And then the hedge funds said they did indeed sell their short positions, but no-one believed them and the rise continues. There is no way the only losers will be hedge funds at this point, lots of retail investors will lose money.

Believe them or not, they can easily confirm whether GME still has > 100% shorts[0], which it does.

0. https://www.highshortinterest.com/

Yeah. So a bunch of shorts closed their position at maybe $50 when the price was skyrocketing, and then reopened their position at $300 or $400 (if they timed it with the peak).

I'm not sure why people expect the short interest to change at all. If shorts thought it was worth shorting at $15, they sure as hell would be shorting at $300 or $400.

A lot of new shorts have also jumped in when the old ones left. The old shorts haven't necessarily bought back in, especially if they're running cautious after getting their faces ripped off.

The cost of shorting the stock is a percentage of the cost of the stock on top of the stock price.

And that price has declined by 80-90% in the last week along with the percentage cost to borrow. It's still expensive to borrow GME but if you have an idea that a stock is going from 500 to 0 in a week or two you don't care about the cost to borrow.

Kind of. But it really depends on your relationship and agreement with your prime broker.

That is unlikely the case. Closing the short would require them to write massive losses. Their best strategy has always been wait it out. They most likely purchased a bunch of options to lock in their losses from getting worst and are waiting for the price to drop back down.

I may be incorrect but I believe that data is somewhat outdated from the previous FINRA short interest report; it looks like the next report is due to be shared today, Tuesday Feb. 2 at 6-PM and the next on the 9th.

So, we'll potentially see if that is indeed the case either tonight or on the 9th which I believe will have the most recent data as the one this evening will already be outdated.

Linky: https://www.finra.org/filing-reporting/regulatory-filing-sys...

The fact that there were paid Facebook and Twitter advertisements for the news stories that "mevlin exited their short" makes me think they did not

Feel free to invest based on that evidence, but I won't be joining you.

How often are news stories promoted in paid-for ads on social media? Do you know? If you don't then you're basing a decision on one piece of data with no context.

Putting that reasoning aside: do you have a link you could share that shows any of these ads?

1. there's nothing special about 101% shorts compared 99% shorts

2. bloomberg's (unofficial) estimates says it's below 100% https://www.bloomberg.com/news/articles/2021-02-01/gamestop-...

3. even if it's at > 100% shorts, it tells you nothing about what price those shorts entered at. if they entered at $300 they're not breaking a sweat.

4. Short interest only matters when a company gets bought out. At which point, the short interest is entirely rolled back to 0% and short-sellers take the ultimate loss.

Beyond that, it could go to 100%, 200%, or whatever people feel like. There's nothing special about 100% short interest at all.

That data is not updated in real time. Unless you pay big bucks short interest data is released every two weeks. https://www.nyse.com/market-data/reference/nyse-group-short-...

If you click on "GME" on that page, it will take you to Yahoo Finance. And if you go to the "Statistics" page, you will see that the number is from January 15th. The >100% shorts number is wild disinformation at this point.

You have no idea if these shorts were opened at $5, $50, or $350.

Someone who shorted when GME was at $420.69 is gonna be laughing all the way to the bank

from that site "Database last updated on January 29, 2021"

Typically these stats are updated slowly.

Short interest data is lagged. What is the source of this website?

it's exactly this kind of misunderstanding that caused this particular herd of new investors to lose out. I've noticed a lot of people making definitive statements of wsb, even though when pressed they admit they don't know squat. This is one of many reasons I like hn better in general --- people don't usually pretend to know what they're talking about.

The question is: at what price point did those new shorts come in at?

Those that shorted it at the high, are minting greens right now.

The rise does not continue, the stock is trading at 98ish bucks right now. Anyone still in is very much holding a bag right now. Yes I understand trade volume is apparently low, but the momentum is likely dead and I don't see Robinhood magically opening up the playing field again. They don't have the liquidity.

WSB would need to convince people who are already burned to move to a broker like Fidelity and start it up again.

Edit: Not to mention that yes the short positions that exist now likely exist at a price point well above the original shorts.

I have no horse in the race, but the press about the hedge funds closing their positions was rather suspicious, along with the silver thing right after.

So the idea is everyone who buys late can sell high and jump off the ship at the same time? Maybe I'm missing something, but if a whole bunch of people offload a stock, wouldn't that drive the price down, meaning a lot of people outside of the original short-sellers would still lose money?

> everyone who buys late [...] Maybe I'm missing something

The narrative on WSB was that you wouldn't be "late" buying in even late last week at $350, because the goal post was raised to $1000. Many people guessing it would go to $5000. Others saying $10,000. Followed by lots of rocket emojis.

Considering how people have witnessed the recent crypto rally generate insane returns, I can see how new / naive investors might think they're getting in early at $350. Especially when it was all over the news late last week and a giant billboard encouraging people to buy GME in time square just yesterday.

Edit: The timesquare billboard was actually last Friday. And only ran for 1 hour.

Cryptos at least have (somewhat theoretical) use cases with many unknowns that Gamestop Stock does not. In the end you will own stock in a dying retail game company and a pump and dump isn't going to keep its value up very long.

With cries of TO THE MOON! HODL! TO VALHALLA!

The idea is the short sellers have to cover first due to margin calls at a huge loss, then the retail investors unload.

