General > General Technical Chat
Gamestop: Reddit vs. Wall St.
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vad:
Someone, who stocked up shares before starting hysteria on Reddit, made good (1000%+) profit. Good on them. Idiots, who bought at higher than 10-15 per share and continue holding will loose. This company is going belly up anyway, not because of some evil investors shorting their stock, but because the company is loosing money and has no future. As for the Wall Street, at worst they will write off losses. 16B - today’s market cap of GME - maximum they can loose today - is peanuts for them.
station240:
The problem is deeper than just a lot of short selling.

On the Securities and Exchange Commission website, is a list of all shares that have "fails-to-deliver" at settlement date.
So shares that someone has paid for, but couldn't be found.
https://www.sec.gov/data/foiadocsfailsdatahtm
Get the latest one, "January 2021, first half" cnsfails202101a.zip

5,074,937
For a company with only 69.75M shares, having 5M shares (7.16%) that cannot be found is odd.

Also you have this analysis
https://www.reddit.com/r/wallstreetbets/comments/l9rk78/sec_doj_60_minutes_public_data_suggests_massive/

--- Quote ---There are are 71 million shares of GME that have ever been issued by the company. Institutions have reported to the SEC via 13F filings that they own more than 102,000,000 shares (including the 13% of GME stock is owned by Ryan Cohen). That is already 30,000,000 shares more than even exist.

On top of the shares reportedly owned by institutions, retail investors may currently hold 50+ million shares (counting both long holdings and call options – both ITM and OTM).

Once you include call options, retail investors may already hold more than 100% of GME (not just 100% of the float, more than 100% of the actual company). This would be definitive proof of illegal activity at the highest levels of the financial system.
--- End quote ---

So how can this happen, more shares being held than exist ?
Simple, one or more hedge funds created counterfeit stock in GME, so it could be shorted.
Given the original plan was to bankrupt Gamestop, no one would find out when the shares became worthless.

-------------------------

As for what started all this, a number of people decided Gamestop had a future, especially more recently.
1. PS5 and Xbox Series X|S consoles are selling out, when supply is no longer such an issue, Gamestop can make ever more money.
2. With new consoles, people will want to buy games and accessories to go with it, either instore or online.
3. Has a new CEO Ryan Cohen, and two other new board members.
4. Plans in motion to revamp the company online sales.
5. In the process of exiting out of some of the expensive realestate they lease.

Most recent figures I could find, it's a mixed bag
https://www.gamespot.com/articles/gamestops-holiday-sales-drop-due-to-covid-19-and-ps5-xbox-series-x-sellouts/1100-6486095/ (dated Jan 13 2021)

--- Quote ---Total comparable store sales rose by 4.8% compared to last year
Net sales amounted to $1.77 billion, which is down 3.1 percent.
E-commerce sales jumped by 309% and made up 34% of GameStop's total sales.
GameStop said its sales across Australia and New Zealand jumped by 31 percent, and these regions outperformed GameStop's other international markets.
--- End quote ---
DrG:

--- Quote from: station240 on February 02, 2021, 07:59:44 am ---The problem is deeper than just a lot of short selling.----

--- End quote ---

I appreciate the post. Not saying I agree, especially about the "fundamentals" of GameStop, but you are presenting some interesting material.

On the call options in one of the quotes- back in the day, I would sell call options (these are contracts, that expire on a certain date, to buy a stock at a certain price). But, I never sold uncovered calls. That is, I could only sell call options where I held the stock. To sell uncovered calls required you to fulfill a bunch of requirements with the brokerage...I never went there (no real reason for me to mention that, but again...memories).

From this morning https://finance.yahoo.com/news/gamestop-extends-pullback-short-interest-083934905.html



and the price


My point, if I have one, is that the short selling was, indeed, at the heart of the move...or not :)

PS: Can't wait to watch Katie Porter (House) and Elizabeth Warren (Senate) start questioning the SEC folks.
thm_w:

--- Quote from: vad on February 02, 2021, 02:29:20 am ---Someone, who stocked up shares before starting hysteria on Reddit, made good (1000%+) profit. Good on them. Idiots, who bought at higher than 10-15 per share and continue holding will loose. This company is going belly up anyway, not because of some evil investors shorting their stock, but because the company is loosing money and has no future. As for the Wall Street, at worst they will write off losses. 16B - today’s market cap of GME - maximum they can loose today - is peanuts for them.

--- End quote ---

- "lose" for reference
- they have 2.8B in assets: https://www.macrotrends.net/stocks/charts/GME/gamestop/total-assets which would equal a value of $40/share
- everyone knows the company has no long term future, but it can easily survive until the end of the current console generation (5-10 years)
- they can't just "write off" borrowed shares, they have to purchase them back first
vad:

--- Quote from: thm_w on February 02, 2021, 10:03:25 pm ---
--- Quote from: vad on February 02, 2021, 02:29:20 am ---Someone, who stocked up shares before starting hysteria on Reddit, made good (1000%+) profit. Good on them. Idiots, who bought at higher than 10-15 per share and continue holding will loose. This company is going belly up anyway, not because of some evil investors shorting their stock, but because the company is loosing money and has no future. As for the Wall Street, at worst they will write off losses. 16B - today’s market cap of GME - maximum they can loose today - is peanuts for them.

--- End quote ---

- "lose" for reference
- they have 2.8B in assets: https://www.macrotrends.net/stocks/charts/GME/gamestop/total-assets which would equal a value of $40/share
- everyone knows the company has no long term future, but it can easily survive until the end of the current console generation (5-10 years)
- they can't just "write off" borrowed shares, they have to purchase them back first

--- End quote ---
Of those 2.8B, 1.06B is property and real estate after depreciation (land is only 18M, BTW), and 860M is inventory. Cash and AR is only 640M. At the same time they posted -794.8M net income in 2019, -464.4M in 2020. Retailer with such fundamentals is doomed.

Large market players will write off the losses, not the shares. Idiots who yesterday bought at $225, face today’s -60% correction and will never see their money back again.
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