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GameStop Stock Jumps To New Record (wsj.com) 82

Posted by msmash from the stonks dept.
GameStop shares surged to a record Monday, before pulling back and giving up much of their gains, the latest sign that frenetic trading by individual investors is leading to outsize stock-market moves. From a report: Class A shares of the Texas-based games retailer surged as much as 145% to $159.18 in morning trading, before reversing course and briefly turning lower. By midday, the stock was up 27% at $82.55, up more than 330% in 2021. The rapid swings prompted the New York Stock Exchange to briefly halt trading multiple times. The rally has been fueled by individual investors, encouraging each other on social media to pile into GameStop shares and options. The buying pressure has led money managers to switch out of substantial bets that the stock would fall, analysts said. This resulted in a short squeeze, in which rising prices prompt investors to buy back shares they had sold short to cut their losses, pushing the stock higher still.

The company has become a high-profile battleground between bullish chatroom-driven day traders, especially on online platform Reddit, and hedge fund short sellers, who have been betting against the stock. GameStop has been the most-actively traded stock by customers of Fidelity Investments in recent sessions, with buy orders outnumbering sell orders by more than four-to-one, according to the brokerage. "We broke it. We broke GME at open," one Reddit user wrote Monday after the NYSE halted trading, referring to GameStop's stock-market ticker. The tussle over the company, with a modest market value of about $5 billion at Friday's close and four years of declining sales, exemplifies the increased sway of retail investors. Many poured into the market during the coronavirus lockdown, congregating on online platforms to swap trading ideas and to boast about winning bets. From last week: Gaming the System: How GameStop Stock Surged 1,500% In Nine Months.
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GameStop Stock Jumps To New Record More

GameStop Stock Jumps To New Record

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  • They are currently closing location after location. They are burning twice as fast and will soon be in a position where the only thing left is bankruptcy.

  • lol, WSB trolling (Score:5, Informative)

    by curtis3389 ( 5534388 ) on Monday January 25, 2021 @01:59PM (#60990136)

    This is just r/wallstreetbets trolling big money. GME is a dying company that has repeatedly failed to adapt, but WSB is piling on to fuck over all the big investors.

    LMFAO, fuck rich people.

    • Re: (Score:1)

      by Anonymous Coward

      They're going to fuck themselves once this bubble pops. Fun for everyone involved

    • Re: (Score:1)

      by DarkOx ( 621550 )

      Well in the end its going to be the WSB diamond hands fools that end up bag holding.

      GME has fairly small float and huge short interest. That is what keeps pushing the price up. Management is going to get smart here really soon and issue new shares. It seems major players want to make a serious attempt and going 'online/digital' the way do is flood the market with shares and suck money into the company. The shorts (read big money) will get the shares they need to cover cheaply. Retail will be left with a

    • Yeah it kinds looks like people are fscking with the short sellers....

      I guess the trick is, knowing when to sell and get out.

    • They aren't trolling anyone. Producing a bunch of "memes" and pretending you are sticking it to the man doesn't make them master "autists", as they fancy themselves. They aren't hurting anyone really rich, and nobody gives a real shit.

    • This is just r/wallstreetbets trolling big money. GME is a dying company that has repeatedly failed to adapt, but WSB is piling on to fuck over all the big investors.

      LMFAO, fuck rich people.

      I honestly think this might be a product of apps like Robinhood. Anyone can throw cash into the market quickly and easily. Even armchair backyard investors aka kids that think gamestop is cool so why not throw $20 into stock and see what happens.

    • This is just r/wallstreetbets trolling big money. GME is a dying company that has repeatedly failed to adapt, but WSB is piling on to fuck over all the big investors.

      LMFAO, fuck rich people.

      Bloomberg confirms. [bloomberg.com]

    • I guarantee you the rich people have been following WSB for quite a while now and know what's going on. They are making money buying GME too. You really think those redditors with their $500 accounts can drive a stock that much? LMFAO.

  • Pump and dump (Score:5, Insightful)

    by sinij ( 911942 ) on Monday January 25, 2021 @02:01PM (#60990148)
    There is absolutely nothing that would justify such valuations.

