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Comment by me_me_me | Hacker News Reader

That is well put.

I saw a meme on WSB - photo of a main guy and quote 'What is an exit strategy?' u/deepfuckingvalue'

Ie the main guy behind the squeeze. He already took profit of $13M but somehow he is made into this hodl till 0 martyr?! WTF are those people on?

This really is starting to have all the halmarks of crypto bull rush with hypemen trying to get their exit as high as possible before it all starts to loose momentum and tumble off a cliff.

Its fun to watch though. A lot of fun. Plus more people are becoming aware of how rigged the whole financial system is, how its a boys club that will attack any outsider at sight.

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> Plus more people are becoming aware of how rigged the whole financial system is, how its a boys club that will attack any outsider at sight.

Are they though? I mean the idea that hedge funds are rigging the system is so well established in the public psyche it drove the meme stocks in the first place.

If people's conclusions from all this are that Melvin Capital lied about unwinding their shorts and Robinhood rigged it for them but those nice people saying BUY AND HOLD YOLO on reddit were fighting their corner, has the state of their knowledge advanced?

If those are the only 2 things you've taken away, then you haven't been paying attention. Yesterday's whole "Reddit moves to silver" narrative plastered all over mainstream financial media was a pack of lies. Bots have been flooding the subreddit with misinformation. And today eToro accidentally triggered a massive sell off of their users' $GME by incorrectly setting their stop loss.

Sure, we've all seen the movies; "hedge funds cheat" is not new information. But this is all very out in the open and very directly targeted at retail investors. There's a lot of noise being made and everyone has taken notice. I would argue the state of everyone's knowledge has advanced.

This: there's definitely misinformation going on both sides (both on wsb and the media). You can't really trust anyone in a full-fledged war, and I think this is one of those situations. For those who didn't put money on this, let's wait and see how it goes.

Although the truth is, retail traders are incredibly disadvantaged due to immense informational asymmetry. Hedge funds probably have access to all the data they want (for example, Citadel having access to Robinhood trade flow), but ordinary people have to first wade through all the misleading information both on mainstream media and on social media, so it's a pretty hard fight. But regardless of the results, I think there would be much more distrust towards financial institutions and mainstream media overall due to this event, and this would be only the beginning of 2021.

I am not saying that everyone understands what is happening, but there are a lot of people who took interest and educated themselves on how the stock market works and what is happening.

Two of my friends got into trading because of this (and not in fuck the system way).

Oh, I don't doubt some people will inform themselves and some people will make some good decisions as a result. Just unconvinced that it'll be a net improvement in the state of public knowledge

Why? Uninformed might have different but still wrong idea, but some people will learn.

I don't think you could get net negative in this situation.

Or am I missing something?

If significant numbers of people become deeply committed to beliefs which are clearly incorrect to rationalise being duped into losing money on a meme, I'd argue that was pretty negative.

This happens in ponzi schemes too, people will find a scapegoat rather than feel their ignorance or greed was the problem. Here it's Robinhood and hedge fund conspiracies and Wall street playing by different rules. When MMM ponzi scheme (https://en.wikipedia.org/wiki/MMM_Global) peaked everyone was furious about people writing negative editorials and government warnings not to jump in.

I nearly put a reference to MMM true believers actually voting Mavrodi into Parliament to give him immunity from prosecution for defrauding them in my original post. Wonder if any hedge fundies shilling GME on WSB whilst betting big in the opposite direction are bold enough to try that if the SEC comes after them...

How much can they have really learned in a few days? Certainly not enough to be "trading".

I read the WSJ article on u/deepfuckingvalue, but I couldn't put together if he was behind the trade or if he genuinely thought GME was undervalued, started buying some a while ago, and became a wsb hero during the squeeze just because he happened to be there first, and someone else orchestrated the squeeze.

That article also felt like it missed some key reporting details, and I was surprised he talked to reporters, so I halfway wondered if he did have a larger role, but got this out there to shape the narrative in case the SEC comes knocking.

If you look up roaring kitty on yt, you can see his thesis on gamestop atleat 6 months back, he bought in I think in 2019. The stock was more valuable than the price on a fundamental level then caught some huge investors, board change, better than expected sales due to the console cycle.

The analysts were also not understanding its potential and probably misunderstood greater online sales revenue as moving away from physical disk instead of just a huge growth of free games with in game transactions adding a larger share to the gaming revenue pie.

I've seen "The analysts were also not understanding its potential" a few times and this is mostly incorrect. I know there were large value funds who had looked at GameStop and there was another primary reason the stock price was so low: management.

Value investors totally understood that there was a well-liked brand here that still had huge cash flows. And they knew all the bear cases about the move to digital and the retail biz dying.

A main reason there were value funds who analyzed GameStop and came to the "neutral" conclusion was that the old management team wasn't making any big moves to even attempt to turn around the death spiral.

DeepFuckingValue and even Michael Burry were half-wrong in their original thesis: just using cash flow to do stock buybacks was not necessarily going to turn GameStop around.

It wasn't until Ryan Cohen got involved, got on the board, and started pushing for serious e-commerce and digital initiatives that the stock and story majorly turned around and caused the momentum trade.

GME was not undervalued. Its a dying company.

They sell physical copies of video games. In the ear of digital content, even worse companies are selling game passes - ie rent our game catalog for a month. This is literally Blockbuster vs Netflix of video games world.

The hedge funds were trying to prey on Gamestop's dying corpse, and WSB players figured out how to take advantage of it.

I think the reality is the WSB big guys needed to hype up the short squeeze and 'sticking to the man' to cause the boubble. And it worked out great.

