If the price goes way up, they can sell stock at that price and keep the business running.
GME being a worthless company right now is not an objective fact about the world, but a contingent one, significantly dependent on their access to capital to get through covid and restructure.
P.S. Matt Levine's column today gave a "traditional four part test" for manipulation:
(1) That the accused had the ability to influence market prices; (2) that the accused specifically intended to create or effect a price or price trend that does not reflect legitimate forces of supply and demand; (3) that artificial prices existed; and (4) that the accused caused the artificial prices.
No individual on WSB can possibly be doing all four things, can they? Unless there is some private conspiracy among a small number of people.
May I ask: Why would there need be an individual behind the attempt? If it takes (say) 1mUSD to manipulate a market, then the market is being manipulated whether 1 person does that in one $1m trade or 1000 people do it in 1000 trades each of $1 right?
The second possibility adds complexity admittedly. I'd have to show they were conspiring to do it, not just all randomly making the same trade on the same day.
But at least some WSB members have explicitly admitted that so...
>we somehow coordinated and we stuck with it
https://www.reddit.com/r/wallstreetbets/comments/kwkle2/gme_...
There are a lot of reasons the SEC (and others) might not act on this. And there are a lot of "fuzzy edges" (eg how influential were they in the price move vs someone else trading at the same time?). But the case I'd make is pretty much that: Members of WSB conspired together to complete your 4 items, no different to a safe-cracker and a get away driver working together to commit a crime they couldn't have managed solo.
Of course, I'm a bit of a Crime and Justice nut, so maybe it's best I don't get to interpret these things in real life :)
"Legitimate" and "artificial" seem like undefined words. If one person or a few people puts a value on something that nobody else does, then you can call it artificial. But if millions of people are buying and selling at various prices, how can you prove any of them are "artificial"? To some extent, I think it's simply about numbers. One person who thinks different is crazy. Millions are a political party or religion or something.
They could go after Elon Musk (again), since he gave WSB a shout-out after hours and it jumped like 50%.
To be honest, I have no idea.
There may be a hard mathematical test I'm unaware of. Or it might just come down to convincing the jury. In this case, I'd say that the statements on WSB and the fact the price rose 2 (3?) figures with no change in the underlying company is a pretty strong indication. But it's not a slam dunk, "anything over x% is manipulation" rule AFAIK.
Still, plenty of others are convicted of it, so either juries can be convinced or there is a mathematical rule I'm missing.
I actually think WSB likely didn't do it completely alone. Plenty of hedge funds watch WSB. RobinHood sells the data too so I'd be surprised if it was a solo effort.
Index funds buy shares as a group.
Retail investors buy Tesla in droves.
Companies buy back their own shares on the regular specifically to increase the share value.
That said, manipulating the price up because you think someone is manipulating it down, is still manipulating it. I'm not saying they're "the bad guy", but they're breaking the law and not actually helping anything imho.