10. Therefore, with as little as $500 (aka less than a stimulus check), you get 50-100 shares. Even as recently as ~3 weeks ago, it was $20-25/share. It cost more to buy in but still within reach for all but the smallest investors.
And that's not considering the options side.
As of the 19th (aka 12 days ago), you could still buy $35 calls for $12 with a Feb 19th expiration. That $1200 is worth upwards of $12-15k now.
Now multiply any of those by a couple hundred thousand investors, some with much more to put in.. and we still haven't touched the medium, let alone the BIG players.
number of shares shouldn't matter much though. especially now that all these brokerages offer fractional shares. I guess it does matter a little more for options since those lots are bigger and fixed.
I mean the WSB user count has grown from 2.2m on Monday to now 7.5m. If 5 million of those users all bought $100 worth of GME that's half a billion, if they bought $1000, that's 5 billion.
On average I don't think $100 is that crazy. Most haven't YOLO-ed anything. While many YOLO-ed for 1-2 shares, there are many who have YOLO-ed for thousands to tens of thousands of dollars.
I'll also add that tons of people I know who have never traded in the markets woke up Tuesday and Wednesday and decided to buy a single share for the lulz. I'm fairly convinced 70% of the volume may have been due to retail.
Over 700 million shares were traded last week, so even if every WSB user bought 10 shares, that wouldn't account for close to a majority of the activity.
Volume is meaningless, as the same share might be traded back and forth several times, e.g HFT or order flow buyers flipping stocks within microseconds.
Would HFT traders flip a stock 10 times among each other just to fulfill a single Redditor's buy order? (Honest question, I don't know enough about standard HFT practices to confidently guess.)
Reddit users would be an amount of the capital in the GME situation, but far from the majority.
There's a huge amount of other hedge funds who actually control the vast majority of the capital screwing over Melvin at the moment. This whole scenario is hedge funds making money off of other hedge funds and a bunch of retail investors making a small amount but risking huge amounts when GME inevitably collapses.
This has been my question as well. Especially when you overlay the charts for gme and amc and bb, they move almost identically. I really struggle to believe it's all gressroots. This entire thing was astroturfed if you ask me.
word on the wall street bets street is that there are a couple of big whales that are long on gme,amc and they are trying to generate a squeeze. at this point in time it’s basically a battle of the trading bots with the whole world watching.
My experience of reddit is you can get a "wildly successful" meme or post, yet rarely that translates into more than a few thousand dollars of cash being spent on anything.
All the "wildly successful" kickstarters and stuff seem to have commercial backers lined up to make the social media buzz effect appear bigger than it is.
> All the "wildly successful" kickstarters and stuff seem to have commercial backers lined up to make the social media buzz effect appear bigger than it is.
This is interesting (and not at all surprising). Do you have a link to more information or is this just something you've noticed?
Well, what's the evidence of that then? I think the reddit behaviour explains what happened much better, and then everyone jumped on the train because of the groundwork they set.
The thing that moved the share price up was simple supply and demand.
From what I've read the short sellers had taken a short interest that exceeded 100% of the available GameStop shares.
But remember these are short sellers are selling something they don't yet own.
They are selling a promise to sell shares at some time in the future for given price.
When that future date turns up the they are forced into the market to buy shares at what ever price just so they can full fill their original promise to sell shares.
They have no choice in this as it was the contract they signed.
Now because shareholders weren't prepared to sell, that created massive buying pressure which then drove up the price.
I suspect where reddit played it's part is they spread the word that the shore sellers had taken up such a massive short position, adding to the buy pressure and effectively killing off any sell pressure, which then makes that short sell position even worse..
> From what I've read the short sellers had taken a short interest that exceeded 100% of the available GameStop shares.
When someone shorts a stock, it creates a new long position as well. The term is "short sell" because the borrowed shares are sold to someone else. The new buyer is also long.
Long interest is always greater than short interest for this reason. This is why short interest can be greater than 100%.
The facts didn't really matter in this pump, though. The running joke on Reddit was that no one was reading the "DD" anyway, just hopping on the bandwagon.
I don't know if you're right. But that definitely sounds like a good game plan for state to pretend to be on the side of the little guy, and do what they like to do...
Create a bigger, more sinister enemy...and you can have the crowds on your side.
Yeah, Matt Levine pointed this out in an article last week... the total buy and sell numbers for ‘retail investors' was actually pretty well matched (meaning retails investors bought and sold roughly the same number of shares)
This is not a just simple “Redditors keep buying shares” story
The media portrays it as "Redditors take on hedge funds". In reality, the volume indicates there's hedge funds, as well as a broad group of retail investors from outside Reddit, who have all jumped on the train. Hedge funds are on both sides of this.
yes, there are large whales that are long on gme. yes, a lot of retail investors have jumped on it. reddit is the propaganda machine that ignited the fire
A strat that quant funds use are algorithms that look for movement in the market. When they noticed an uptick in gamestop they bought in. When they buy in the price goes up which signals to other algorithms to also buy in. Thus raising the price and causing a tsunami.
