GameStop shares soar 110% and are halted as trader 'Roaring Kitty' resurfaces | Hacker News Reader

GameStop shares soar 110% and are halted as trader 'Roaring Kitty' resurfaces

cnbc.com

48 pointsmfiguiere53 comments

Market cap is now close to ~$11B, for a company that over the last 12 months burned ~$240M in cash. Revenues declined by ~11%. Net cash on hand is ~$600M. It's hard to justify purchasing the shares at the current price based on the company's recent results. Its future prospects don't seem particularly promising either.

A stock's price is set by the marginal buyer and seller. For example, a single share that trades at 50% less than the last price instantly brings market cap down by 50%. Once all the retail investors loading up on the stock have purchased as much as they can hold, very little marginal trading volume can bring the stock price back down.

Retail volume is easily outmatched by hedge fund volume. GME has always fallen on heavy volume as hedge funds dump, like in 2021.

If the price starts dropping, the fearful start dumping, and volume jumps.

Sellers pushing the price down beget more sellers pushing the price down.

Hedge funds will try to ride it up and down.

this is completely anecdotal but I recently went into an average sized mall based gamestop looking to browse for some used xbox games, and the selection was maybe 1/4 as large as it was 5 years ago. The PS4/PS5 selection was similarly bad.

What there was an abundance of was funko pops and other random plastic objects and toys.

Or things like $95 "gaming headsets" that looked equal in quality to what I could probably buy as a $40 full ear headset from some random brand name on Amazon .

I understand that gamestop doesn't have any power to control microsoft and/or sony moving to an all-digital, one-purchaser, no-resale direct game sales model of downloading everything from a game app store, but I was left distinctly unimpressed.

Same here in Europe. I dont go there anymore. The PC section was already decimated and the hardware stuff they sell is nothing more than rebadged AliExpress crap. And yea tons of merchandise.

It's not unique to GameStop, we also have a European chain called GAME which is the same. They're trying to revive themselves with second hand consoles and phones.

> It's not unique to GameStop, we also have a European chain called GAME which is the same.

I was interested, because I’ve never heard of them, yet I know of GAME in South Africa.

Looks [0] like GAME in UK is a UK-only chain, and GAME in SA is an eventually-owned-by-Walmart SA-only chain.

[0] https://en.wikipedia.org/wiki/Game_(disambiguation)#Brands_a...

Well yes, it's British but also active in Spain.

Wikipedia says they are also active in Ireland but they left that country many years ago (it's annoying, nobody bothers with Ireland, there isn't even a real Apple store even though Apple has their own EU Headquarters there!).

And apparently they were in Sweden too at some point: https://en.wikipedia.org/wiki/Game_(retailer)#/media/File:Ga...

It's much better to just go to CeX, the (original?) Charlie Brooker chain. At least they are honest at being basically a pawn shop for games.

So GameStop bought ThinkGeek, killed ThinkGeek, and is now trying to become a worse ThinkGeek. That's...upsetting.

Let's stop pretending stock prices still have any strong correlation with the real world.

This is all a fucking game ripe with speculators, insider traders, funny QE money and hordes of addicts rolling the dices in hopes of beating the man.

As Ben Graham said: “In the short run, the market is a voting machine but in the long run it is a weighing machine.”

Folding Ideas (of Line Goes Up and In Search of a Flat Earth fame) had a video on the Gamestop meme stock here: https://www.youtube.com/watch?v=5pYeoZaoWrA

Apparently, the people still holding Gamestop have devolved into absolute insanity, somehow believing that the Mother of All Short Squeezes hasn't happened yet, and they need to hold on for dear life to perpetuate the short squeeze, which will cause absolute financial calamity as the Federal Reserve will pay those people millions of dollars per share to bail out the hedge funds.

These are the people who are helping to prop up the share price.

So what was the point of all those hearings and SEC investigations in 2021 if nothing changed? I don't get it. All just Kabuki theater at taxpayer expense.

Considering that the majority of the interviewees lied under oath, I would suspect the "investigations" were meant primarily to convince average retail apes that institutional investors had been bad, but wouldn't be bad again — WE PROMISE.

Disclosure: I own a small amount of GME. Meows and moons.

Is there a calendar date at which you will concede to the claim that the base idea is simply false?

I will accept "the base idea is simply false" when Gamestop files for corporation-ending bankruptcy.

To date, I am net-positive on this investment.

How much of that net-positivity is a result of a 110% jump because a man posted a meme of a guy leaning forward?

Not all of it =D

You know he posted that after days of double digit gains and and excessive call volume, right?

I'm still "up" — almost always have been.

>>Time in the market beats (attempts at) timing the market.

It's been a few years, and will be a few more.

Will you accept bankruptcy declared by the company, or do all DRS-registered shares need to turn in paper ballots?

Whatever a US Court would accept, but if it's your latter proposal you can pry mine from my cold dead fingers.

Did you literally DRS your shares?

On a risk adjusted basis?

What is your exit thesis for this trade and what will the return and timeframe be if that thesis is met?

Do you have a deadline or price level for closing the trade if your thesis is not met?

What’s the base idea in your mind? Shorting more than 100% of a share’s float seems to put hedge funds at extreme risk of a squeeze, no?

What did they lie about under oath? From what I recall the whole saga was pretty much reddit gamblers blowing through a bunch of liquidity of the major brokers, and triggering a bunch of big margin calls. There were no naked shorts or whatever other conspiracy theory reddit was spinning up, this is the kind of thing the SEC actually gets very angry about regardless of who's on the other side of the trade.

