Someone noticed that there were more shorts than stock shares issued on troubled company Gamestop. Experts expect it to BK soon, so the big hedge funds made huge shorts. Now the big Billionaire Hedge Funds are getting killed to the tune of BILLIONS, because a bunch of autists are beating them at their own game.
Short selling means you sell stocks you don't have, with the promise of buying them later, with a hard deadline.
If the stock goes down, you will end up buying them later, cheaper, than you "sold" them right now.
But if the share price rise, you HAVE to buy them at a higher price.
Because GameStop was expected it to go bankrupt (and share price go to zero, essentially), some investing companies have shorted a lot of their stock. (Sold stock they didn't have, expecting to buy them later at 0$, and keeping the difference.)
But now a shitload of people (or something) bought actual stock at 8ish$, making the stock go UP a shitload to 300+$
This means the people who sold a shitload (shorted) at 8$, will be stuck, this friday, buying it at 300$+. Since they probably sold thousands of share, they'll have to pay thousands times 300$ to buy them back, and they HAVE to.
So, they're going bankrupt themselves.
Autists don't care if the company lives or dies (it's dying, the internet killed them), they're just saying they can stay retarded longer than the hedge funds can stay in the game. Literal quote from them.
Merrill capital hedge fund short-selled GameStop stock (GME) by borrowing shares and selling them as they thought the price would drop below market when they had to buy the shares earning a profit. They are getting burned because these retail investors collectively drove the price of GME shares way above market price. This GME price is artifical. The reason this is such high risk investing is because short selling can result in losing far more than a 100% of investment because you have to buy the shares you borrowed
Hedge funds sold stock they didn't own at the current market price with the promise to buy it later thinking the price would be lower. They promised to sell more stock than actually exists for gamestop, small time investors noticed and started to buy up the stock at current market prices. Because the hedgefund is obligated to buy all of the stock at whatever price the stock has become essentially priceless.
Gamestop has been shorted lower and lower by big funds. It was then really cheap.
Public information shows there are more shorts on Gamestop than available shares of stock. In fact, there are also very few shares of stock available to buy.
When you short a stock, you essentially borrow a share and then sell it. You then have to give someone a share of stock back later. If the stock goes down, well then you can make money buy giving them a share that you bought for cheaper than the price of the initial stock.
Well because there aren't a lot of shares available, the Wallstreetbet people bought all the available shares on the market. Driving the stock up. So the shorting folks are now out money.
But not just the normal amount of losing money. They can't even get enough stocks form the market to provide a stock to get out of their short positions.
The WSB people are holding onto the stocks and not putting them back into the market.
So now the shortsellers are having to pay interest on the stocks they owe while they can't pay back the stock they owe. So they can't close out their position until a share becomes available to buyn. Mean while, the stock price is rocketing upwards, because there is this huge demand for shares to pay back the short positions, plus the WSB people still buying some more positions to cause more squeeze.
edit: Someone has 5 cameras. You borrow one and sell it to someone because you expect cameras to be cheaper. You expect the someone to sell it because camera prices are going down and maybe they think they can buy it cheaper later, or maybe they just don't want a camera. But they don't sell it, they all hold on to it. No one else is selling their camera either. You owe your buddy a camera. People know you owe your buddy a camera and that no one has any for sell. Finally someone says, sure I"ll sell you my camera for double the price.
At what point can the shorts be covered then? When the WSB people decide to cash out, then their extremely valuable shares are bought up by the hedge funds, and the price should plummet accordingly right? What if WSB doesn't sell and just holds on for sentimental value?
correct, when WSB starts selling to make their money, prices should start to go down. Depends on how many shares they put on the market. Also fundamentally, the business can still go bankrupt, which the hedge thought was going to happen which is why it was shorted so heavily anyways. But that's longer term and the hedgefund that has a major short position was expected to fail at gamestop going to 190 per share. Not entirely sure what happens when the holder of all the shorts just goes belly up.
