Obviously?
The company was bankrupt.
People who bought HRTZ after bankruptcy had to have known it was a game of financial musical chairs, much like GME, TSLA or BTC.
The company was bankrupt.
People who bought HRTZ after bankruptcy had to have known it was a game of financial musical chairs, much like GME, TSLA or BTC.
I don't know how many times I saw people claiming GME would go to $1000 because the new CEO has a brilliant new scheme to turn the company around by going digital! Why "going digital" in 2021 means your company is worth 100X what it was a few months ago I'll never quite understand. I guess no one had yet discovered the opportunity of these computer machines and the World Wide Web!
Or "it's the short squeeze" By people who didn't even know what a short was 72 hours before, long after the shorts had covered their positions.
Sure some people acknowledge they are essentially gambling in equities, but tons of people truly think they have some stunning insight into a business because of some anonymous WSB shitpost they read this morning.
As mentioned elsewhere in here, it’s ultimately gambling. It’s putting money up, exposing it to risk that could completely wipe you out. If someone doesn’t understand that about stock investing, I think they’re very similar to someone not realizing a casino could wipe out your money. But making sure everyone fully understands this - educating people who are risking money - certainly seems like a thoughtful thing for countries to incentivize.
But unless all the financial websites have to be styled to look like a casino, or areas of a physical bank space put up neon lights and blinking signs to emulate Vegas casinos, I don’t know if we can ever drive the point home clearly enough.
There's also the thing where buying equity in a company can seem very simple because you see something like Apple where they made a cool thing and obviously their stock went up. People just have no idea about how complex the markets are.
They also don't remember the very smart people who claimed the Iphone would be quickly overtaken by Android and other cheaper alternatives (Clay Christensen predicted this a guy generally very smart on tech/business)
Hindsight always makes it seem like it was easy to pick the great companies that were OBVIOUSLY going to do well.
They don't understand how incredibly sophisticated professional investors are who dedicate their lives to it, and on average even THOSE people don't 'beat the market'.
Understand it or not, it happened. Going from $3 to $300 in under a year.
Just because some people stated seemingly silly reasons for their predictions doesn't mean everyone betting on it is stupid. They may be trying to encourage others, have an intuition, hope to detect the peak and quickly sell, or even not care about money and be playing it as a game. But at the end of the day, whoever makes money is not the stupid one. Today GME is $250. Plenty of them can be getting rich now.
I have a thought that understanding how the stock market works doesn't matter much. Most of the knowledge from that is already bakes into share prices and the movements are pretty much random. So you very well could win by not knowing what a short is.
Most of the WSB equity analyst is the equivalent of the blackjack player sure he's going to win it big because Mercury is in retrograde!
Errr.. this doesn't follow at all.
Plenty of people get lucky by winning the lottery. This doesn't make lotteries a smart investment in general (and yes I'm aware of some exceptions to that).
Getting in on the GME short squeeze was smart.
More than that means you are thinking there is something other than the short squeeze going on. There doesn't seem to be much evidence for that.
Yes, cycles of hype and supply and demand do distort stock prices, but it’s still a capital allocation market. GameStop can choose to sell shares into the hot market, much as AMC did, to raise money. Buyers of those shares are allocating capital into the company.
One of the draws of Bitcoin as a speculative instrument is that there are no fundamentals. Without fundamentals, there is no mechanism to suggest if it’s undervalued or overvalued. The only thing a Bitcoin purchase funds is more energy expenditure on mining.
What? Why not?
Not only can we continue to trade stock in a defunct corporation, we do. Take a look over here: https://www.liveauctioneers.com/item/85889867_imperial-india...
Trading happens on the pure derivative of stock prices, yeah, and people get rich off of it, sure, but ignoring the trillion dollars a year that flows from the profits on the economic activities of the S&P 500 back to the investors in the stock is ... oversimplifying things.
Even so, that figure isn't really relevant to the GP's point. Their point was that in addition to the price of the stocks, people who owned those stocks got cash money paid into their pockets, via dividends. That amounts to about 1.1% interest on money you spend buying the shares[1].
(That's not actually a great number. 2% is more common over the last 20 years. It suggests that as of right now the market is overpriced. But that's also for 2020, which is not a typical year. So far for 2021, it's more like 1.5%)
(My vague understanding is that for complicated and silly reasons, many more companies have preferred stock buybacks to dividends in recent decades, but it's still money flowing back from companies to investors.)
for traders, it's something that has a ticker, a price and some volume. whatever works.
(It seems clear to me that this isn't a valuable enough capability to justify the current price of BTC, but I guess that's a separate discussion.)
