http://reddit.com/r/wallstreetbets doesn’t pretend to be SJW. We are interested in one thing, to make money. We affectionately call ourselves autistic retards, are cuckolds (betas) whose wives have boyfriends, and everyone is gay. Unlike a lot of reddit forums, there is a cycle of positivity with people even posting loss porn of their losses and others giving virtual pats on the back.
And yet, story after story are coming out how people are making enough to pay their student loans off, or pay off their mortgage so they don’t lose their home.
There are plenty of posts here about what is happening, so I’ll just post a brief recap.
A year ago a reddit user https://reddit.com/u/deepfuckingvalue thought that gamestop (GME) was oversold and had decent fundamentals. Through options and owning shares he controlled about 100,000 shares with a single digit value using about $50K (originally). During that year many people (kindly) suggested he should sell. He didn’t and now is now worth between $20-$50 million
In December other longs and wsb users started to hop on and the price started to rise from single digits all the way up to teens and more.
As it rose more and more wsb redditors piled on and it became a movement. Elon Musk mentioned them in a tweet which caused the price to explode.
The story behind the story is one of Wall Street corruption. We all “know” that it exists, but it is hard to come up with examples. Wall Street Bets has become Occupy Wall Street 2.0 and has potential to change everything.
One of the big shorters was a hedge fund, Melvin Capital. They and other shorts had shorted 140% of GME. Shorting means they borrow the shares, sell them on the open market and get the cash. At some later date they have to return the shares. In the meantime they pay a per share fee on the shares they borrowed so they wouldn’t hold them forever. Shorts have infinite downside. If you short a stock at $10, and it goes to $100, you now have to buy it at $100 and give the shares to the person you borrowed from. You just lost $90/share.
As the price soared wed Jan 27th, Melvin Capital was losing billions (their total portfolio was around $13 billion). Two other companies Citadel and Point72 stepped in to invest $2.75 billion into Melvin, likely to help them to meet their obligations. The stock leapt from $150 to $300 and that cash essentially evaporated. All of this is normal and fine.
Yesterday Robinhood and other brokerages announced that people could no longer buy GME they could only sell. This helped to cause incredible downward pressure on the stock. Robinhood is the millenial stock trading platform of choice because of an easy to use interface, no minimum deposit size, and no transaction fees. 50% of Robinhood users were trading GME and stopping them from buying allowed the Hedge Funds to have much less pressure and allow them to exit their short positions. Robinhood may have destroyed their company with the decision as they can no longer be trusted.
This was a huge blow to the wall street bets crowd. The question is why did Robinhood do this? It turns out Robinhood can offer free trades because they sell their deal flow to Citadel. For every 100 trades that Robinhood sends to Citadel, they get a few pennies. Citadel in turn gets to see what the Robinhood traders are doing and front run them. This is the same Citadel that invested $2.75 billion into the company that Wall Street Bets was attacking.
Here is a vice article about the relationship.
www.vice.com/…
It turns out when Wall Street rips off main street, they get fat bonuses and accolades. But when main street fights back, Wall Street gets to change the rules of the game.
Chairman of Interactive Brokers in an ill advised CNBC interview admitted that they halted trading to protect the clearing houses and brokerages that were overleveraged.
www.cnbc.com/...
Today the shorts will start to need to cover. The entire short squeeze could take a week, watch and hold Wall Street accountable.
This is the way.
I LOVE THIS STOCK.
💎🙌
(disclosure: I don’t hold any GME)