[alistproducer2]

Reddit and discord are afraid they'll be implicated in what is a classic pump and dump. Robinhood only exists because the SEC has chosen to look the other way concerning the pattern day trading rule which clearly is in jeopardy if big money starts complaining.

[volta83]

How is this a classic pump and dump ?

This is a short squeeze: the stock is shorted to the limit, and from the stock price, the shorters entered their positions "uncovered", so their risk is extremely high, and their losses are potentially infinite.

The WSB crowd and probably others noticed this, and bought the stock, knowing that it was going to become more valuable over time once the shorters had to close their positions.

They were right, and the shorters are loosing so much money that they are willing to buy back the stock at astronomical prices to limit their losses, which drives the price up even more.

The WSB crowd just need to hold until the stock is at the maximum price that the short sellers can pay, right before the short sellers default. That's the actual value of the stock right now.

If the stock climbs too much, and the short sellers default, the stock is worthless.

TBH, this is the short sellers own fault. They made the assumption that the market was "fair", and that they were going to buy back the shares for cheap when they needed them as a consequence.

That assumption was wrong.

[SpicyLemonZest]

It's a classic pump and dump because there's just no reason to believe that this is what's happening. There was a short squeeze at one point, but all of the funds known to hold large short positions had closed their positions by Wednesday morning; the value since then was most likely driven entirely by speculation.

In particular, I've seen a lot of speculators spreading the idea that margin calls will force everyone shorting Gamestop to buy stock at market price on Friday. This is wrong, and pretty unequivocally so, but I've had multiple friends come to me and explain that this is why they bought some.

[robot1]

This makes no sense - if they had closed their short positions of millions of shares and had the squeeze happen, the share price would have spiked far higher than it is now.

[SpicyLemonZest]

Why is that so? Trading volume was over 175 million each of Friday, Monday, and Tuesday. Do we have some way of knowing exactly what the price should be when they exit?

[robot1]

Robinhood would not put themselves in such a precarious position if they had already exited - also as for the price target of when they actually do start covering their shorts, they are still currently short more than the available amount of shares on the market - the current trading range of around 200-300 cannot be the squeeze.

[SpicyLemonZest]

You’re misunderstanding what a short squeeze means. There’s no singular “the squeeze” - no specific point in time where everyone who holds a short position has to simultaneously obtain the underlying stock. If everyone who wants out of their short position has gotten out, there’s no guarantee that any further squeeze will be forthcoming.

[imtringued]

By this logic the stock should be shorted even more than it currently is. Why did short sellers close their position if that is the case? Your story is not consistent at all.

[llampx]

What? RH enforces the PDT rule, as does every other US broker. SEC is not looking the other way there at all.

[Sohcahtoa82]

> Robinhood only exists because the SEC has chosen to look the other way concerning the pattern day trading rule

This is simply not true at all.

I've had my trading on RH restricted specifically because of the PDT rule. As in, I was about to make a trade, and the site told me that the trade would cause a restriction because of pattern day trading.