    • Financial markets are totally insane right now because the fed is stuffing Wall Street full of trillions, they have to keep it moving, or it rots

      • If valuations keep going crazy, gamestop, bitcoin, tesla,...does this eventually devalue the dollar?

        • That seems to be the intent.. There still might be time to play and make a small killing.

        • Re: (Score:1)

          by DarkOx ( 621550 )

          The answer is the dollar is already devalued. Its not just gamestop, bitcoin, tesla. Look that the SMP500 (ok a big part of that is just AMZN, so look at the Russell 2000 over one year or five.

          People are biding up these assets because there is a lot of currency running around in the market without goods to chase. What is left of the middle class isn't confident enough to actually enjoy their wealth. They won't spend it on consumption because they are (rightly) afraid its going to be taken from them or the

      • Financial markets are totally insane right now because the fed is stuffing Wall Street full of trillions, they have to keep it moving, or it rots

        Explain what fed actions have been taken that are pumping up GameStop

    • It's a massive short-squeeze. Currently there are more shares short than exist in the float. It doesn't take much buying pressure to rocket the share price upward when such a situation exists. That's all this is, once a significant number of the shorts cover (losing their butts in the process) the stock price will normalize back down. It might take a while though.

      • Re: (Score:2)

        by sinij ( 911942 )
        Interesting point on short-squeeze, but can you explain "doesn't take much buying pressure to rocket the share price"? Yes, shorts will have to buy to cover, but you still have supply and demand. Meaning, if I were holding GameStop stock (and I am not), I would jump off right now. So would any non-speculator acting rationally.

        • Zerohedge (yeah, I know) has been covering the GME short-squeeze and has a couple good articles explaining what's happening and why. TLDR version: put options trading and a massive short position by a couple large hedge funds that exceeded the number of shares in existence.

          https://www.zerohedge.com/mark... [zerohedge.com]

          https://www.zerohedge.com/mark... [zerohedge.com]

        • So the idea is you may jump off here, but they have to cover the short. So, it's a economics game in real life. Of the people with shares, N% will get to sell. That number is going to be the same regardless of what the price is. But what changes is who sells and what price they get for it. Obviously, the best for the sellers would be to agree on a price of 1 million a share and split the profits. But that's illegal. So it's similar to a game of chicken. But it produces a huge bubble that then pops.

        • Re: (Score:1)

          by DarkOx ( 621550 )

          the float isnt big enough. There are few big institutional guys that want to control enough shares for seats on the board but literally everyone else is a speculator or did exactly what you describe already.

          The shorts only have to buy to cover when their lenders feel they may not be able to and can't cover. As the long as the market trend stays up; we can assume these guys don't get margin called, so they wont be forced into covering. Its a big game a of chicken at this point. Who will blink first the sh

        • Re: (Score:2)

          by tlhIngan ( 30335 )

          Interesting point on short-squeeze, but can you explain "doesn't take much buying pressure to rocket the share price"? Yes, shorts will have to buy to cover, but you still have supply and demand. Meaning, if I were holding GameStop stock (and I am not), I would jump off right now. So would any non-speculator acting rationally.

          Yeah, but if you're holding shares, and you know the reason they're holding the price high is because everyone is waiting for the shorts to be covered, you'd want to wait for those to

      • Re: (Score:2)

        by stikves ( 127823 )

        This is precisely what would happen if people are suddenly selling a lot of stock as well. Of course it is in the other direction, and called a "flash crash".

        Happened to BitCoin several times recently. When someone (usually an exchange) dumping a lot of coins at the same time, the price crashes, usually momentarily.
        https://news.bitcoin.com/bitco... [bitcoin.com]

        The mechanism is easy. At every time there are sellers who want too much for the stock, and buyers who want to pay pennies. If a very large order comes in, they w

        • The bottom line is that the stock price movement the last few days has absolutely nothing to do with the underlying health of the company or it's real value. GameStop is just as dead as it ever was the past few years.