Don't quote me, but I think whatever company underwrote the short (it's basically a loan) would be able to sue/seize assets like any other creditor in this type of situation. But realistically, the government will probably bail them out with our money.
So essentially, a whole bunch of big hedge fund companies bet on GME to fail. They did what's called a short. What this essentially is, is I'm going to borrow your share and sell it at the current price, and I guarantee to return it to you by date X. If the price goes down, I make the difference between the sell price and the price I have to buy it to give it back to you. However, if the price goes up, I eat the loss.
Well, there were a whole lot of short sell orders out for GME that were about to come due. A WHOLE lot. Like nearly or possible more shorts than stocks that existed lots. And some people noticed it. And since the companies have to buy back the stock to give it back to the people who they borrowed from, if they can drive up the price by buying it all up and demanding a higher price to sell it back, well, they make the money and the hedge funds have to bite the bullet.
The bigger ones will lose a shitload of money. The smaller ones may bankrupt and have to close.
This stuff alone deserves a wallstreetbets.win, because you know they'll be coming for them.
u/Doggos should consider reaching out to them, because we know the banhammer is coming.
No doubt. I'll watch him repair traces under a power chip on a MacBook motherboard, but I can't listen to his rambling. In that 27min he didn't even mention naked shorts once. WSB discovered that more GME shares were shorted than shares available.
Can someone ELI5 this whole GameStop thing? I feel out of the loop
Someone noticed that there were more shorts than stock shares issued on troubled company Gamestop. Experts expect it to BK soon, so the big hedge funds made huge shorts. Now the big Billionaire Hedge Funds are getting killed to the tune of BILLIONS, because a bunch of autists are beating them at their own game.
This is not the “eli5” version. Ya gotta dumb it down further for us lol
Short selling means you sell stocks you don't have, with the promise of buying them later, with a hard deadline.
If the stock goes down, you will end up buying them later, cheaper, than you "sold" them right now.
But if the share price rise, you HAVE to buy them at a higher price.
Because GameStop was expected it to go bankrupt (and share price go to zero, essentially), some investing companies have shorted a lot of their stock. (Sold stock they didn't have, expecting to buy them later at 0$, and keeping the difference.)
But now a shitload of people (or something) bought actual stock at 8ish$, making the stock go UP a shitload to 300+$
This means the people who sold a shitload (shorted) at 8$, will be stuck, this friday, buying it at 300$+. Since they probably sold thousands of share, they'll have to pay thousands times 300$ to buy them back, and they HAVE to.
So, they're going bankrupt themselves.
Ah, thank you. I’m smart now
You explained this very well. Now most people should understand what is going on.
Imagine being in the room when the genius who came up with that burst in.
"I have an AWESOME idea!!! You can sell stocks...get ready for it...that you don't even own!!!"
BRILLIANT!!!!!
Watch "Trading Places" with Eddie Murphy. This is exactly what they did to the Dukes.
Basically Trading Places? Eddie Murphy movie?
What do you not understand? Shorting?
Hedge funds bet on the company dying, autists bet on it staying alive and kept ot alive.
Autists make money, hedge funds lose money.
Autists don't care if the company lives or dies (it's dying, the internet killed them), they're just saying they can stay retarded longer than the hedge funds can stay in the game. Literal quote from them.
Thanks fren
Well, it’s also like watching the media prop up Biden, only I hope the autists get out before they lose everything. The media wasn’t so fortunate.
Then hedge funds send in their goons to regulate, erm i mean protect, the little guy from doing this again.
A bunch of autistic redditors are buying Gamestop stock at way inflated prices and it is messing with these hedge fund's shorts.
Is this like The Big Short in reverse?
What is a short?
Merrill capital hedge fund short-selled GameStop stock (GME) by borrowing shares and selling them as they thought the price would drop below market when they had to buy the shares earning a profit. They are getting burned because these retail investors collectively drove the price of GME shares way above market price. This GME price is artifical. The reason this is such high risk investing is because short selling can result in losing far more than a 100% of investment because you have to buy the shares you borrowed
Hedge funds sold stock they didn't own at the current market price with the promise to buy it later thinking the price would be lower. They promised to sell more stock than actually exists for gamestop, small time investors noticed and started to buy up the stock at current market prices. Because the hedgefund is obligated to buy all of the stock at whatever price the stock has become essentially priceless.
