Are they though? I mean the idea that hedge funds are rigging the system is so well established in the public psyche it drove the meme stocks in the first place.
If people's conclusions from all this are that Melvin Capital lied about unwinding their shorts and Robinhood rigged it for them but those nice people saying BUY AND HOLD YOLO on reddit were fighting their corner, has the state of their knowledge advanced?
Sure, we've all seen the movies; "hedge funds cheat" is not new information. But this is all very out in the open and very directly targeted at retail investors. There's a lot of noise being made and everyone has taken notice. I would argue the state of everyone's knowledge has advanced.
Although the truth is, retail traders are incredibly disadvantaged due to immense informational asymmetry. Hedge funds probably have access to all the data they want (for example, Citadel having access to Robinhood trade flow), but ordinary people have to first wade through all the misleading information both on mainstream media and on social media, so it's a pretty hard fight. But regardless of the results, I think there would be much more distrust towards financial institutions and mainstream media overall due to this event, and this would be only the beginning of 2021.
Two of my friends got into trading because of this (and not in fuck the system way).
I don't think you could get net negative in this situation.
Or am I missing something?
That article also felt like it missed some key reporting details, and I was surprised he talked to reporters, so I halfway wondered if he did have a larger role, but got this out there to shape the narrative in case the SEC comes knocking.
The analysts were also not understanding its potential and probably misunderstood greater online sales revenue as moving away from physical disk instead of just a huge growth of free games with in game transactions adding a larger share to the gaming revenue pie.
Value investors totally understood that there was a well-liked brand here that still had huge cash flows. And they knew all the bear cases about the move to digital and the retail biz dying.
A main reason there were value funds who analyzed GameStop and came to the "neutral" conclusion was that the old management team wasn't making any big moves to even attempt to turn around the death spiral.
DeepFuckingValue and even Michael Burry were half-wrong in their original thesis: just using cash flow to do stock buybacks was not necessarily going to turn GameStop around.
It wasn't until Ryan Cohen got involved, got on the board, and started pushing for serious e-commerce and digital initiatives that the stock and story majorly turned around and caused the momentum trade.
They sell physical copies of video games. In the ear of digital content, even worse companies are selling game passes - ie rent our game catalog for a month. This is literally Blockbuster vs Netflix of video games world.
The hedge funds were trying to prey on Gamestop's dying corpse, and WSB players figured out how to take advantage of it.
I think the reality is the WSB big guys needed to hype up the short squeeze and 'sticking to the man' to cause the boubble. And it worked out great.
That in itself is not bad, but it will become a problem when the main players start to slowly exit, the greedy middle will have (what is it called) stop sells set up in case of fall, and then it will quickly collapse and who will be left with their pants down waking up in the morning to see its all gone?
The "I am holding till zero" crowd.
The idealists are always taken advantage of by the shrewd leaders of any movement.
If you take part, just pay attention to it, and exit or at least take some profit when you start seeing signs of it.
Gamestop was being sold below its Net Current Asset Value, that is, if you took all of its cash in the bank and used it to pay off all of its debts, you would have more cash in hand than if you had not bought gamestop.
I'm not sure if the comparison to Blockbuster is as comparable, as renting media probably has different dynamics from buying media. And games, which cannot be rented except in a few specialty subscriber services such as Apple Arcade, will have different dynamics from movies or shows that can be rented.
Also no, the current decisions for the retail stores make me feel like they will lose a lot of goodwill if they transition. The stores barely keep any stock on hand at all, and are increasingly being emptied of goods. I'm legitimately worried they will shutter them all soon; 3 local gamestops where I live have closed in a year or two.
GameStop could also take advantage of physicality and become community spaces for eSports events or even tabletop gaming, collectible card game tournaments, etc. Basically become general "geek" stores and not just gamer stores.
It was somebody else who figured the short squeeze was possible during mid September.
That was this post: https://old.reddit.com/r/wallstreetbets/comments/ip6jnv/the_...
He even predicted the $400 price target as the time to cash out of the squeeze.
I'm not even sure this is a redemption story - just a plot twist that made a funny story, much funnier.
A bunch of financially illiterate newbies who don't know half the terminology and don't understand the underlying math have gotten tricked into thinking that "it's all rigged" or "it's all a scam" and that they're going to get rich quick by participating in the scam. Completely oblivious to the fact that the only scam happening is to them.
Trump-supporters think the election was a scam and barged into the capitol. WSBers think the stock market is a scam and bought GME. Same thing, different day.
For example, there were reported that Melvin closed last week. People thought it was fake news. In the article they reportedly lost 53%. If they lied about it, that would be exceptionally serious. Yet, everyone called it fake news, to their own detriment it seems.
Isn't it? Look at what they've been doing lately to make the GME stocks go down. The small guy always loses.
And there are also indications of illegal practices (naked short selling), people are asking themselves why stock purchase settling takes two days instead of either seconds (or, to account for an option to unwind mis-trades, hours) which was why Robinhood and others suddenly found themselves in a dire need for cash, and why/how Robinhood can afford their cheap fees (because they're selling off the data of their users).
The most important part that the world learned from $GME is another: the big promise after 2008ff was "we learned from our mistakes, regulations were passed to rein in dangerous speculation"... and $GME proved undeniably that this has not happened, not during the Obama admin and certainly not under the Trump admin. Wall Street still is a casino, not a stock exchange.
(disclosure: holding a couple dozen AMC and NOK for the lulz)
I saw a meme on WSB - photo of a main guy and quote 'What is an exit strategy?' u/deepfuckingvalue'
Ie the main guy behind the squeeze. He already took profit of $13M but somehow he is made into this hodl till 0 martyr?! WTF are those people on?
This really is starting to have all the halmarks of crypto bull rush with hypemen trying to get their exit as high as possible before it all starts to loose momentum and tumble off a cliff.
Its fun to watch though. A lot of fun. Plus more people are becoming aware of how rigged the whole financial system is, how its a boys club that will attack any outsider at sight.