The stock already sits at 600% valuation, what kind of turnaround will justify a multiple of that?
Current price is, in part, driven by asymmetrical risk/reward - there's a small potential loss (size of one's position in GME) and subjectively high chance of having a real stock squeeze (and having a 10/100/1000x reward) assuming that original 120%+ short interest was not closed and is still held in the form of various derivatives.
The assumption hasn't been disproved so far, partly because current regulatory environment is very lax on reporting (which makes it very hard to disprove the thesis using public data) and partly due to other indicators (like retail owning over 10% of float as of last earnings report).
Uhh, what?
I guess one man's price stabilization is another man's market manipulation.
Every trade has to be marked correctly, whether it's short with a physical locate or short on a riskless principal basis. Equity swaps trade and are marked as riskless principal trades (ie. they're fully hedged positions and the short position is the market maker's aggregate short position). That information gets aggregated at client level and reported to regulators.
After Dodd Frank equity swaps and rehypo became even more heavily restricted. Swaps go through a clearing house and rehypothication was basically dead the last time I worked in the industry (though that might have changed).
I'm 99% sure that the speculation about the "elites" and their sinister role in GME's trading activity is simply caused by booking errors and/or aggregation mistakes.
If you're taking liquidity (i.e. "I want to sell right now"), you're directly applying downward price pressure to the market, by removing shares from the buy side.
If you're adding liquidity ("I'm selling, but I'm waiting for a buyer"), that's likely to have much less (if any) effect on the price.
The idea that MMs would somehow use their privilege to actively sell massive amounts of non-existent shares into the market in order to manipulate the price downwards is preposterous. That is literally the opposite of their business model and such activity would certainly be flagged by regulators.
Honestly it feels like a lot of the conspiracy theories around these meme stocks are based on reading a lot into a very narrow slice of regulatory text without any real understand of the whole.
It's literally called the "madoff rule" and the "madoff exemption" because he's the one that pushed the SEC to allow it.
This assumption is disproved every day by publicly available short interest data. If you operate on the assumption that all official data is false you can make all the wild claims you want, but you're not being serious and your theory is unfalsifiable.
This is a strawman. It is possible to believe (and there is motive and opportunity in this case) that one "official" statistic is manipulated or does not show the whole picture without being a raving conspiracy theorist who trusts no official.
I will also say: you can read SEC sources about RegSHO limitations about how short interest can be manipulated and masked through "Failures to Deliver" (FTD). So this is not exactly an assumption, more of a preposition about magnitude.
Actually, it's the other way round: you can only have accurate price discovery if people can take both long (buy) and short positions (short sell). If shorting is restricted, price discovery is much less likely, since only current owners of the shares can sell them. That's like only allowing current owners of the shares to buy more of them.
The more opaque information discovery is in general, the less accurate markets are in the short term.
Acme Corp has exactly 1 share of float, owned by Alice.
Bob borrows the share from Alice and sells to Charlie.
Diana borrows the share from Charlie and sells it to Eve.
Bob and Diana are each short 1 share for a total of 2. Total short position is 200% of float.
The better indicator of sketchy activity is FTDs, which may indicate that people are selling short without a locate.
> subjectively high chance of having a real stock squeeze
Ha, that explains a lot. The only way to believe the stock will go up, is the fairy-tale short squeeze. The current valuation is extremely generous based on reality.
Related to this theory, a lot of them believe the ease of closing short positions is facilitated by shady phantom shares and are trying to stamp that out by directly registering shares with the broker Computershare.
Disclaimer: I own GME stock.