Why Did Reddit Trigger a GameStop Stock Surge?

[kyphysics]

Will there be a Physics Forum watch party for this film?

 

[Astronuc]

GameStop shorts dealt $1.4 billion paper losses in meme revival​

GameStop stock gains more than 70%, gets halted for volatility after 'Roaring Kitty' post​

GME 2.0?

GME GameStop Corp.

30.98

+13.52

+77.44%

Really? Again?

At Monday’s opening bell it appeared that Gill had reignited the phenomenon as shares of GameStop more than doubled. At midday, shares were trading 60% higher. It’s the biggest intraday trading jump for GameStop since the meme craze of early 2021. Other meme stocks like the theater chain AMC were jolted higher as well.

Trading in GameStop was halted eight times before noon on Monday due to volatility.

https://apnews.com/article/meme-roaring-kitty-gamestop-amc-stocks-401916acd3715d35cc0220143b26b2ac

 

[Vanadium 50]

The stock fell 30% today.
That makes it P/E 1260. It was roughly twice that at its recent peak.

 

[Vanadium 50]

So, one can say "Look, the meme-stockers were able to prop up GameStop yet again", well, maybe. That's not what happened with Bed Bath and Beyond...who is now in the Great Beyond. And AMC is still troubled.

Propping up a stock costs money. I think people are losing their interest in losing money to do this. Ironically, if they were willing to pay somewhat higher pricves for games and buy some more of them, GameStop would be better off.

 

[Astronuc]

GME down again today ~25%, after falling about 30% again.

GameStop stock (GME) sank as much as 30% on Friday after the company filed to sell 45 million new shares of common stock and released preliminary financial results that revealed sales fell sharply from the year prior in its most recent quarter.

https://finance.yahoo.com/news/game...shares-quarterly-sales-decline-123226611.html

 

[Vanadium 50]

I am not sure what 1Q sales tells us. They typically make money only in 4Q of a given year. Obviously, they are related, since if there isn't enough profit in the good quarter to make up for the losses in the other 3, that's a problem.

But its not really so complicated. It costs them 97 cents to bring in every dollar. That's too much out for too little in.

 

[Astronuc]

Yet again - GameStop stock soars 75% after 'Roaring Kitty' reveals $175 million bet on the retailer
https://finance.yahoo.com/news/game...75-million-bet-on-the-retailer-124246966.html

Stock manipulation?

At 0935 EDT Symbol, Price, Gain/Loss, %Gain Loss

GME GameStop Corp.

38.00

+14.86

+64.22%

 

[Vanadium 50]

Stock manipulation?

Of course. Since GME pays no dividend, the only way to make money is to sell it later for me. Whether this is legal or not, I can't say, but since the 1st transaction has taken place and the 2nd has not, this looks hard to prosecute.

The options, however, are another matter. The more he can drive up the price by the 21st, the more money he will make. This looks more troublesome.

 

[Astronuc]

On Monday, GameStop shares sank about 12% to $24.83, following a dive of nearly 40% on Friday after the company reported a drop in quarterly sales.

https://finance.yahoo.com/news/gamestop-tumbles-second-day-meme-173500703.html

Also on Friday, GameStop said it would sell up to 75 million shares, days after it made $933 million by selling 45 million shares.

Gill acquired 5 million shares of GameStop at an average price of $21.274, according to details he shared on social media. In addition, he bought 120,000 GameStop June 21 call options at a strike price of $20 at $5.6754 per contract. Reuters was unable to verify the size and value of his holdings.

On Monday afternoon, the options contracts were changing hands at $6.40 a contract, according to LSEG data.

Other so-called meme stocks also gave back recent gains on Monday, with AMC Entertainment losing nearly 7% and headphone seller Koss down about 4%.

Irrational exuberance strikes again.

 

[Vanadium 50]

Irrational exuberance strikes again.

Is that what's going on?

It's pretty clear what GME's thinking is: it's easier to sell stock than to sell games.

 

[Astronuc]

Is that what's going on?

