[Goosee]

For context one short seller (Citron Research) published this video explaining their belief that GME is a $20 stock.[1]

The way I see it, Citron believes this fiasco is irrational thought about the future of Gamestop and its value.

I think this is actually about the common retail trader manipulating the 'market manipulators'. In other words, let Citron taste their own medicine.

I think Citron failed to realize in the beginning that they were playing a different game than retail traders. Citron believes this is about value investing. WallStreetBets thinks this is a David vs Goliath situation, regardless of the stock they are fighting over.

[1] https://twitter.com/citronresearch/status/135234404324660838...

[boatsie]

Volume for the day is currently at 134m. Even at $80 average trade price, that is over $10 billion worth traded today. Average volume was 20 million for a whole day, and at $20 was about $400m trading hands.

Do the wsb retail investors really control enough money to be buying up the stock this much? If they do, that means they could do this to many stocks...

[seabird]

They're not managing this by having a huge amount of capital; what's happening here only works under some really specific circumstances. Recent-ish short interest data had GME at ludicrous levels (over 100% of issued stock was shorted due to market maker activity). Good news on a large investment from a big name who then joins the board spurs optimistic pricing, which puts the top end of call options (which are normally pie in the sky lottery tickets) within range. Some really questionable bull decision making (WSB's forte) gets retail investors interested, price keeps going up, and eventually all calls are in-the-money. Large market makers selling what _used_ to be absurd calls are now going to have to make good on them and start buying up stock to cover them. Stock price is going up, retail bulls are pepped up, and anybody short on GME (and there were some people that were outrageously short) is now looking down the barrel of huge losses. Short sellers need to start considering getting their hands on this stock to make good, which applies upward pressure, making other short sellers consider doing the same. This all looks good for bulls, so they're simultaneously applying upward pressure. Market makers who didn't learn their lesson have written more call options for strike prices that are now in range.

This is a perfect storm where very big players are incredibly overextended and don't know how to deal with irresponsible/rash decision makers. It's not impossible for it to happen again, but these are not conditions WSB or similar peanut galleries can reliably recreate.

[runeks]

You don’t need $10bn of capital to trade $10bn worth of a stock. For example, if you repeatedly buy and then sell a single share then you could, in theory, add billions of dollars of volume with only as much capital as the price of a single share.

[retzkek]

Matt Levine had a very good explanation of this in his newsletter today: https://www.bloomberg.com/opinion/articles/2021-01-25/the-ga...

The TL;DR is that r/WSB et al primarily trade in options, which provide significant leverage and force market makers to take increasingly large positions in the underlying to hedge.

[tamiral]

r/WSB has held mostly shares of the company and a survey on the subreddit found that users own 8% of GME shares, that's if everyone was truthful, so no 8% isnt enough to move the market when everyone is buying shares and not options. The fact is GME pumped above all time highs due to retail investor hype and from click bait articles on all the financial news sites + specific scenarios of a gamma squeeze mentioned here....

[TrackerFF]

Let's be real here, WallStreetBets thinks it's about getting 2000-20000% gains in xx months - "sticking it" to some boomer short seller (their words) just sweetens the deal. It's a culture that revolves around pure gambling.

[tmpz22]

I wonder if the recent hunger for the new PS5/XboxSeriesX, namely the lack of supply, scalping, and massive web traffic trying to secure online orders, contributed to a short-term distorted view on the stock.

[abbbccdefd]

The new console cycle definitely contributed. I think it more had to do with Ryan Cohen, founder of CHEWY, buying 13% of gamestop shares and joining the board with two other CHEWY executives. The assumption is he will play a large role in GameStop's future and buying GameStop stock is a bet on his ability to pivot GameStop into new revenue generating gaming verticals.