Again though, the retail investors unload to who?

Everyone knows GME is over valued by an insane amount, who do people expect to be snapping up shares at $500?

The short sellers. They are short so they must buy the stock to close out their positions.

(not saying this is indeed what would happen, just explaining the though process)

> The short sellers. They are short so they must buy the stock to close out their positions.

This is incorrect. Short sellers only need to close out their positions if:

1. They cannot maintain them. If they can raise funds ( which they did ) they can maintain the positions. In fact they are probably shorting more, short averaging up if they can get a locate. GME yesterday was on a hard to borrow not on non-borrowable list.

2. Their shares are called back.

GME looks like a crazy stock around 1998/1999 ADEP(?), I think, which went from sub 3 to over 75 two days before Thanksgiving peaking with a couple of trades over 97 followed by a quick crash into teens and a really slow side into pennies. Some of the short sellers covered by putting up classified ads buying stock certificates from the cause the short squeeze by asking to deliver the certificates crowd a few years later.

I think you misinterpreted what I said. Rephrased: "in order to close out their positions, they must buy the stock". I didn't intend to state that they would close them.

I will say though, price going up forcing short sellers to close out (due to margin calls, fear, whatever) is not some made up thing..it's called a short squeeze. I do not know what will happen with GME.

> I think you misinterpreted what I said. Rephrased: "in order to close out their positions, they must buy the stock". I didn't intend to state that they would close them.

They do not need to close out their positions until the stock becomes non-borrowable, causing their position to be called in.

> They cannot maintain them. If they can raise funds ( which they did ) they can maintain the positions

I think at this point for a lot of people its "hold until they can't maintain, this isn't about money it's about screwing over the man!!!!" - as they say the market can remain irrational longer than you can remain solvent.

"The man" is much more liquid and much more capable of raising funds to maintain its positions compared to the WSB buyers of last several days.

Margin calls after today's close are going to be brutal.

Two days ago, the view (of some) was "WSB can remain irrational longer than short-sellers can remain solvent..."

Doesn't look like that was the case.

The people they targeted borrowed liquidity and may have even short averaged up. To be honest, in the end, the net effect of this thing may be something similar to a pump and dump.

I feel bad for the retails that are really gonna take it on the chin. At the same time, I'm sticking to my guns. We have to let all the people who lose in this thing fail, or nothing will be learned. It will need to be painful for people to be more careful in the future.

> only losers would be the short selling hedge fund

That's true for when stock went from $4 to $350, but who are the "losers" when stock goes from $350 to, let's say $7?

Also, who are the "winners" on that $350 -> $7 journey?

> but who are the "losers" when stock goes from $350 to, let's say $7?

Nonsavvy retail investors who believed in the hype and bought when the stock was significantly overpriced.

Sane retail investors who are about to enter a whole new world of requirements to get a margin account.

> Also, who are the "winners" on that $350 -> $7 journey?

The hedge funds who were willing to bet on the stock price dropping from $20 and who would've almost certainly increased those bets when the stock was in the $300s.

That's the irony, the hedge funds they were targeting, unless they were run by borderline imbeciles, increased their short bets. It's like WSB designed this attack never having heard of short averaging.

People will say that the hedge funds cheated somehow to come out whole, but the reality is that the attack was extremely poorly designed. (And that's being charitable and assuming that this was an attack and not simply an out and out pump and dump.)

Time will tell but my little finger told me that there will be plenty of losers, that the wall street people supposedly "owned" will be 100% bailed out, and that nothing of interest will change at wallstreet. The only thing that will change is that mobile trading apps will get major nerfs

> No, they didn't pitch it as a BTC or Tesla

It was a figure of speech, "we'll transform your $300 in $10000 in 2 weeks". People internally think about all the past opportunities they missed, we're talking about life changing money for a lot of people

Banks are prone to bailouts, hedge funds are not (in the traditional sense of taxpayer money, not private investment).

Many banks control trillions of dollars. Hedge funds almost always have less than $50B, usually by one or two orders of magnitude. If a bank fails, it's actually a problem for the government. If a hedge fund fails, it's barely a blip. If the limited partner was smart, it will also only cause them a single digit percentage decrease in their portfolio.

Hedge funds can amplify a systemic risk, but they would not really be targets for a bailout, the banks would be.

I think the promise of money being the driving factor for this is probably a strawman argument, at least as far as the WSB community itself. If you browse it, you'll see 'lossporn', with people posting screenshots of their personal losses on the stock performance. I don't think anyone prefers that to lose, but there are very definitely true believers.

Of course, as soon as it was covered by the news media, it draws people in who don't share that mindset and do stupid things. so... yeah

Update: they're actually doing it now, https://www.reddit.com/r/wallstreetbets/comments/lbdi8m/mess...

The current (and historical pitch has always be to "cause a short squeeze and hold indefinetely...). Literally every other message is about "do not sell"

If one were, hypothetically, trying to execute a pump and dump, what message/advice would be ideally the most common?

i understand what you mean, but why would you say that when it's dumping ?

Anyone who is long any stock has an incentive to encourage others to "not sell", whether the stock is going up or down. (The pump-n-dumpers are still incentivized to "pump" all the time, even while they're dumping.)