DeepF-Value, Reddit, GameStop. What happened?

Any investor nerds around here?

At least, enough of one to be able to explain what happened with Reddit, GameStop

and what it was that Mr. Gill aka DeepF-Value did to make it happen?

Any guess as to its ripple impacts?

I’m no investor nerd but I know enough to sum things up like this: Short Sellers basically are betting that a company will do bad. Regular investors are betting that a company will do good. Various “retail” investors, meaning I believe non-professionals “davids”, found out that various hedge fund/institutional investors, aka Goliaths, were selling short in large dollar amounts. Through communication using reddit and other social media investors bought huge amounts of Gamestop stock causing it’s price to skyrocket (i.e. to “win/do good”). That caused the bad guys betting on Gamestop’s demise to lose a fortune.

It gets more complicated because there are controls that kicked in to limit their losses. Which means the goliaths had a regulatory mechanism to save themselves, whereas average investors like you and me don’t have that. And to make things even more fun, the retail investors used a very popular trading platform called Robinhood. Get it? :slight_smile:

Exactly what happened !!!

The big boys got caught with their shorts down.

Short sellers borrow stock in order to sell it without actually owning it. When you spot a stock with more share sold short than actually exists all you need to do is buy calls and then buy the stock and tell your broker to not lend your stock. When the short sellers try to borrow more and no one is lending, they have to buy or go to prison The price of your calls goes up and the people who sold you your calls try to buy too, so the price goes up. It is a wonderful spiral for you and a horrible event for the short sellers and the call sellers who are usually the big boys.

This is the best explanation I have heard. Go girl!!

https://twitter.com/avalonpenrose/status/1354496683938201600

a normal person explains
that she is really clueless.
This is the best explanation I have heard. Go girl!!
She started off well with the rich people having hedges around their house going to the market, but then it kind of fell apart from there.

At the market they bought some hedge trimmers to keep the hedges short, but a bunch of kids in the neighborhood keep putting fertilizer on them and the hedges keep growing. The rich people have to keep going back to the market to buy more expensive trimmers

… it might work better if it were the neighbors hedges that the rich people promised to keep short for a low cost (hoping that the hedges will die). But because the kids keep fertilizing, the RP have to keep trimming - costing them more, while the neighbor just pays the same low rate …

Maybe some SNL writer can polish that up :wink:

 

… actually, isn’t that kind of like a seasonal contract for snow plowing. If it snows a lot, the company is on the short end of the stick. If it hardly snows the company makes out, and the customer just paid for nothing.

People like that really are out there - and they are allowed to vote.

People like that really are out there – and they are allowed to vote.
Which is why it is important to curtail the lies, misinformation and alternative facts.

We hit diminishing returns in a hurry.

 

The first couple comments seemed reasonable and helpful, at least in summarize roughly what I know. Would have been nice if someone had taken it up one notch, but hey.

That gal, well, seems like a great example of the dangers of not taking the time to write a script and not spending a couple hours rereading and editing before going live. Had she done that it probably could have been comprehensible.

We want hedges too! Brilliant skit.