Gamestop has been shorted lower and lower by big funds. It was then really cheap.
Public information shows there are more shorts on Gamestop than available shares of stock. In fact, there are also very few shares of stock available to buy.
When you short a stock, you essentially borrow a share and then sell it. You then have to give someone a share of stock back later. If the stock goes down, well then you can make money buy giving them a share that you bought for cheaper than the price of the initial stock.
Well because there aren't a lot of shares available, the Wallstreetbet people bought all the available shares on the market. Driving the stock up. So the shorting folks are now out money.
But not just the normal amount of losing money. They can't even get enough stocks form the market to provide a stock to get out of their short positions. The WSB people are holding onto the stocks and not putting them back into the market.
So now the shortsellers are having to pay interest on the stocks they owe while they can't pay back the stock they owe. So they can't close out their position until a share becomes available to buyn. Mean while, the stock price is rocketing upwards, because there is this huge demand for shares to pay back the short positions, plus the WSB people still buying some more positions to cause more squeeze.
edit: Someone has 5 cameras. You borrow one and sell it to someone because you expect cameras to be cheaper. You expect the someone to sell it because camera prices are going down and maybe they think they can buy it cheaper later, or maybe they just don't want a camera. But they don't sell it, they all hold on to it. No one else is selling their camera either. You owe your buddy a camera. People know you owe your buddy a camera and that no one has any for sell. Finally someone says, sure I"ll sell you my camera for double the price.
sort of that, but compounded a lot
At what point can the shorts be covered then? When the WSB people decide to cash out, then their extremely valuable shares are bought up by the hedge funds, and the price should plummet accordingly right? What if WSB doesn't sell and just holds on for sentimental value?
correct, when WSB starts selling to make their money, prices should start to go down. Depends on how many shares they put on the market. Also fundamentally, the business can still go bankrupt, which the hedge thought was going to happen which is why it was shorted so heavily anyways. But that's longer term and the hedgefund that has a major short position was expected to fail at gamestop going to 190 per share. Not entirely sure what happens when the holder of all the shorts just goes belly up.
Don't quote me, but I think whatever company underwrote the short (it's basically a loan) would be able to sue/seize assets like any other creditor in this type of situation. But realistically, the government will probably bail them out with our money.
So essentially, a whole bunch of big hedge fund companies bet on GME to fail. They did what's called a short. What this essentially is, is I'm going to borrow your share and sell it at the current price, and I guarantee to return it to you by date X. If the price goes down, I make the difference between the sell price and the price I have to buy it to give it back to you. However, if the price goes up, I eat the loss. Well, there were a whole lot of short sell orders out for GME that were about to come due. A WHOLE lot. Like nearly or possible more shorts than stocks that existed lots. And some people noticed it. And since the companies have to buy back the stock to give it back to the people who they borrowed from, if they can drive up the price by buying it all up and demanding a higher price to sell it back, well, they make the money and the hedge funds have to bite the bullet. The bigger ones will lose a shitload of money. The smaller ones may bankrupt and have to close. This stuff alone deserves a wallstreetbets.win, because you know they'll be coming for them. u/Doggos should consider reaching out to them, because we know the banhammer is coming.
Oh yeah, there’s no scenario where that subreddit survives.
Here ya go. Take the language as....whatever. But there’s a fairly simple explanation of it
Here is the solid explanation I got..
https://youtu.be/awDE9i9u6Xo
yuck, the trading places explanation is better than listening to this faggot for 27m
https://www.youtube.com/watch?v=R9Hgn2t4a7Q
No doubt. I'll watch him repair traces under a power chip on a MacBook motherboard, but I can't listen to his rambling. In that 27min he didn't even mention naked shorts once. WSB discovered that more GME shares were shorted than shares available.