Gaming the system: How GameStop stock surged

Re:Gaming the system: How GameStop stock surged by FishbowlPrime on Tuesday January 19, 2021 @05:58PM (#25840093)

Here are a few pointers from a WSB member with a position in $GME

1. Short sellers have been running the stock into the ground over the past years and have been stupid enough to get to roughly 130% short interest as percentage of available float.

2. There are no more shares available for them to borrow and sell short, WSB has jumped into this trade following Ryan Cohen (your dog must know him), buying as many shares as possible, decreasing the float even further and pushing the price up.

3. Ryan Cohen owns about 13% of the company. He founded chewy.com and is an e-commerce wizard who wants to turn GameStop around from a brick-and-mortar shop to a digital / e-commerce player. He joined the board last week together with two other former Chewy execs (COO and CMO). FYI GameStop digital sales are 300% yoy and the company has recently posted a profit for the first time in many quarters. Shorts pretend like Chewy never happened, Ryan has nothing to do with GameStop and digital sales are nonexistent.

4. This short squeeze is inevitable. There are no other moves short sellers can do. They are trapped and check-mate is near. It will be similar to VW in 2008 and more aggressive than Overstock last year.

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Re:Gaming the system: How GameStop stock surged by patleeman on Tuesday January 19, 2021 @08:07PM (#25841306)

I too have a position and its been such a crazy ride. I started following it around $15 for just the sheer curiosity.

Its funny, I went through all the bear arguments at first, but as I kept reading and digging in deeper, the bull thesis became apparant. RC signing on really sealed the deal for me and $GME is now my largest position.

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Re:Gaming the system: How GameStop stock surged by voisin on Tuesday January 19, 2021 @09:11PM (#25841760)

I followed GME maybe 6-7 years ago pretty closely and I recall it having crazy short interest vs float then as well. Am I wrong on that, or is there some reason why the short interest is no longer sustainable? I would think lower prevailing interest rates would help sustain the shorts.

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Re:Gaming the system: How GameStop stock surged by FishbowlPrime on Wednesday January 20, 2021 @04:48AM (#25844471)

Back then there was no Ryan Cohen or WSB. Shorts don’t control the narrative anymore. They had the chance to cover at $3-4 (at a significant profit) last year, but they were too greedy and wanted the stock to go to $0 and see GME file for bankruptcy.

The interest rate to borrow GME shares has little to do with the Fed rates. It actually hit 45% last week as there are almost no more GME shares available to borrow.

Shorts are bleeding about 2% every day just on interest and have little road left to run.

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Re:Gaming the system: How GameStop stock surged by patleeman on Tuesday January 19, 2021 @09:22PM (#25841838)

I think its the combination of the extremely high number of short shares (71M) vs shares outstanding (69M), the stock hitting an all time low in March ($2.57), poor public sentiment ("its the next blockbuster"), and then the addition of Ryan Cohen (a "Rockstar" entrepreneur) all making for a really epic turn around underdog story.

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Re:Gaming the system: How GameStop stock surged by 7thaccount on Tuesday January 19, 2021 @08:55PM (#25841657)

How does GameStop sell anything digital? Why would someone go through them instead of Sony, Nintendo, Steam, or Microsoft store?

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Re:Gaming the system: How GameStop stock surged by bigtunacan on Tuesday January 19, 2021 @10:14PM (#25842202)

GameStop is still the largest console retailer and they recently reached an revenue sharing deal with Microsoft on the Xbox Series X where GameStop gets a cut of digital purchases on any Xbox Series X that was purchased from a GameStop.

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Re:Gaming the system: How GameStop stock surged by jliptzin on Wednesday January 20, 2021 @12:14AM (#25842806)

Why would Microsoft agree to such a deal? Is it really so hard to take Xbox orders online and ship directly to the customer?

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Re:Gaming the system: How GameStop stock surged by lgats on Wednesday January 20, 2021 @01:05AM (#25843046)

I suppose gamestop would then take the position of trying to sell Xbox consoles instead of PlayStation. They can even offer discounts based on their future expected earnings from the digital purchases on the console.

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Re:Gaming the system: How GameStop stock surged by Karunamon on Wednesday January 20, 2021 @12:59AM (#25843017)

Gamestop has a significant retail presence, Microsoft has none. It's quite tempting to just go to the local shopping center, pick up a system and a handful of games (with a decent return policy that's more reasonable than the one at big box stores) rather than ordering it online and waiting for it to arrive.

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Re:Gaming the system: How GameStop stock surged by LanceH on Tuesday January 19, 2021 @10:54PM (#25842408)

The overlap between people using cash on a daily basis and people who play games is pretty big. Think of all the people getting tipped in cash, or with horrible credit, or just kids. Gamestop is where they go to get a digital code for cash.

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Re:Gaming the system: How GameStop stock surged by chrischen on Wednesday January 20, 2021 @04:53AM (#25844504)

These are pretty prevalent in Walmart, CVS, et al.

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Re:Gaming the system: How GameStop stock surged by freeone3000 on Tuesday January 19, 2021 @09:09PM (#25841749)

They don't operate a storefront (in the digital sense). Retail copies of games contain codes for one of the above store in lieu of physical media. You're buying a code from GameStop, with the code delivered digitally -- and sometimes this is cheaper than buying it directly.

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Re:Gaming the system: How GameStop stock surged by WA on Wednesday January 20, 2021 @05:34AM (#25844768)

If everyone bets on a short squeeze, someone has to hold the bag. VW did spike to 1,000€ in '08, but it also dropped hard again. So, the short sellers need to cover, they realize insane losses, return their shares back to the lender and then what? The lenders just keep them or do they sell themselves and realize as much profit as possible?

I wonder if most of the WSB people actually time this right and find an exit on the peak, because that is the implicit goal if you bet on an infinity short squeeze.

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Re:Gaming the system: How GameStop stock surged by FishbowlPrime on Wednesday January 20, 2021 @07:22AM (#25845574)

The shorts are the bag holders. Longs sell their shares to shorts at peak prices, who then return those shares to the lenders. The lenders could sell, but they probably won't since they are in this for the long-term and that's why they lent the shares in the first place.

Short squeezes act like a much needed flush.

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Re:Gaming the system: How GameStop stock surged by secondcoming on Wednesday January 20, 2021 @04:04AM (#25844195)

Is there not a risk that GME issues more shares to raise money, and so everyone gets diluted?

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Re:Gaming the system: How GameStop stock surged by FishbowlPrime on Wednesday January 20, 2021 @04:34AM (#25844401)

Yes there is. At current prices it would be a disaster and Ryan Cohen and his 2 other mates on the board would likely block that. If share price hits $100 would make more sense. In effect GameStop would save the shorts who wanted the company to die in the first place.

Also, for this to stop the short squeeze the company would need to issue 30% of their float and then the shorts would still need to find another 100% of float to cover fully. The shorting emperors are left without clothes any way you cut it.

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