Read on Twitter
A lot of you have been seeing all this Gamestop $GME stuff and don't know what's going on...
It's amazing, hilarious, brutal, all of the above.
I dug in to try n understand it all, lemme give you a rundown.
//THREAD//
It's amazing, hilarious, brutal, all of the above.
I dug in to try n understand it all, lemme give you a rundown.
//THREAD//
The folks behind this are the good (crazy) people over at r/WallStreetBets (WSB), a subreddit of YOLO-esc day traders with a good sense of humor, who work together to manipulate the market for their own gain.
The ringleader was a dude who goes by "Deep Fucking Value"
DFV LFG
The ringleader was a dude who goes by "Deep Fucking Value"
DFV LFG
Gamestop is a video game retailer and has been poised, especially w/ the pandemic, to go the way of Blockbuster.
In December, former Chewy CEO Ryan Cohen took the reins, and a 13% stake, to pivot Gamestop into an eCommerce force just like his previous venture.
In December, former Chewy CEO Ryan Cohen took the reins, and a 13% stake, to pivot Gamestop into an eCommerce force just like his previous venture.
With Cohen at the helm with a lot riding on it's success, the share price increased 29% - but the party wasn't even close to started.
Enter the folks of r/WallStreetBets.....
Enter the folks of r/WallStreetBets.....
Unrelated to leadership changes, the Redditors noticed that some hedge funds including the one you've seen trending - Melvin Capital - were shorting Gamestop stock in a MASSIVE way.
To the tune of $50M in put options.
To the tune of $50M in put options.
How tf does a short work?
Let's say....
- You have shares worth $5, and I borrow them from you
- I sell them to someone else at $5, betting I can buy more of them for $3 at a later date to give you yours back
- The $2 difference is my profit
Let's say....
- You have shares worth $5, and I borrow them from you
- I sell them to someone else at $5, betting I can buy more of them for $3 at a later date to give you yours back
- The $2 difference is my profit
So the hedge funds were betting on Gamestop failing and the Reddit savages noticed how huge the bet was.
They started buying up ALL the Gamestop shares.
The options (the borrowed shares) were coming due...
They started buying up ALL the Gamestop shares.
The options (the borrowed shares) were coming due...
But the fine folks of WSB had all the shares. And weren't gonna sell em. And kept demanding higher prices.
The price started going up and kept going up.
And up and up and up.
The price started going up and kept going up.
And up and up and up.
And so - Melvin Capital lost BILLIONS. Other hedge funds are bailing them out to cover the losses.
And we've all forgotten about Gamestop's new CEO and if he's going to be able to make a turnaround happen. Either way, his stake in the company is now worth north of $3B.
And we've all forgotten about Gamestop's new CEO and if he's going to be able to make a turnaround happen. Either way, his stake in the company is now worth north of $3B.
DeepFuckingValue started the whole thing w/ $100k trade which dropped to $40k in this whole squeeze before exploding to be worth 10's and 10's of millions $$$
This madness has made TONS of random millionaires and crushed the hedge funds.
Strange fucking times we live in....
This madness has made TONS of random millionaires and crushed the hedge funds.
Strange fucking times we live in....
Come smash that follow for more random deep dives and some shitposts too. I tweet about business and basketball cards, mostly. Cheers!
