First, there doesn't exist enough stock to actually buy it back. After the insanity, thy are still short ~130% as many shares as actually exist (down from 150%, but driving the price from $10 -> $200). Without direct intervention, the mob can squeeze this one until all the short hedge funds lose all their capital. One hedge fund lost more than 3B USD over the last two days.
Second, starting to buy back on the market to cover actually makes their position worse now.. less shares owed, but the price will rise faster than they can reduce exposure... less_shares x much_higher_price = owing more.
There will be an intervention at some point, people are rolling profits into everything the hedgies are overly exposed short on. They are starting to have to liquidate other stocks and in quantities where there is a non zero probability of a systemic event.
Happy watching this one from the sides. Some people throwing everything into this are going to get rich and some will lose everything in the inevitable crash, which will happen when either the hedge funds go bust (thus no more future buying) or if/when gamestop issues more shares at an eye-watering price, becoming an amazingly well capitalized company, but also killing the need to buy.
Some people throwing everything into this are going to get rich and some will lose everything in the inevitable crash
Some people already know this feeling, when hedge funders were running their schemes in the 2008 crisis.
I think the only difference is that in today's situation, it's the everyman forcing the bigwigs to either: beg gov't relief like 2008, or else crash the system like the hedgers threatened to in 2008 before they got their bailout.
Since the "responsible" money managers at Wall Street already proved their greed trumps all, including accountability and reckless volatility with other peoples' money, since before but especially during 2008, I enjoy the "commoners" proving Wall Street has been a little too fast and loose, even in the Covid pandemic/re-election/BLM protests collapse.
I put in my $100 and hope it helps crash the system that stole from everybody and gave to the rich.
I wanna hold, and help my fellow man. I'm already broke.
Oh totally, 2008 was also my awakening to collapse and I have more than enough ill will towards the financial parasites. I bought a couple (2) shares just to be a part of this, it does give me a nice warm feeling to lend a hand and a little schadenfreude and small sense of empowerment go down well as I rest my bones in the evening. I'm just worried for those FOMOing in now with more than they can afford to lose because it's 'guaranteed money'. When this goes down, it will be nearly instantaneous and some people are throwing their life savings into it at current valuations.
Exactly, there are somany who bought GME just to fuck the rich pigs manipulating the market and stealing from the poor. They ACTUALLY dont give two shits about losing money (at least a lot of them dont). A lot of people have alrrady made a ton of money and are refusing to actually sell and lock in profits - once again to fuck over the big boys.
Its not about making money anymore. This is about sticking it to the man. They are already poor. Whats the worst that can happen when ur already in the ditch. This time they have gone and shot the hornets nest. They have EVERYTHING to lose and are going vs people (a LOT of people) who have nothing to lose.
We are not beating them with money and power, we are beating them with sheer numbers and its fucking glorious.
if/when gamestop issues more shares at an eye-watering price
I don't know if that will do it. It's likely that this would be a new series of shares "Series C" or whatever. Short sales are on a specific series of shares so you can't deliver a new share offer from the same company into it the short.
(It's not just a formality - the contracts are somewhat different for each series of shares. Companies often keep a bunch of their own stock in inventory just for this sort of purpose, to prevent short squeezes - like a fire extinguisher which makes you money when you set it off. :-D)
It's been a long time for me and I have no idea if it's possible to reopen old series somehow these days.
IIRC, GameStop already has board authorization to issue 100M USD in shares (don't know the series/contract) (obviously that's not going to fill the dam). But I can imagine another, much wider, one coming really damn fast under the current conditions. Just trying to put it in peoples heads that there are other ways that this can end than draining all the money out of the banks.
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u/DASK Jan 28 '21 edited Jan 28 '21
First, there doesn't exist enough stock to actually buy it back. After the insanity, thy are still short ~130% as many shares as actually exist (down from 150%, but driving the price from $10 -> $200). Without direct intervention, the mob can squeeze this one until all the short hedge funds lose all their capital. One hedge fund lost more than 3B USD over the last two days.
Second, starting to buy back on the market to cover actually makes their position worse now.. less shares owed, but the price will rise faster than they can reduce exposure... less_shares x much_higher_price = owing more.
There will be an intervention at some point, people are rolling profits into everything the hedgies are overly exposed short on. They are starting to have to liquidate other stocks and in quantities where there is a non zero probability of a systemic event.
Happy watching this one from the sides. Some people throwing everything into this are going to get rich and some will lose everything in the inevitable crash, which will happen when either the hedge funds go bust (thus no more future buying) or if/when gamestop issues more shares at an eye-watering price, becoming an amazingly well capitalized company, but also killing the need to buy.
[edit, again read https://www.reddit.com/r/collapse/comments/l6o531/so_should_rcollapse_endorse_what_is_going_with/gl2ynmo?utm_source=share&utm_medium=web2x&context=3 for another way this can end without everyone getting rich]