I genuinely, no bullshit, think TSLA is more irrational than GME, and has been for years. I put my money where my mouth is and I'm up 5x in 2 weeks. I know it won't last, but hey TSLA is crashing too. Nothing lasts forever.
Ryan Cohen, the guy who founded Chewy, is on the board for GME and leading an initiative to transform Gamestop into an e-commerce store. In other words he wants to compete directly with Steam, and while many don't realize it yet, Amazon. And this is one of the only people in history who has successfully beat Amazon in a product category before. Chewy absolutely dominated the pet market for e-commerce.
What I think Gamestop should do is compete directly with twitch, and set up an online game store on top of that. Basically do what twitch is doing but better, because twitch is shockingly bad for an Amazon acquisition. Then Gamestop could host online game tournaments, and they could even draw attention at local brick-and-mortar stores. They've got the real estate, they've got the brand recognition, and they've got the goodwill of the public right now (which is something you can't even buy, Amazon doesn't have that even with a trillion dollar market cap).
I don't think this will happen. But if it did, GME would be ridiculously undervalued right now.
But there is a market and nobody likes the only player. Eventually somebody is going to figure it out. And I am extremely confident it won't be Amazon. I'd short twitch in a heartbeat if it weren't propped up by the most valuable company on Earth.
I too hear a lot of complaints about Twitch too but I feel that most of them have nothing to do with the product, but the zero-sum and competitive nature of gaming streaming. It's just difficult to succeed as a gaming streamer (or content creator more generally) and the vast majority of people who try will never make any meaningful amounts of money, so frustrations tend to be attributed to the arbitrary quirks of the platform, even though that's just the nature of any content business.
Everything and everyone. Seriously, even the people making literally millions on twitch hate the DMCA takedowns, the completely capricious bans, the ridiculous barrage of forced ads which twitch has straight up lied about, the fact that Amazon streamed anti-union ads on twitch and then pretended it was an accident, the fact that titty streamers get special priveleges...and that's what I thought of in just 30 seconds off the top of my head.
twitch is fucking awful because it's owned by Amazon. It was great before the acquisition and shortly thereafter.
I never said it was easy. I'm saying twitch fucking sucks and when somebody makes something that doesn't suck it will instantly be an 11 digit market cap company. Right now the most likely contender is Gamestop, even if I'd only put that at about a 1% chance of happening.
Anyway, let's agree to disagree because we're not finding common ground here.
They're giving up on streaming because they hate twitch that much.
https://dotesports.com/streaming/news/over-27-9-billion-hour...
We're not going to agree. I'm exiting this thread.
But the market leader in any market always gets the most complaints.
Why would GameStop not do these things? They wouldn't be immune to copyright problems. They'd surely need to implement automated ban systems. They'd surely need to advertise. They'd surely want to make money on "titty streamers".
Twitch is essentially a hardcore user's platform. Engagement is extremely high vs other platforms. That's what keeps content creators on twitch, even if they're making the bulk of their income from putting the VODs on youtube: they can't create the same content and interactions on other platforms.
Again, as explained in a sibling comment, competing against twitch is a terrible opportunity. It's a miserable business to try to make a profit margin on, and your #1 competition doesn't care if twitch loses money all day. The ad market for streamers is all wonky because so much of the content is radioactively toxic.
That does not mean it is not possible, it is not shocking to me that large institutions like Facebook and MS could not compete even with their deep pockets.
you seem to have conflated Money with creativity, and/or vision.
it will not be a Microsoft of Facebook that will topple twitch or you tube, it will be a startup of some kind that is completely removed from Corporate culture and the extreme chains on innovation that large companies have
Do you mean you don't think they'll compete with Twitch, or you don't think they'll compete with Steam and Amazon?
Personally I think investing in GME today is no different than investing in Blockbuster ten years ago. Competing with Steam is a terrible idea. EA tried it with Origin and despite having huge exclusive franchises, they're essentially throwing in the towel by abandoning the Origin branding and moving their newest titles back to Steam. There are also few physical goods to ship anymore so the experience in selling pet supplies online is irrelevant. Something like 80% of PS5s sold are the digital-only model; they don't even have a disk drive (and 99% of modern PCs don't have one either.)
Most of GameStop's profit was on used games. A game would get purchased, completed in a few days, then sold back to GameStop. When GameStop re-sells it as used, that's pure profit; the original publisher doesn't get a cut. Rinse and repeat a few times and within a few weeks of the launch of a game, GameStop has made more money off of it than the game developers. This is no longer possible with digital game sales. These games are locked to accounts and cannot be individually transferred. (And if you think GameStop's digital storefront will support game resales to try to capture this profit, no publisher in their right mind would publish their games on it!)
I do not think Gamestop is going to compete with twitch. I will be very surprised if they do not try to compete with Steam.
