Reddit users manipulating the stock market....and they're winning

[audiophile]

Those hedgefund companies now owe billions for attempting to profit on suffering retailers. Good.

That's an overly simplistic view. If the prices go down it could open the way for a healthy buyer to assume control.

The chances of that happening now are zero.

Besides isn't AMC Chinese owned? So Reddit users are helping China? Niiiiice!

[audiophile]

My memory was correct, AMC is Chinese owned.

So let's play out this scenario, a Chinese blogger on Redditt convinces a bunch of wet-behind-the-ears investors to "stick it" to the big guy.

They do so and the Chinese owners sell their stock at a good price and laugh all the way to bank.. Hedge funds lose money which hurts elderly invested in them. AMC files for bankruptcy in August and wet-behind-ears investors lose everything as AMC closes it doors.

Scorecard:

Chinese 1

Elderly 0

Hedge Funds 0

wet-behind-ears investors 0

AMC 0

[bmw]

I will say this - I have no sympathy for anybody who shorts a stock and then loses money. All the money being transferred in this massive short squeeze is away from hedge funds who shorted these stocks. And with Gamestop in particular, I definitely have no sympathy for you if you're shorting a stock with a short percent of shares outstanding over 100%. No other stock even comes close to this ratio.

[audiophile]

I will say this - I have no sympathy for anybody who shorts a stock and then loses money. All the money being transferred in this massive short squeeze is away from hedge funds who shorted these stocks.

Which is the reason I left the stock market prior to primary's. Too much election interference.

Waiting for big correction to return.

[bmw]

I've been out of the market for about 5 months. Once I recovered my Covid-related losses, I took my money out of the market altogether.

I'm tempted to maybe throw $1,000 at Academy Sports & Outdoors once the market opens today. It's the one stock on the list I posted that has room to run (it is by far the least targeted stock thus far in this squeeze).

I wouldn't touch GME with a 10-foot pole. While it may surge past $500 today, it could just as easily crash back to $100. I suspect that many of the reddit folks may take their money and run today.

[Matt]

I will say this - I have no sympathy for anybody who shorts a stock and then loses money. All the money being transferred in this massive short squeeze is away from hedge funds who shorted these stocks. And with Gamestop in particular, I definitely have no sympathy for you if you're shorting a stock with a short percent of shares outstanding over 100%. No other stock even comes close to this ratio.

Let's reframe this: I get where you are saying from an ethical standpoint, but this is absolutely market manipulation. Jen Psaki was asked if the administration was keeping an eye on what is going on, and her response was that we have the first woman secretary of treasury. Meanwhile, we have the administration focused on "major" issues such as virtue signaling on climate change, opening the southern border, and creating useless edicts that it doesn't follow. This manipulation should be right up there with fighting covid, should it not?

[bmw]

Opinions vary on whether this constitutes illegal "manipulation." Jim Cramer on CNBC says it does not. While this is similar to a pump-and-dump scheme (the most common form of market manipulation), the big difference here is that the buying frenzy is NOT based on false information being posted on message boards, but rather, is targeted specifically at stocks that are overly sold short. Short squeezes are nothing new and have never been considered manipulation - what IS new is the speed at which large numbers of people can come together over the internet to accomplish a short squeeze.

[audiophile]

Should the practice of shorting be banned?

[bmw]

KOSS? The sh1t headphone maker?

Yep. And their stock is SOARING this morning. Up to $169 in the pre-market. It was a $4 stock just 3 days ago. That's an over 4,000 percent increase in less than 72 hours.

[bmw]

Should the practice of shorting be banned?

I'm certainly no stock market expert, but I don't think that would be healthy for the market overall. What I HAVE seen proposed is setting limits on the amount any given stock can be shorted. Gamestop was a perfect candidate for such a limit.

[bmw]

Should the practice of shorting be banned?

Looks like RobinHood is banning - wait for it ------ the BUYING of certain stocks. You can still sell them, but not buy.

RobinHood is a new startup stock trading app that has seen its membership skyrocket in recent days. They had this to say this morning:

In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AMC, $BB, $BBBY, $EXPR, $GME, $KOSS, $NAKD and $NOK."

Can you do that? Can you allow only one-way trading? THAT seems like market manipulation to me. I've never heard of that kind of a restriction before.

[Turkeytop]

Capitalism. How's that workin out for ya?

[Bryce]

Capitalism. How's that workin out for ya?

Pretty damn good for this guy...

GameStop's movement has driven significantly higher the net worth of Donald Foss, the now-retired founder of Southfield-based subprime auto lender Credit Acceptance Corp.

Foss took a 5.3% stake in GameStop in February 2020, according to federal regulatory filings, and has been one of the biggest beneficiaries of the stock's climb. He purchased more than 3.5 million shares in the company for about $12.5 million, when the stock was trading at under $4 per share.

As of Wednesday's close, 3.5 million shares would be worth more than $1.2 billion. Forbes pegs Foss's net worth at $2.5 billion, an increase of more than $670 million since close of trading Tuesday.

[Lester The Nightfly]

Should the practice of shorting be banned?

It won't make any difference. This entire event was precipitated by a sharpie Reddit user who saw that GME short interest was oversold by 140%. How do you get to 140%, when by legal means it would be impossible to have an equity shorted over 100%? Naked short selling. In other words, not owning/having claim to the shares you are shorting. Highly illegal but if you're a uber wealthy hedge fund manager or firm, rules don't apply to you.

I don't know how this will all play out but I'm happy the Reddit user that figured this out appears to now be up about $50M on a $55K gamble. I'm happy that Citron and Melvin Capitol who were major culprits in the shorting play are said to have lost about $1B for every $12 GME stock price rose. I'm unhappy with the general competency of financial journalism in our country who seems to be as clueless about the nature of this as they were back when the economy crashed because of the housing market (which by the way, wasn't that dissimilar to the root of what this GME thing is all about). The talking heads at CNBC, FOX Business and Bloomberg are fretting and thinking in terms of over how could this ever happen when GME's fundamentals and valuation don't support the run up, that this somehow must be a colluded effort or that it's some lefty insurrection on the market when in fact it's mostly a case of the folks they were having cocktails with last night got too greedy and got burned because technology for raw financial information made the playing field a little more level.

[Lester The Nightfly]

Looks like RobinHood is banning - wait for it ------ the BUYING of certain stocks. You can still sell them, but not buy.

Are those margin accounts or standard accounts? If they are margin accounts, it would be slightly understandable considering the exposure Robinhood would be taking if the buys were on Robinhood's dime.