That in itself is not bad, but it will become a problem when the main players start to slowly exit, the greedy middle will have (what is it called) stop sells set up in case of fall, and then it will quickly collapse and who will be left with their pants down waking up in the morning to see its all gone?

The "I am holding till zero" crowd.

The idealists are always taken advantage of by the shrewd leaders of any movement.

If you take part, just pay attention to it, and exit or at least take some profit when you start seeing signs of it.

It being a dying company doesnt mean it wasnt undervalued.

Gamestop was being sold below its Net Current Asset Value, that is, if you took all of its cash in the bank and used it to pay off all of its debts, you would have more cash in hand than if you had not bought gamestop.

Not unusual for a company expected to lose money. Yeah, sure, I'd pay $90 for a bag of 100 $1 coins, but not if there's a hole in the bag and half are going to spill out before I get home.

Oh, I see. I stand corrected then.

Digital content is king, but physical copies are always going to have a market- collectors do want physical boxes for their display shelves. Though certainly the company does need to pivot into something bigger.

I'm not sure if the comparison to Blockbuster is as comparable, as renting media probably has different dynamics from buying media. And games, which cannot be rented except in a few specialty subscriber services such as Apple Arcade, will have different dynamics from movies or shows that can be rented.

I think amount of physical games is declining in real terms, though. I actually buy a lot of them, as one of my weaknesses are portable console systems. I've noticed that new releases are much harder to find in general now; Limited Run's entire business model is based on the fact most smaller games are digital first or digital only.

Also no, the current decisions for the retail stores make me feel like they will lose a lot of goodwill if they transition. The stores barely keep any stock on hand at all, and are increasingly being emptied of goods. I'm legitimately worried they will shutter them all soon; 3 local gamestops where I live have closed in a year or two.

I've actually seen ideas brought up that they don't necessarily have to (only) transition to digital. They already are planning to transition to selling PC parts at their physical stores; I've seen people suggest they also sell physical board games as well, which has had somewhat of a renaissance this past decade. I've definitely seen the remaining big box bookstores (pretty much Barnes and Noble at this point) move out of their core content in a similar fashion.

GameStop could also take advantage of physicality and become community spaces for eSports events or even tabletop gaming, collectible card game tournaments, etc. Basically become general "geek" stores and not just gamer stores.

He genuinely believed it was undervalued, and it was at the time. There is a lot of opportunity to grow in different segments, from esports to PC Building (there really is a shortage of Microcenters and Newegg shops compared to Gamestop shops).

It was somebody else who figured the short squeeze was possible during mid September.

> It was somebody else who figured the short squeeze was possible during mid September.

That was this post: https://old.reddit.com/r/wallstreetbets/comments/ip6jnv/the_...

He even predicted the $400 price target as the time to cash out of the squeeze.

If you watch his videos from this summer, he genuinely believed they were undervalued, and would talk for hours about why - and essentially became a laughing stock for putting so much behind a failing bricks'n'mortar highstreet retail.

I'm not even sure this is a redemption story - just a plot twist that made a funny story, much funnier.

He did good fundamental analysis months ago on why it was undervalued [0].

[0] https://www.youtube.com/watch?v=GZTr1-Gp74U

Ironically, your last statement is kinda completely inverted.

A bunch of financially illiterate newbies who don't know half the terminology and don't understand the underlying math have gotten tricked into thinking that "it's all rigged" or "it's all a scam" and that they're going to get rich quick by participating in the scam. Completely oblivious to the fact that the only scam happening is to them.

Trump-supporters think the election was a scam and barged into the capitol. WSBers think the stock market is a scam and bought GME. Same thing, different day.

Did those supporters just barge into the capital on their own though? Or were they directed to do this to create a specific political outcome, just like the naive WSB “investors”?

I was thinking that all of Trump's conditioning to make people think that the news is all fake and disinformation for a cause has ruined people.

For example, there were reported that Melvin closed last week. People thought it was fake news. In the article they reportedly lost 53%. If they lied about it, that would be exceptionally serious. Yet, everyone called it fake news, to their own detriment it seems.

I don't think so; WSB is too large for that on Reddit, and if anything Reddit is much more anti-trump than anything now. This is more center-left people joining in, similar to BLM in tone I think. Not the same overlap but I'm sure there are some too.

yes the WSB ambience right now is VERY Qanon-feeling

> Trump-supporters think the election was a scam and barged into the capitol. WSBers think the stock market is a scam and bought GME. Same thing, different day.

Isn't it? Look at what they've been doing lately to make the GME stocks go down. The small guy always loses.

The rate of the drop is certainly in part due to the inability of many retail investors to continue to buy it at a way overvalued price. But the price drop was inevitable, it is (at the time of this comment) overvalued now. Its revenue is hovering around $1 billion per quarter but it's not profitable. Last year it lost half a billion dollars, and even more in 2019.

> Plus more people are becoming aware of how rigged the whole financial system is, how its a boys club that will attack any outsider at sight.

And there are also indications of illegal practices (naked short selling), people are asking themselves why stock purchase settling takes two days instead of either seconds (or, to account for an option to unwind mis-trades, hours) which was why Robinhood and others suddenly found themselves in a dire need for cash, and why/how Robinhood can afford their cheap fees (because they're selling off the data of their users).

The most important part that the world learned from $GME is another: the big promise after 2008ff was "we learned from our mistakes, regulations were passed to rein in dangerous speculation"... and $GME proved undeniably that this has not happened, not during the Obama admin and certainly not under the Trump admin. Wall Street still is a casino, not a stock exchange.

(disclosure: holding a couple dozen AMC and NOK for the lulz)

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