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?
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.
> 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.
https://www.bloomberg.com/opinion/articles/2021-01-29/reddit...
Is 5/7.5M users of any forum did anything it would be some kind of record level conversion, let alone speculating $100.
Recent retail investing has moved more tickers than just GME.
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.
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.
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.
also, why would gamestop bail out the same people that wanted to drive it into the ground?
I think you are off by one or two orders of magnitude. I'd wager that a full half of the subscribers haven't even opened reddit in the last week.
[1] https://web.archive.org/web/20210125060034/https://www.reddi...
I'll still insist that only a small minority actually purchased GME.
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.
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 am not making predictions!
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.
I suspect the same happened here.
This is interesting (and not at all surprising). Do you have a link to more information or is this just something you've noticed?
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..
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.
Now if no one is selling where do the shares required to fulfill these burrowed position come from?
If it was not that buy pressure created by the excessive short selling, what did drive up the share price?
Create a bigger, more sinister enemy...and you can have the crowds on your side.
Retail investors are in no way able to move price.
Nevermind this is incorrect.
This is not a just simple “Redditors keep buying shares” story