I mean they can say they want to, so can McDonalds. But their plan is magical thinking and not sure why folks fall for this.
The worst but though is that they have a terrible reputation with gamers. Every gamer I know hates them. Some shop there like some tolerate Comcast, but they don’t have a fan base.
Indeed, I think we get as many Chewy boxes as Amazon boxes. Of course three dogs and three cats will do that.
Chewy used to send every customer a handwritten personalized Christmas card each year. I think they had every employee spend some time writing these cards when they weren't busy.
Later they switched to printed cards using a handwriting font, but those early years of handwritten cards certainly left an impression.
And, Ryan Cohen has no operational role at the company and changing an existing company is very different from building a new one. It's not just having some grand vision, but having the culture and talent to execute on it at every level. And it's unclear Ryan Cohen himself would have any particular expertise here - selling digital goods is very different from selling physical goods.
I don't massively disagree, but perhaps you underestimate the prevalence of their brand right now. Gamestop is salient in the gaming and internet communities.
What of 'irrational' consumer behavior?
The only thing happening with GME is some opportunistic behavior around their sudden unexpected ability to raise speculative capital. Jeff Bezos himself could take over GME and there is zero chance it's going to become some sort of online ecommerce competitor to steam. They have absolutely no comparative advantage for that. All that's happening is GME management finding every way they can to redirect this influx of cash into their bonuses.
I guarantee there’s hedge funds who infiltrated the group playing up this one. Fictional fresh faced MBA from Jamie Diamond‘s outfit, “too the moon homie. Hold forever. They can take my wife, but not my GME. We tards are bringing down Capatalism.” (I used the T word because that the vernacular they use.)
I find it sad that the Retail naive investors will get fleeced again, but by professional billionaire trading outfits.
You are likely right that finance bros were (and still are) behind the polished 24/7 rocket memes, but they were likely small single-PM funds and non-regulated private players, posting behind 7 proxies to provide anonymity and plausible deniability against the SEC.
Not financial advice, I thought Tesla was laughably over valued at $40 a share, never bet more than you’re willing to lose.
Remember when it was impossible for real estate investments to lose money 15 years ago?
Other notable differences include actively building the largest and most advanced factories on every major continent, disrupting the entire automobile industry such that even jaguar is going full electric by 2025, mainstreaming self-driving, and cutting the costs of residential solar in half.
Meanwhile, gamestop is trying to make a profit out of a portfolio of dusty commercial real estate.
They are not the most advanced factories, not even close. Tesla uses much more human labor per vehicle than its competitors; the "alien dreadnought" never materialized. "Toyota remains well ahead of Tesla in terms of manufacturing efficiency, producing more vehicles per employee, while utilizing its fixed assets and inventory more effectively":
https://www.forbes.com/sites/greatspeculations/2020/02/11/co...
> disrupting the entire automobile industry such that even jaguar is going full electric by 2025
The industry shift towards electric vehicles is because it's finally becoming profitable to make them. This is largely due to a dramatic reduction in battery costs which is driven by R&D for smartphones, not cars. Personally I don't believe Tesla has much to do with it.
> mainstreaming self-driving
They are mainstreaming dangerous driver assistance technologies well before they are ready because they've been pre-selling "full self driving" for years. They are nowhere close to completing an autonomous cross-country drive, something they promised would be done five years ago. Waymo is far ahead of Tesla on self-driving technology.
> cutting the costs of residential solar in half
I'm not sure there's even any point in arguing this because solar is an insignificant fraction of their business. They are a car manufacturer, nothing more. But in my personal opinion, I think the SolarCity acquisition was a fraudulent bailout of Musk's family, the solar shingles were mostly a sham, and Tesla has no significant proprietary solar technology at all.
As much as I agree with the rest of your comment, I have to disagree with this part. Yes, there is a shift towards profitability with electric vehicles now and that has a lot to do with battery advancements from smartphones. But EVs still aren't exactly profitable, and when they are it's usually because of tax credits (granted that still counts, but it's important to mention).
It's important to remember traditional automobile manufacturers have decades of accumulated knowledge from spending hundreds of billions, if not trillions of dollars, on R&D for the internal combustion engine. Their processes are set up for it. Their tooling is set up for it. And more importantly, their business model which almost always focuses on maintenance costs is set up for it. It's like how Kodak invented the digital camera, but decided to continue with their legacy business because they were already set up for it.
There are many things I dislike about Tesla. But I genuinely believe they are responsible for bringing EVs to market ~3 years before it would have happened without them.
This feels vaguely ahistorical. The best-selling electric car platform in Europe today is the Renault Z-E platform (or at least it was; VW may have overtaken by now). That platform was announced in 2009 or so, with the first cars in 2011, and the first Zoe (the popular car based on the platform) in 2012. The Nissan Leaf came out in 2010. The Tesla Model S came out in 2012.