> All just Kabuki theater at taxpayer expense.

America in 2024 is this, but for everything.

The point of the investigations was to determine if any rules were broken, and potentially to propose new rules if something bad happened that didn't break the rules.

It turned out no rules were broken, and while things got weird for a short time, ultimately the underlying cause was a confluence of self-delusion and a couple traders being in truly irresponsible positions (and paying for it). No further action was deemed necessary.

And Robinhood deactivated the BUY button https://www.reddit.com/r/Superstonk/comments/1cqq713/robinho...

For everyone still saying crypto is pointless, this is the point

How would crypto help this? Robinhood could accept crypto as payment and still turn off the buy button.

What OP means it that crypto's peer to peer nature means we wouldn't have to go through gatekeepers that can turn off the "Buy" button.

But stock ownership, as a relationship between the stockholder and the company, is fundamentally not peer to peer. There's no way for you and I to settle a trade of Gamestop stock ourselves; we have to either contact Gamestop to transfer the registration or go through a trusted third party broker who holds the registration on our behalf.

The stocks themselves should be tokenized. Tradfi is an antiquated system. Thankfully Larry fink understands this.

There used to be bearer certificates for shares that could trade without a third party being involved.

They went away both because of the obvious downsides (fraud, loss etc) and the obvious upsides (efficiency) of more consolidated clearing.

What’s probably less obvious but more important for securities trading is the consolidation of the extension of credit. We no longer need to go verify the cash is available with every different counterparty pair, we can instead extend the credit just by using central rules, including the turning off of the buy button.

It’s not obvious to me how crypto equity trading, even if decentralized, solves the credit issue at the cash off ramp. Unless that off-ramp is truly a society that actually uses crypto as a currency.

Robinhood disables stuff because stock settlement gets wonky if there's too much volatility. This is "fixed" by crypto because there's no settlement, at least in layer 1.

I believe OP means that a decentralized trading network (not sure how that would be implemented with lowish latency) would circumvent this, not that the transaction needs to be done in a cryptocurrency

Why this doesn't count as a market manipulation? They can influence stock prices this way, can't they?

A broker not executing a trade that requires the broker to spend liquidity, because the broker doesn't have any liquidity is not market manipulation.

It's not market manipulation to not do something that you're not allowed to.

You are getting close to the heart of the matter, though. There was a kind of distributed market manipulation, as is inherent in any crowd mania. Largely coming from the people on reddit screaming 'DIAMOND HANDS' and 'BUY AT ANY PRICE' and 'WE WILL ALL TO THE MOON TOGETHER' and 'BELIEVE IN THE MOVEMENT', and ...[1] while they were quietly unloading their positions to bigger fools.

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[1] My absolute favorite was 'If we just diamond hands Uncle Sam will cover all of Melvin Capital's losses and will turn over ownership of the entirety of the world's economy into the hands of the apes, because contracts, are, like, sacred, and we found the infinite money glitch, and the USGov is somehow responsible for bad trades done by a shitty hedge fund.'

Why are people posting on Reddit a manipulation? Anyone can post anything on Reddit and no serious investor will blindly follow this. On the other hand, companies (brokers) that allow people to trade have a power to manipulate the market by enabling/disabling trade of specific stock at necessary moment.

Also if people posting on Reddit can cause serious losses to greedy capitalists then it is fun.

Historically, everyone looses their ass on these pump and dump schemes. And when that happens, people say things like "Why didn't the SEC step in to prevent the losses?"

What’s the point?

As if Robinhood wouldn't disable crypto buy/sell buttons if needed.

Robinhood deactivated the BUY button because it didn't have enough liquidity to execute the trades. The apes blew through all of its pool of liquid money in a day.

You get what you pay for with a discount brokerage that you can load through a friggin' credit card. One thing that you don't pay for is 100% uptime for being able to do any trade you want, at any time you want.

Contrary to what you see on your bank's/broker's website, it takes actual time for monetary transactions to settle, and the NYSE does not value charge-backable IOUs from retail investors at 1:1. It actually wants real money delivered to them when trading closes. Money that Robinhood did not have on short notice, no matter how many credit cards you maxed out to buy shares on it.

> it didn't have enough liquidity to execute the trades.

Robinhood needs FedNow support. That settles within 10 seconds. Then people can lose money faster.

The problem is not RH paying its counterparties, the problem is me, a retail customer paying RH. It takes time for my money to settle with them, and they can't pay their counterparties until it does.

They keep a pool of cash on hand to deal with this, but that pool was not big enough to absorb the GME mania. Robinhood eventually borrowed enough money to solve their liquidity problem, but by the time they did, the bubble popped, and the bagholders started screaming about fraud and collusion.

Few banks support consumer-initiated FedNow transfers. The main near-term application is receiving government payments: Medicare, tax refunds, and such. The US Treasury wants to convert over, to reduce customer service issues. ("Where's my Social Security check?") If it only takes seconds, customer service and actual money transfer are in sync.

Banks are dragging their feet on customer-initiated transfers because of the fraud problem. If you send money by FedNow, it's gone. So there's a lot of scam potential. Wells Fargo supports bill pay via FedNow to known payees, which is useful. Pay a bill, and the payee gets paid immediately. Both sides can see the transaction as completed. That's useful.

The ability to send your entire bank account to anybody in seconds with no way to reverse the transaction is rather risky.

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