  • Is there any kind of bubble detecting software or website service? I'd like to dump any stocks I have that are being pumped by people who don't know what money is.

    • I mean, there are a lot of them. They cost money and have differing levels of success in detecting bubbles. But, ultimately, no there is no equation to guaranteed never-lose money in the market - and if there was and it was widely known people would manipulate it causing it to no longer work.

    • Re: (Score:1)

      by Shotgun ( 30919 )

      Bears make money.
      Bulls make money.
      Pigs get slaughtered.

    • Money??? I have tulip bulbs, you insensitive clod!

    • Re: (Score:1)

      by DarkOx ( 621550 )

      if by dump you mean sell stuff in your portfolio; that should be easy enough without automation. I mean how many individual stocks do you own? If so many you can flip through the news and charts related to each and spot the ones that have been irrationally bid up. if the chart if asymptotic and there isn't any real news or surprising quarterly results; make sure there hasnt big a recent big institutional ownership increase - there is your pink elephant.

      If you mean find stuff to short just scroll thur r/wal

  • While it's fun to see individuals toss around a bunch of large companies, what is the end game here?

    Is the idea that there are so many small investors that just bought a share or two each, so they never need to sell and thus the price will remain inflated?

    Or is no one thinking longer term, where eventually you have to unload all this GameStop stock you bought... at which point the people who have shorted the stock at this new, higher price win?

    Seems like artificially pumping up a stock is just creating an e

    • Quantitative easing is what has been inflating the financial industry since 2008. "Investors" have to keep the money moving so they can ask for more. Wall Street is a rain forest canopy of capital that allows just enough trickle down to reduce the rioting.

    • The end game is that people who sell at the height of the bubble will make a lot of money and the people who don't will lose money or make nothing (Depending on when they bought in). The idea is that because of how the short position is set up, those people will have to buy their shares back at a specific point in time, regardless of the price.

      Seems like artificially pumping up a stock is just creating an even better environment for shorting the stock long-term.

      If you can guess when the bubble is going to

      • The idea is that because of how the short position is set up, those people will have to buy their shares back at a specific point in time, regardless of the price.

        You are supposed to already have access to the shares you shorted. If you dont, its called "naked shorting" and if you do your research on that, you will fall down the rabbit hole and not trust the financial industry ever again as the number of imaginary shares of stock can only go up, continue to circulate forever.

        • Re: (Score:2)

          by Ambvai ( 1106941 )

          The lowest estimate of short interest is something like 97%, and most estimates peg it at around 130-140% of float. On the far end, I've seen estimates (guesses, at this point) as high as 400%... though I wouldn't put much faith in them.

          Naked shorting appears to be in play already.

        • No no no, you're 100% wrong. "naked shorting" is intraday shorting of a stock without having the asset to back it up and is pretty tightly regulated. Regular shorting is me borrowing a share of X from you for $Y with a promise to return it on day Z. I then sell the stock hoping the price goes down and I can buy it back for less later. But if it goes up to $1,000 a share, I can be pretty fucked.

          • No no no, you're 100% wrong.

            oh really?

            But if it goes up to $1,000 a share, I can be pretty fucked.

            ....or the person you owe it to is pretty fucked, yes?

            You havent thought it all the way through. All shorts go through clearing houses and the person you owe that share to gets it 100% of the time from the clearing house even when you fail to produce it, something that happens more than 0% of the time, because as you say, you can be pretty fucked. The clearing houses dont talk about this. They produce imaginary shares by letting their own books possible go negative on it and never do anything

            • the person you owe that share to gets it 100% of the time from the clearing house even when you fail to produce it,

              What nonsense is this? "Counterparty default risk" is one of the ones that houses make you acknowledge to lend out your share. But the borrower is definitely fucked. If they're so fucked they go bankrupt, than the person who loaned the share to is also somewhat fucked, getting paid whatever then can from the bankruptcy proceedings. However, at the retail investor level, most brokerage house

    • Bloomberg has the long story https://www.bloomberg.com/news... [bloomberg.com]

      • Bloomberg has the long story

        That article should have been in the summary, it's required reading to understand what is really going on...