So given that, it's hard to see what Tesla had to do with it, really. Some of the most popular models came to market BEFORE Tesla (if you ignore the roadster, a contemporary of the Z-E concepts, which you almost certainly should).
You are correct about timings. What you are missing is
1) Adoption and perception. The public and mainstream media love 'EV Jesus' and his perceived dedication to 'the mission'.
2) User experience, in particular charging. Tesla still today has the biggest charger network and charging is a crucial remedy for range anxiety.
Not to say they're not a significant electric car manufacturer, but "coming third in the biggest western market, behind Renault, who apparently still exist" is not a great argument for them being either a market leader or having a particularly sticky brand.
The disruptive product doesn't have to be the first.
By contrast, a Leaf or Zoe that you buy today is just a better version of the Leaf or Zoe you could have bought before the Model S came out.
You know what else "their tooling is set up" for? Being changed in a short period of time for whatever the next hotness is.
But I genuinely believe they are responsible for bringing EVs to market ~3 years before it would have happened without them.
How do you reconcile that statement with the fact that while folks were waiting for Tesla to fill their Model S pre-orders, we were already driving a Nissan Leaf? The Leaf was going to happen whether or not Tesla ever built a single car, or even if Tesla never existed. I mean it's nice that Tesla fans jumped on the EV bandwagon, even if a little late, but let's not pretend Tesla wasn't late to the production EV game.
Teslas maintain most of their retail value.
There's a reason. If leafs were the archetypical EV, public perception of EVs would be leafs. Which are garbage.
Also consider that the tesla gigafactory will build the entire frame and body of the vehicle as one part in under a second. Nothing close to this is being done, because the machines to do it are being invented for tesla.
If you'd like to discuss your other points with me, i'm down. But I don't like the "I disagree with every one of your points so here's a pdf" format
It’s not “we don’t have any more money” or “we aren’t making any money”, it’s “we need a little court-mandated breathing room (from our creditors) to change x, y, and z, and then we’ll be ok”.
More like: "and then we'll pay back as much as we can to our creditors, and then if there's still money left at the end we might be ok"
> It’s not “we don’t have any more money” or “we aren’t making any money”, it’s “we need a little court-mandated breathing room (from our creditors) to change x, y, and z, and then we’ll be ok”.
It really depends on which "we" you're talking about:
1. What you said is probably true, from the perspective of the organization itself (which includes its officers).
2. It's almost always false, from the perspective of the current shareholders. They're going to get wiped out.
A better criterion would be "when transaction fees aren't worth enough to incentivize enough mining to keep the network secure". But even that isn't a very clear concept because you can always just wait longer for more blocks to confirm.
In case of a sudden huge decrease of BTC price for a whatever reason, the cost of electricity for mining would become much larger than the cost of all the expected reward (the newly mined part plus the txn fee part). If such a situation would cause major miners cease mining, then there's a gap where there's a lot of unprofitable [proof of] work too be done until the next hash difficulty adjustment, which happens every 2016 blocks - which usually should be roughly every two weeks, but if there's a large sudden hash rate decrease, then it can take months to mine those blocks, the adjustment won't happen until (unless!) someone sacrifices something like 100 million dollars in electricity costs to mine the remaining blocks while the difficulty rate has made it unprofitable at the unexpectedly lowered BTC price - and, of course, the impact of that hashrate drop would make BTC transactions very slow and act as a further downward push on BTC price.
TL;DR - there's a mechanism where a sudden large, rapid drop in BTC price might perhaps cause a sustained collapse of BTC price.
This scenario is known as the "chain death spiral". When BCH forked from BTC, the BCH backers hoped to cause a death spiral on the BTC chain, so that it would die and be replaced by the BCH chain, the later having a modified algorithm which adjusted the hash difficulty faster. IIRC, they failed for two reasons: first, there was a large enough group of miners which didn't defect and stayed on the BTC chain even while the BCH chain was more profitable, keeping the hash rate high enough that the difficulty adjustment kept working; second, the faster difficulty adjustment of the BCH chain led it to oscillate between long periods without any block and periods in which many blocks were mined very quickly, most of them empty. IIRC, this ended when the BCH chain hard forked again to change its difficulty adjustment to one which didn't oscillate as much; however, the hype caused by all this mess (whoever had Bitcoin had doubled the amount of coin they had! Of course, half of it was BTC and half of it was BCH) led to an increase to the price of Bitcoin (and a few more forks).
They basically have to pivot into ecommerce and somehow compete effectively with Sony, Microsoft, and Valve. I don't give them good odds of success there, even with Ryan Cohen.