It's pretty clear what GME's thinking is: it's easier to sell stock than to sell games.

I wasn't referring to GME, but to those who bought GME expecting it to go up. FOMO?

What GME did is expected - take advantage of those expressing 'irrational exuberance'.

 

[Vanadium 50]

Sure - if someone says to me "Here's $25 for a share of your profits - but you don't have to actually give me any of your profits" what do you expect me to say? Besides "Are you sure you only want one?"

If someone wants to bet money that they can buy something worthless and sell it for more to someone else who thinks the same thing, I say have at it. Try not to be the guy at the end of the chain, though. I might ask them if they want some tulip bulbs.

 

[russ_watters]

It's pretty clear what GME's thinking is: it's easier to sell stock than to sell games.

They are selling a video game. It's called GME. It's an educational game. It teaches people about the stock market/"investing", particularly the risk of loss when investing in a dying company. Also, the ultimate futility of manipulation.

Hopefully most of the players are only spending a few hundred dollars on it.

As for GameStop, they must already know how this works. They'll keep selling this game until the userbase loses interest. Unfortunately they don't have development team working on the next game.

If someone wants to bet money that they can buy something worthless and sell it for more to someone else who thinks the same thing, I say have at it.

Apes don't sell, they only buy. The winners are ones who still hold GME when the game ends. People who sell before that are weak or worse, traitors.

The game involves some intestinal fortitude.

 

[Astronuc]

(Reuters) - Citron Research no longer has a short position in retail traders' favorite GameStop, the short seller said on X.com on Wednesday, days after taking a bearish position in the company.

"It's not because we believe in a turnaround for the company fundamentals will ever happen, but with $4 billion in the bank, they have enough runway to appease their cult like shareholders," Citron said in the tweet.

Andrew Left, Citron Research's founder, had said last week he was again betting against GameStop, although his position was "significantly lower" from 2021 when he was forced to close his position after retail traders banded together in online forums and drove an eye popping rally in the stock, squeezing hedge funds.

Left told Reuters he would short GameStop again if the stock reached a $45-$50 level. He said Citron closed the short position at a profit, although he did not disclose the size.

GameStop said it had raised $2.14 billion in gross proceeds from the stock sale it announced last week, after raising $933.4 million in May, as it capitalized on the meme stocks rally sparked by the return of stock influencer "Roaring Kitty" Keith Gill following a three-year hiatus.

https://finance.yahoo.com/news/citron-research-closes-gamestop-short-133529622.html

Benzinga has a headline "Short Seller Citron Closes Short Position In GameStop, Says 'It Respects Market's Irrationality' "

 

[Vanadium 50]

The funny thing is that if the same "Save Game Stop" crowd were to have bought games instead of stock, the company might have turned around.

 

[Astronuc]

Reuters - ‘Roaring Kitty’ Sued Over Alleged GameStop ‘Pump and Dump’
https://finance.yahoo.com/news/roaring-kitty-sued-over-alleged-142121005.html

(Bloomberg) -- Popular stocks influencer Keith Gill, better known as “Roaring Kitty,” was sued for allegedly orchestrating a “pump and dump” scheme involving GameStop Corp. shares.


Gill, who rose to fame promoting GameStop during the 2021 meme-stock craze, reemerged in May and again began posting about the games retailer on X, the social media platform formerly known as Twitter.

In a proposed class action filed Friday in Brooklyn, New York, federal court, GameStop shareholder Martin Radev claims Gill was seeking to manipulate the stock for his own gain.

Posts by Gill starting on May 13 propelled a 180% rise in GameStop shares. On June 2, he revealed that he owned 5 million shares of GameStop and 120,000 call options that were set to expire on June 21. By June 13, Gill’s holdings had risen to more than 9 million shares of GameStop with no outstanding call options.

 

[Vanadium 50]

Well, that didn't last long. The plaintiff withdrew.

IMO, if things are as alleged, it looks more criminal than civil. If you are telling people to buy when you are selling, the nice men in suits from DC might want to have a word or two with you.