        According to that, the rise so far is not even from a short squeeze! That comes later, with a huge amount of short interest still outstanding...

        I found it interesting that you can specify a broker not lend out your shares to people shorting stock, I may have to do that for a few other stocks I own (I don't own any Gamestop).

        I also had read something else before kind of hin

        • From my days of playing the AMD game I remember specifically the tactic if you were holding shares long to place illogical sell orders far higher than you intended to sell which then forced the brokerage to not lend your shares.

          If you view the lending of your long shares to the shorts as basically giving your enemy a weapon to hurt your own stock then I can completely understand doing this.

          • I remember specifically the tactic if you were holding shares long to place illogical sell orders far higher than you intended to sell

            Interesting idea, thanks for that also...

    • In the war between shorts and longs, the side that correctly values the asset will win. But in the battles, it's usually the one with the most capital. In this instance, it's the shorts who will win both.

      But Tesla is an interesting example of an alternate dynamic. With Tesla, the shorts were better capitalized, but (at least based on the current price), they valued the asset wrong, so the longs won (for now).

      But within the group of all Tesla shorts, I'm guessing the highly capitalized covered at minimal los

      • I'm guessing the highly capitalized covered at minimal loss, while the rest were sent to the front lines to get killed.

        I totally agree with this, if you have enough capital you can cover bets from taking a too excessive loss, individual investors who don't even know how just follow along with emotion and get creamed...

        As you say, if you are highly capitalized you pretty much always win.

  • This is just great (Score:3)

    by alvinrod ( 889928 ) on Monday January 25, 2021 @02:07PM (#60990176)

    The rally has been fueled by individual investors, encouraging each other on social media to pile into GameStop shares and options. The buying pressure has led money managers to switch out of substantial bets that the stock would fall, analysts said. This resulted in a short squeeze, in which rising prices prompt investors to buy back shares they had sold short to cut their losses, pushing the stock higher still.

    So it's a bunch of clueless idiots with money trying to dupe other clueless idiots with money into buying an awful stock in order to try and pull of some kind of pump and dump and a whole host of other idiots throwing their hats into the ring for good measure?

    This all just seems like a nice test of a fool and his money.

    • This all just seems like a nice test of a fool and his money.

      Remember when we let 4chan troll the 2016 election?

    • If you think that a few robinhood traders that are trading in volumes of 10 to 100 are moving around the price, then you might want to think again. It's people with accounts that had shorted the stock in the thousands of shares and they were force to buy it back. It's likely that most of the robinhood traders that didn't set limits on their trades are now down on their trades.

      • Re: (Score:1)

        by Anonymous Coward

        You say that, but a number of companies (like Hertz) started bankruptcy filings in the spring and had large share price increases, an informed investor would know that that the outcome of the filing is almost certainly the shares being wiped out particularly stupid as this was happening while stocks were in the process of being delisted from exchanges.

        It seems pretty clear that clueless investors and reddit pump & dumpers are having an effect on some share prices.

      • Nobody on WSB thinks they can drive the share price in perpetuity. What they have figured out is that small investors, banded together, can manipulate the price of heavily shorted stocks using options. That can push institutional stock shorters into a scenario where they end up driving up the price of the stock even more when they have to cover their short positions on stocks with limited availability for trading (losing millions in the process). Things eventually even out and some portion of the WSB cro

      • Re: (Score:2)

        by N1AK ( 864906 )
        I absolutely do think that the price increase in this scenario could be caused by the actions of individual investors. Many people who hold stocks aren't looking to trade, this means typically only a small proportion of shares in a company are being actively bought and sold. For a company with a $5b valuation there could easily be less than $500m in shares available to trade. If short sellers have bought $300m of shares, then shorted them, that's $300m of shares they have to rebuy in the future. If more tha

    • So it's a bunch of clueless idiots with money trying to dupe other clueless idiots with money into buying an awful stock in order to try and pull of some kind of pump and dump and a whole host of other idiots throwing their hats into the ring for good measure?

