Anyone following the stock market and what the folks at reddit are doing?

I'm talking about what has been going on with Gamestop (GME) stock the past couple days.  It was at roughly $50/share, they caused it to shoot up to $138ish/share and it is hovering around $80 right now.  Short sellers lost $1.6 Billion because they didn't believe the stock was going to perform like the group at reddit thought it would.

Some sort of weird groupthink going on there and I'm trying to get ahold of it to figure out if they're just idiots or if a group of someones know what they are doing and are leading the rest.

As an aside, the next stock they are claiming is going to jump is Blackberry (BB) which is currently just shy of $20/share.

I did hear about Gamestop/Reddit. 

The exchange suspended trading at least once on the stock to try to regain control. 

I had not heard about the Blackberry move. 

I saw a friend on social media make a reference to the stock.. so I went and pulled the data on the stock and was like WTF..

In reply to spacecadet (Forum Supporter) :

Same. Lol

OwnwardMobility licensed the Blackberry name, they're making new QWERTY hardware coming out this year.  Stands to reason Blackberry would increase, regardless of Reddit.

I absolutely loved my PRIV, and am doing my damnedest to make my KeyOne last until I see some real world reviews of OwnwardMobility's offerings.

I had some shares of Gamestop and most of it has sold because it far exceeds the targets I set for it. I like the stock for what I bought it for because I felt it was undervalued but this recent activity makes no sense to me.

John Welsh said:

I did hear about Gamestop/Reddit. 

The exchange suspended trading at least once on the stock to try to regain control. 

I had not heard about the Blackberry move. 

My tin foil hat theory...

If a group of people bought cheap stocks in a company, went on social media websites saying this is the next big thang, and after lots of bathoons bought a bunch of stock because it's the "next" big thang,said company stocks rise really quick, then  they then sell their stocks at much higher rate....

Pump and dump 

learned that from wolf of Wall Street referenced in Darknet Diaries. which I heard about here on grm.  Funny how life works

Sounds like some pretty typical stock manipulation.

I suspect the SEC will be dispatching some thugs shortly. They tend to take such things rather  seriously (integrity of the marked and all).

It's one of the best dumb memes my friends and I have been apart of; a few have already made money, though they are out of it now.

Will this make the SEC shut down Wall Street Bets again?

Heard about the Gamestop thing this morning, also something about trading being halted due to threats from hackers.

Very happy with the Blackberry thing. I bought two weeks ago and sold this morning. 

jfryjfry (FS) said:

Pump and dump 

 

learned that from wolf of Wall Street referenced in Darknet Diaries. which I heard about here on grm.  Funny how life works

This is the opposite of a pump and dump. Collectively there were too many shorts on GME for the market to support and with the advent of margin buying in the hands of some very insane people online they punished those positions and hard. This happens quite a bit but not normally driven by individual investors. New world and all that but robinhood has made margin buying way to easy for unskilled investors who do not understand what they are doing or just don;t care about the downside if they get caught out. . 

We are talking almost a 2 billion dollar bath of major investors and they are not prepared to deal with the fallout of this. It will happen again and it will not alwaysgo the way of the small investor. 

We should not underestimate the ability of social media to influence the stock market.  My son had to explain to me why Cran-Raspberry juice was sold out in every store because of some goofy TikTok video.  We'll be hearing more about this, I can assure you.  No idea how you can fix it, but it will ruffle some feathers.

It is a stock manipulation, but it's the pump and dump's cousin the short squeeze.  Instead of pumping a stock to get victims to buy it, the manipulators pumped GameStock to force short sellers to jump out of the game and drive the price up. The more of a stock is shorted, the more effective this trick can be if you can start the stock going up. From the Investopedia link:

How to Measure Short Interest

Two measures useful in identifying stocks at risk of a short squeeze are short interest and the short-interest ratio. Short interest is the total number of shares sold short as a percentage of total shares outstanding. Tesla's 18% short interest was extremely high. The short-interest ratio is the total number of shares sold short divided by the stock’s average daily trading volume. Speculative stocks tend to have higher short interest than more stable companies.

At the time this started, investers had somehow managed to short-sell an insane 138% of the outstanding Gamestop shares. Short selling is often playing with fire, but that's more like juggling thermite grenades with the pin pulled on a catwalk over a vat full of nitroglycerin. This article sums it up pretty well:

 

Regardless, GameStop’s action illustrates, once again, why non-professionals shouldn’t short-sell stocks.

MadScientistMatt said

Regardless, GameStop’s action illustrates, once again, why non-professionals shouldn’t short-sell stocks.

Because they don't have connections to other hedge funds to bail them out with billions of dollars? :)

By my casual understanding, this is the same move that caused VW to become the most valuable company in the world for one day right after Porsche reported they increased their ownership:

Known as "the infinity squeeze."   

Regardless of fundamentals, if there are that many shorts, they are just playing with fire.  

Just ask the genius that bet his hedgefund on shorting Tesla.  It ended badly and he still hasn't backed down.

The stock market is racing towards the kind of failure we have not seen since 1929. 

Just saw a TLDR report on this, with a pretty rational explanation.  And I find it pretty funny that large hedge fund companies who decided to sell Game Stop short lost tons of money over this- because internet opinion.

They were in a horrible position to begin with, as I see it- apparently there are ~60M stocks, and a HUGE chunk of those were recently bought up (by people associated with Chewy.com), and ~77M short positions, which sounds bad, but is legal- basically, the theory being that short sellers bought and bought to cover losses while Game Stop didn't decline.

The reddit site noted that GME had two big things going for it- the new leaders (who are VERY experienced in on-line sales for normally store bought stuff) AND with the new gaming consols coming out- this is a period the GME always did well.  So in combination with all of the short positions, they suggested to buy.  Which totally screwed over the big companies and personalities that banked on GME going down the tubes.

Mind you, the reddit site has a lot of people, but there's no way they have the kind of dough that the 77M shorts did.  

Can't say that I feel bad that some big Wall St companies who saw blood in the stores ended up being their own instead of Game Stop.  You gamble, and can't control the narrative, then sometimes you lose.  Big.

alfadriver (Forum Supporter) said:

 

Mind you, the reddit site has a lot of people, but there's no way they have the kind of dough that the 77M shorts did.  

 

WSB definitely has the pull to do what they did with margin. While it is meme flounder central they have some serious margin buyers there. 

I love it they're playing to break the market and show with it when information is available and had by all and can be made by anyone that it's useless. 

I'm all for Reddit destroying 401ks

captdownshift (Forum Supporter) said:

I love it they're playing to break the market and show with it when information is available and had by all and can be made by anyone that it's useless. 

 

I'm all for Reddit destroying 401ks

So I should call you and Reddit after I retire and want to be able to do things like eat and take a couple vacations or whatever with the money that I've been saving in the 401k that you want to destroy for amusement's sake?  Will you just send me a monthly check or should I just request disbursements when I need them?

In reply to wearymicrobe :

Even so, to have 77M shorts would take billions of dollars.  They were able to take a tight situation, and push it over the edge.  Which is fine.