GameStop rockets, as 'Roaring Kitty' returns; shares halted | Hacker News Reader

GameStop rockets, as 'Roaring Kitty' returns; shares halted

thestreet.com

49 pointsbreck38 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.

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Reposting comment from duplicate OP: https://news.ycombinator.com/item?id=40343460

Ok, so what you are saying it's almost like GameStop shares are just like a virtual identity, that can be transacted for whatever value the parties attribute to it, with no other economic consideration that the trend of the moment...sounds like Bitcoin....

Sounds like Tesla shares.

There are degrees of meme-stock-iness.

The platonic ideal, of course, is that Trump one; it's almost a pure speculative token with only a minuscule social networking company attached.

> For example, a single share that trades at 50% less than the last price instantly brings market cap down by 50%.

It's not a single share trading low that brings the price down, it's the entire buy order book above that price being emptied out.

Which, in effective markets, should happen reasonably quickly when a stock is overpriced, after the market has time to react to a pack of retail apes maxing out their credit cards to buy it at 'any price'.

IIRC, NBBO isn't affected by odd lots except outside of regular trading hours. You'd have to trade shares in multiples of 100. That's after the order book emptied to the ask/bid and a corresponding trade appeared. Then, someone could immediately decide that price was too high/low and the next trade moves it back, where the consensus keeps it.

Yes, but... if existing holders don't believe in the valuation they are free to become marginal sellers.

(N.b. I'm personally staying away from meme stocks)

Short it then.

Mind walking me through that process? I'm genuinely interested in doing so.

Open a brokerage account and fund it. Apply for margin. Type the ticker in. Click sell to open. You have unlimited risk of loss, and if you don't maintain the margin, your position will be closed and you will owe a sum of money larger than you deposited. Be careful.

Alternatively, open a brokerage account and go through their process to enable options trading (essentially mostly a short quiz on how options work to make sure you're not an obvious liability).

Then either buy put options that are currently barely in the money (and will go further into the money once the stock comes tumbling down), or sell call options that are out of the money (or very slightly in if you can tolerate that risk) and will go further out once the price of the underlying goes down.

As with shorting stock, the risk for selling calls is technically unlimited (even though IMHO it's extremely unlikely that GME will go to the moon again the same way it did last time). With buying puts, your risk is the money you spent for the option. If the stock price is higher than the option at expiry, you'll have lost all of it. If it's lower, you can pocket the difference between strike price and stock price, minus the cost of the option.

>even though IMHO it's extremely unlikely that GME will go to the moon again the same way it did last time

FWIW, it hit about $320 during pre-market trading this morning, in terms of the price it would have been before the stock split in 2022. Currently sitting at $200, in those terms.

>Short it then

Many stocks are simultaneously terrible short and long positions to hold as an individual investor.

The most baffling bit is that I’m sure a fairly large part of the meme buying frenzy is gamers who know better. No one uses GameStop - it was a joke before all this started already. They have no chance against steam and epic and game pass.. ie. They’ll give you $5 in store credit for selling them a brand new game.

I also wouldn’t be surprised if the next Gen consoles go the way of PC and don’t ship optical drives anymore - what would be the business of GME at that point ?

I suspect GameStop knows this.

All of the ones near me have reconfigured their stores to emphasize game and geek-culture related merchandise and memorabilia instead of games.

I think there’s probably still a decent market for used console games from the 8-bit and 16-bit eras, and all the generations of Gameboys, and of course they could sell both new and used consoles and accessories. I think they could survive in these niches if they consolidate their stores a bit, as they have far too many locations given current market conditions.

Their only way out is to turn into Hot Topic / Spencer Gifts. Not a bright future.

Thank God. The cult was getting horribly boring after coasting on leftover nonsense for a few years and I'd quit doing much but checking in every couple of months to watch them lose money. Here's hoping this produces a fresh generation of bagholders to perpetuate my weird trainwreck-staring hobby with a fresh injection of fascinating new madness!

Happy to see this silliness return.

That whole community is really pathetic and depressing at this point. People with their entire life savings holding -80% bags that will never recover, spending their days obsessing over tea leaf divinations of their pending salvation. Please don't encourage this.

How do you feel about crypto?

I'm confused. I own some GME for the lulz. Not for the hopes of making a profit or for some greater cause of justice. Purely for the sake of chuckling and getting laughs from family and friends when the subject comes up.

I chuckle about it with family and friends without having bought any shares. It’s not a requirement.

It is a requirement from the standpoint of view of the prisoner's dilemma: if no one holds - there's nothing to chuckle about.

> I own some GME for the lulz. Not for the hopes of making a profit or for some greater cause of justice.

Sure, plenty of people do. But those arent the ones making daily /r/Superstonk posts with their crazy-board yarn lines connecting some CNBC article they found from 3 years ago to a cryptic new tweet from an anonymous "insider" about the impending squeeze. A ton of people who knew absolutely nothing about investing lost everything over this, and it's sad to see it play out.

Is it? Is it sad? There was a time within living memory where the basics of personal finance were taught and it was strongly implied throughout that additional education on the topic was a must-have for any functional adult. At what point did personal accountability go out the window here?

When we replaced pensions for most workers and required them all to become direct market participants without teaching people the basics of how the markets work.