      I wouldn't call them "clueless idiots."

      Most of them know exactly what they're doing; they know the risks. They're just greedy sociopaths who get off on trying to manipulate the system for their own gain, with a bonus of inflicting pain on institution

    • So it's a bunch of clueless idiots with money trying to dupe other clueless idiots with money into buying an awful stock in order to try and pull of some kind of pump and dump and a whole host of other idiots throwing their hats into the ring for good measure?

      If this were cryptocurrency instead of stock in a real company, we'd just call that business as usual.

    • You're judgement isn't really warranted. The most common "safe" investment advice is to invest in index funds. But if everyone is investing in index funds, it creates a bubble. If every professional investment advisor you see is telling you the same thing, it's not foolish to listen to the advice of people who know better than you.

      So, if the stock market is largely driven by this groupthink mentality, then it's really just a matter of where your risk profile is. It's not foolish if you exit before everyone

  • Whomever sold it short at the high of 144.59 and bought back at the low of 61.13 made 83.46 per share. The price as I write this is 81.81 per share.

    • I think you'll find that the number of people who played it perfectly today were rather small. Getting a stock market call looks easy in hindsight. But in the real world, calling a stock that is moving double digit percentages in the span of minutes based on nothing but competing speculative pressures is nearly impossible.

      There are undoubtedly a few folks who bought 6 months ago who have made out like bandits though, if they manage to sell before it plunges back to earth.

  • They got squeezed (for those unfamilliar with shorting, its buying negative stock). Those people thought that gamestop would tank, and then it started going up, and it probably caught a lot of people off guard to the point that their accounts were having issues, so then they are forced to buy the stock. So then you get a huge artificial demand for the stock. It will probably go back down some.

  • Rule #1: Wall Street Always Wins (Score:4, Insightful)

    by TheCowSaysMoo ( 4915561 ) on Monday January 25, 2021 @03:49PM (#60990702)

    Rule #2: If Wall Street loses, please see Rule #1

    To add a little perspective here, GameStop's market cap ($4.53B) is 0.19% of Apple's market cap ($2.34T). Put into layman's terms, Wall Street taking a loss on their short position of GameStop is the equivalent of you dropping a penny on the sidewalk and not stopping to pick it up.

    On the other hand, Reddit users taking a loss on purchasing a $4 stock at 1900% markup... that's going to hurt the wallets of some people who don't understand Rule #1.

    To think Wall Street's going to live or die by their short position of GameStop is foolish, to put it lightly.

  • Explination (Score:2, Informative)

    by FeelGood314 ( 2516288 )
    GameStop is dead. I think almost everyone on slashdot sees that their business plan is out of date. A bunch of people looked at game stop's business plan and figured there is no way the company was going to recover and that GameStop's share price was over valued. They borrowed the stock and sold it with the intention of buying it back later. Lots of others looked at the short position and jumped in. Now the first group of shorts borrowed X shares maybe 60% of the shares outstanding (guessing) and sold

  • Look,
    We all know this is the new digital version of pump and dump driven by r/WSB.

    There is nothing in GME's business that justifies these valuations.

    The interesting thing though is that in the meantime, as long as the ride keeps running before you stop and are left holding the bag, there's opportunities to make money.

    After writing off WSB, I realized that in the short term, one could make serious money. Now it's pretty much gambling. And I just put in a little bit of play money, not betting any core inves

    • GME and BB are up so much already, I feel like it's dangerous to try to jump in at this point. Better to try to find one that hasn't risen much yet. But how to tell which stock the WSB crowd will jump on next?

  • Louis Rossmann has a take on this that I thought makes sense -

    Step 1. Gamestop shoters (generally huge institutional investors) took out short positions of over 100% of Gamestop shares (Why were they allowed to do that? Capitalism magic!) and generally forcing the share value down, undervaluing Gamestop.

    Step 2. However those shorters *have* to buy back those shares at some point.

    Step 3. Small individual investor notices this and realizes if they buy enough shares up and refuse to sell, when it comes time fo

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