I don't know- there must be institutional players on the long side by now right? Either way, _eventually_ someone will be left holding the bag when the stock comes back down to earth.
$GME is up 11% as of the writing of this post. Who is buying it?
This is actually making me angry to watch.
-edit-
I had like one share - Robinhood just sold my shares without me ordering it. Dunno what happened there.
I know RobinHood messed up here. But... they never had a good reputation to begin with. Its an open secret that RobinHood's entire setup is kind of crap.
My understanding is TD Ameritrade is only blocking the purchase of stock on margin. If you have the cash, you're allowed to make the purchase.
The lender. As in all loans. As is in every detail described in one’s margin contract.
For example, with InteractiveBrokers "long stock positions [of AMC, BB, EXPR, GME, and KOSS] will require 100% margin and short stock positions will require 300% margin until further notice".
The context of this subthread is this message https://news.ycombinator.com/item?id=25942677 about brokers allowing the buying of GME but not on margin (and how they don't have to disallow the use of margin for every stock for that).
That may explain why they had to block trading in the stock. Margin losses almost inevitable at this point. But legal said they couldn't block lending on a single name. Their TOS, however, permit them to suspend trading in single names.
I was at the gym yesterday and heard like 5 people talking about stocks: gme, amc, bb. Everyone is trying to get in on this and they're trying to stop it. They bogged gme at open to scare people and now it's back up. If they didn't remove the option for users to buy they surely would have bought the dip.
Keep in mind that this is very likely a zero-sum game. At some point the bubble will pop, and as many people as gained money on the way up will lose money on the way down.
GME has now become a $25B hedge fund with a gaming focus. They absolutely have the ability to become long term successful given these black swans they just experienced.
Now, I know *nothing* about their management, but they at least have been given a chance. Their's an Eminem song that they should be playing throughout their buildings right now. If I were them I'd sell more shares, pay down any bad debt, and invest in 10-100 of the best black swan ideas of my rank and file and see what happens.
I think you're confusing their market cap with their balance sheet. A $25B hedge fund has $25B in assets, but a $25B market cap does not mean that they have access to anywhere near that amount of capital.
Sure, maybe they could issue a dilutive follow-on offering and bring in some cash, but who knows where the stock price will be by the time they get through the paperwork on that. And they're currently losing about half a billion per year on about $6B in revenue, so I'm not sure that an extra billion or so in cash is going to fundamentally remake the company....
Didn't know about the $500M lost on $6B in revenue, but gaming is a growing market, they just got a ton of free advertising, so seems like they have a chance to do something great.
Robinhood isn't the only investment platform that allows trades on NYSE obviously. Evidently though, it had the highest volume when it comes to GME it seems.
If you're a long GME holder who feels like this price is temporary: you can buy calls or sell puts (bull-trades). Or, you can sell calls or buy puts (bear-trades).
If you own a ton of the underlying and are willing to be "forced to sell" the stock, selling calls would be a marvelous option to benefit from the uncertainty of the situation. Worst case scenario, you end up holding the GME stock (ie: lost the game of musical chairs). But you'll be paid for that risk.
Indeed, this entire situation is analogous to the economics of running a GameStop-like trading post, where preorders are allowed. The store wants to sell lots of preorders in order to stay afloat even outside of release seasons, and customers want to purchase preorders in order to guarantee a low price for hyped releases. This is just like the original purpose of derivatives, which were to ensure that foodstuffs would be fairly priced for both farmers and grocers, even when prepaying for not-yet-grown crops.
One would hope that GameStop would not sell preorders that it cannot guarantee from game publishers; if a game publisher promises only 100 copies to a particular brick-and-mortar, then they would be in big trouble if they took 140 preorders.
Now, folks generally agree that GameStop's business model is on the way out. The stock should not be worth much, because there is not much to say about the future of the corporation, and so not much point in participating in corporate governance. But instead, it is overly-shorted, with about 140% of shares sold short. That is no longer in the spirit of derivatives, but is now a magic trick.
https://www.sec.gov/Archives/edgar/data/1326380/000083423721...
>BlackRock Inc. trimmed its holdings in Gamestop, Inc. (NYSE:GME) by 18.23% during the 4th quarter, according to the company in its most recent Form 13G/A filing with the SEC. The firm now owns 9,217,335 shares of GME, which represents 13.20% ownership.
GameStop just also got $100M-$1B in free advertising (maybe someone in the ad biz could weigh in with a better estimate on that).
If the GameStop management allocates their newfound wealth well, this stock is just as likely to perform as well as any other $25B company.
They could do something like sell $2B in fresh capital and invest it in a slew of gaming startups, who then suddenly have distribution figured out.
Lots of creative ways they can not squander their windfall.
I know nothing about their management, but have seen many many people get a double and then hit a grand slam.
All comes down to the management.
This will leave the original holders of the shares (the ppl the shorters borrow the money from) with a stock worth less than $200, but maybe more than their original purchase.
If the retail investors don't "get out", then definitely a few will be caught with the bag, but I think its mostly going to be institutional investors paying crazy prices for this stock.
If all the shit to stem the tide works: shutting down discord and personal trading platforms, halting trading, yada yada works then WSB will be holding the bag. I wouldn’t really mourn their loss either because it’s a meme stock bought by people who can afford to can afford to lose.