My grandmother taught home economics for her whole career including personal finance and I assure you she doesn’t know what a short squeeze is. My grandfather probably didn’t pay a bill or make a budget his entire life, but his heirs are still getting payouts from his benefits.

For that matter most of the tech workers I’ve worked with don’t understand how many of their benefits work either (e.g rsu, HSA, backdoor Roth’s, etc). How many startups out there are pitching options as major components of their compensation without even giving their employees the information needed to price them?

I think there is a ton of good about moving away from patriarchal relationships between employee benefits and employment, but it’s not at all surprising that it’s had the repercussion that people unprepared for it have been dumped in the deep end. And that it’s deeper than ever and they are drowning.

I don't disagree with anything you've said here, every point you've made is solid and I couldn't agree more. Where I think we disagree is on the concept of personal responsibility. I maintain that it is every adult's responsibility to acquire whatever information they need to make informed decisions regarding their personal finance. If they opt not to for whatever reason that is absolutely a personal choice they've made. I reject any notion that having exercised their personal agency in this decision they are then victims later when poor outcomes manifest. Investing in an uneducated fashion is the very definition of fucking around, and I'm not prepared to offer up my feels when someone finds out.

I thought I knew how bad it was, and then I saw Folding Idea's video on the post-crash meme stock phase here: https://www.youtube.com/watch?v=5pYeoZaoWrA

So, apparently a lot of the people who are still holding onto the stock have engaged in full-on apocalyptic cult insanity. They're under the delusion that the "Mother of All Short Squeezes" hasn't happened yet, and that when it will happen, it will be an absolute financial calamity, as literally all Gamestop stock will be held by "true" holders [1], who can therefore extort any price from the short sellers desperate to buy the stock back to cover the short squeeze, causing the price to hit millions of dollars per share, allowing the true holders comfortable retirement as billionaires.

It really is an apocalyptic cult mindset, people seeing themselves as the sufferers who will receive redemption in the imminent apocalypse as their (currently more successful foes) receive absolute punishment at the same time. Although even compared to most apocalyptic prophecies, this one is particularly far-fetched: the means of deliverance is extremely vague, with the closest hint of an idea is essentially that the Big Bad who is currently oppressing them will somehow turn around and reward them handsomely for their perseverance (usually stated with some amount of cognitive dissonance--you get the sense that the adherents don't really believe this, but they need to justify deliverance somehow and there's no better option than this).

[1] There's a belief that most of the shares are fake.

This is something I'm fascinated by; did this type of financial cult always exist, or is it a new thing? Like, people investing in the South Sea Company had some very silly ideas about it, but they didn't believe it was going to bring around a fundamental restructuring of society or anything. The first manifestation of "if you invest in this, you will become part of the ruling elite in a pseudo-apocalyptic new world order" I can think of is Bitcoin (remember the citadels); the meme stocks seem to have taken that absence of crypto-nonsense and dropped the crypto bit.

>This is something I'm fascinated by; did this type of financial cult always exist, or is it a new thing?

The general framework is always the same, it's just the underlying scenario that changes. Generally you have some group of people for whom a question is a matter of survival (in this case financially) that do what humans do when there is no hope: they continue to hope. It necessitates a detachment from reality to keep their worldview consistent.

> Generally you have some group of people for whom a question is a matter of survival (in this case financially)

That very much isn't the case for the vast majority of people suckered into this, though. And they're not looking to survive, they're looking to become rulers in a new world order (the current theory is that if they directly register their shares, then it will become clear that hedge funds have made up a lot of shares(??) and that hedge funds/the federal reserve/the government(?????) will be forced to buy their shares for millions of dollars apiece, for some reason).

To be clear, the GameStop thing wasn't always like this; their 'MOAS' concept started as just them slightly misunderstanding what a naked short was. But it has really gone some weird places.

A bit before Bitcoin was NESARA: https://en.m.wikipedia.org/wiki/NESARA

I learned of NESARA through Will Sommer's TRUST THE PLAN, which is about qanon. The MOASS, NESARA, and qanon conspiracy theories all share some interesting characteristics, like there's something necessary for a conspiracy theory to start resembling the distributed cataclysm-utopia cults we're discussing

I really can't recommend this video enough. It's startling. You'll get a bunch of ideas for Google and Reddit searches from it, and I think you'll find --- especially if you go back in time just a little bit --- that he's underselling it.

I thought the GME/Robinhood/Citadel conspiracy theory was, you know, conspiracy-theoretic. But that's not even scratching the surface of how weird this gets.

Are we sure this is not a hacked account or something? He seems to be posting clips from movies etc.

Maybe someone well versed in the WSB culture can explain what's going on? What happened to the guy through the years?

Oh, wow, that would just be the crowning glory on this nonsense.

[dupe]

Some more discussion: https://news.ycombinator.com/item?id=40343460

I don't get why GameStop didn't try to revitalize their business after the 2021 short squeeze. They had (and still have) access to a large amount of capital, but they didn't try to launch an online storefront to rival Steam or transition to a closely related industry like game development. Instead, the only real changes that I've seen are an NFT store that nobody uses and rebranding all the EB Game stores here in Canada as GameStop to grift the cult of stock holders.

You're not going to be rivalling Steam with a billion dollars and no prior experience in doing anything like that. Like, if that were sufficiently easy that GameStop could do it, someone would just go to a VC, get a billion dollars, and do it.

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