[omarchowdhury]

> I believe it when I see it. Isn't the majority of shares hold by the heavy pros anyway? I doubt the other Hedgefonds and Yolon Musks will sacrifice shit.

They don't need to. It's mathematically impossible for shorts to cover, because they've shorted more than the entire float.

[monopoledance]

I don't think that's how this works. They "just" need to pay twice for it. The over 100% borrows happen like this:

Alice owns one GME. Bob borrows the share and sells it to John. John doesn't know this is borrowed stock and borrows it to Lisa. This way way you got two borrows on one stock.

As you can see, the hedgefonds likely already recovered some stocks from 140% down to 113%.

Their intention was to speculate on Gamespots bankruptcy and there for not even have to buy back any shares. That's why they overshot like this and also why they are human scum needing to bleed for their sins.

I honestly don't know what it means for the short squeeze, if they reach <100%. I assume at that point it becomes less of an we against them, and increasingly more of an everyone against everyone, again.

[nowherebeen]

> if they reach <100%. I assume at that point it becomes less of an we against them

In order to cover their short, they actually need to buy shares with willing sellers. So it wouldn't be a case of everyone against everyone. The amount of holders will decrease proportional to the short percentage.

They just need to make sure they aren't buying while the sellers are decreasing their exposure. But that's quite easy to tell as the price would shoot sky high from all the short sellers buying.

[monopoledance]

Yes, but wouldn't the dropping shorts mean increasingly people bought overvalued shares?

Increasingly people jumping onto "the ride" up, who may not sell to shorts in time and will just lose the game?

I don't think we know the short:share ratio exactly, as double borrows would be happening for <100% too, no? I think in the end, nobody knows what situation people bought into exactly and how fast this will collapse.

People who got in late, risk not getting off in time, as GME is totally overvalued right now. There will be causalities from desperate, poor folks going all in for a lack of understanding their risk and believing the WSB hype. I don't blame them for being "stupid", as a few thousand bucks plus, can change your life, if you're poor; I blame the ignorant people on WSB not educating about the very real risks involved. Tho, it's probably a good time for everyone learning how all this works and paying 100$-500$ risk for this education.

[nowherebeen]

> Yes, but wouldn't the dropping shorts mean increasingly people bought overvalued shares?

That's the point. When its 100% shorted and hedge funds all need to cover, they would be the ones buying these worthless stock from sellers. If say there are 5 hedge funds right now shorting 100% (20% each), you wouldn't want to be the last one shorting cause the 80% short sellers that are covering could very well bankrupt your fund. The underlying stock value doesn't matter as long as someone else is paying for it (i.e. hedge funds).

That's why business schools always say a) don't short sell and b) don't over leverage your short sell or you will get into a short squeeze. Short selling in my personal opinion is really dumb because your upside is limited, but your downside is unlimited.

I very much suspect that this will be in the textbook in the coming years as a prime example of black swan/ short squeeze.

[monopoledance]

Yeah, but the question was, what happens <100%.

[nowherebeen]

It’s already answered in the previous response.

[imtringued]

>Alice owns one GME. Bob borrows the share and sells it to John. John doesn't know this is borrowed stock and borrows it to Lisa. This way way you got two borrows on one stock.

The question is what happens on the "margin". Lets say there are 110 shorted shares. You need to get rid of 11 of them to eliminate the short squeeze (assuming nobody buys the remaining 99 shares to hold them).

Lisa owes 30 shares. She only has to buy 11 shares and then the rest of her shorts will have the potential to be in the money. She could buy one share and return it to the lender. She could now make an agreement with the lender to buy a share for a fixed price from the lender and return it and repeat this 11 times.

The question is, why would the lender agree to this instead of just charging market rate?

In my opinion the lender should be on the hook. By lending out your shares you receive interest payments that cover the risk of a "default" just like a regular bank loan. If the borrower fails to return the shares due to bankruptcy you just lose your share. This would significantly reduce the potential for a short squeeze because the lender would just agree to a share price that does not leave the borrower bankrupt.

[monopoledance]

This is over my head, sorry.

Tho, I think your scenario doesn't exactly mean "mathematically impossible" but rather speculation about the short situation's specifics. The whole situation only exists because the big fishes can deceive and manipulate the market mostly to their liking. I wouldn't bet on them not playing dirty to distort analysis of what's really going on.

Sadly, I didn't get into a broker in time. I literally have no shares in this and just hope wallstreet burns over this one way or the other. Would have preferred to throw 50€ or 100€ into the game just for the education. There will be another crisis for me :)

[omarchowdhury]

Thanks for the explanation. Yes, they would need to pay more than once for it. In any scenario, the demand would outstrip the supply and hence there is still a short squeeze on the table.

[nly]

It's very reminiscent of how fractional reserve amplifies the money supply. John puts $100 in the bank. Bank lends $90 to Steve. Steve buys a thing from Ali. Ali puts $90 in another bank...Bank 2 lends $81 to Sheila...

Does a short/float ratio of 100% require multiple brokers to participate? How is the bookkeeping on these shorts maintained?

[monopoledance]

I have no idea how all this works in detail. I think some of the GME naked shorts were not even really legal.

I don't see any value in all this shit and hope shortselling and similar metashit will be outlawed all together. How is speculation a valid business?