This David versus Goliath story is currently turning Wall Street upside down: An army of Reddit users has been causing a price explosion for the ailing company Gamestop for days. It bankrupts large hedge funds; it makes individuals very rich. If you still want to get in, you can now do so via Bitcoin thanks to FTX — and also against the GME rate.
Last spring, Gamestop (GME) stock wasn’t even worth $ 3. The gaming company behind it has been stumbling for years, missed the connection to online business and invested money incorrectly. On January fourth, a good three weeks ago, the share was worth just under 18 US dollars and had gained around 500 percent in ten months. Few could have guessed that this was just the beginning. However, a group of users of the anonymous social network Reddit tried everything to ensure that the price of the ailing company continues to rise. In the meantime, it stood at 482.85 US dollars (high January 28), so it has gained over 15,000 percent. In less than a year. But how did that happen?
In any case, the price explosion is not due to good news from the company. For one year, one bad news has followed the next, first hundreds of branches are closed here, then millions in losses are announced there. The online magazine Slate founds the latest bull market, therefore, not with the “greatest comeback story in the history of the free market economy,” rather, the development is “symptomatic of financial life in 2021.” The development of the Gamestop share is representative of the “democratization of financial trading” and the “power of the gigantic online communities.” What the latter is capable of was only seen a few weeks ago in the storming of the Capitol in Washington DC, when Trump supporters and conspiracy mythics stormed the barricades waving QAnon and Pepe-the-Frog flags.
Now a particularly popular branch of the large online community Reddit has taken on Wall Street’s hedge funds. In particular, users of the 4.3 million strong subreddit r/wallstreetbets agreed to beat institutional investors at their own gun (and make a fortune on the side). The Reddit user u/Player896 had the idea last September. In r/wallstreetbets he published his seven-part plan: “Driving institutional investors to ruin for dummies — using Gamestop.” He had found that Gamestop stock had enormous short positions from institutional investors. If he and his Reddit network managed to get the stock up a little now, the hedge funds would be forced to abandon their short positions and buy back their shares — thereby increasing the price.
The highlight: The plan works. And: Even with the above-mentioned price increases, Reddit users are still convinced that there is still a lot of room for improvement at Gamestop — there is talk of up to 5,000 US dollars per share. u/DeppFuckingValue is probably the best-known r/wallstreetbets user and is treated like royalty in the subreddit. He got in at just under $ 15,000 at a rate of around $ 3.50, and his shares are now worth just under $ 48 million — and he is still holding. And while some shareholders became very rich in a very short space of time, it also had the desired effect of driving institutional investors with large short positions to bankruptcy.
Melvin Capital, for example, has already cost around 30 percent of its capital at the current price rally. Even a rescue package amounting to 2.75 billion US dollars, which the hedge funds Citadel and Point72 Melvin Capital provided so far, could not save the institutional investor from bankruptcy. On January 22nd alone, Gamestop Shorter lost $ 1.6 billion in capital. And how does it continue? According to some analysts, the bull market cannot last and is predestined for a hard crash. That calls again for shorters who smell the quick money. And this time, the crypto space is also part of the party.
Because with the entry of the FTX cryptocurrency exchange, on which pretty much everything can be tokenized (including futures from the upcoming Coinbase IPO ), Bitcoin traders now also have access to the current Gamestop price rally. Because recently, in addition to the regular tokenized GME / USD share, the so-called Gamestop March 2021 Futures have also been offered. Even the CEO of the stock exchange let himself be carried away to a tweet on the occasion of the current hype:
In principle, short positions are also possible via these futures. However, caution is advised here, because betting on the bankruptcy of Gamestop can be expensive for shorters. And if the Reddit army continues to prevail and keeps the course bullish, then even four-digit rates are conceivable. These are certainly not increases from 3 to almost 500 US dollars, but the revolutionary shareholders are already diligently looking for such margins. And think to have found them in other ailing companies such as Blackberry, Nokia, and AMC. All of them have recently experienced price explosions. And all of them are shooting south again.
No need to worry for r/wallstreetbets users. These are just the institutional investors who are now trying to manipulate the market in order to sell fearful investors. When everyone sticks together, even greater profits can be made. The Reddit user u/MotorcycleDreamer addresses the investors as follows:
Chill out. You know what to do. Hold the damn line. Wall Street is pulling out all the stops to get us up for sale. Don’t give in to them. Hold on to $ GME. Don’t let her off the hook. We can get through this together and it only works if we STICK TOGETHER. We are destroying the system and we are being paid for it.
It is still unclear which side will prevail in the end. Whether investors like u/DeepFuckingValue hold on to their shares even after three-digit price drops, or not sell in the end. Or whether in the end online giants like Reddit will actually turn financial trading upside down.
P.S. You Can Support me For Free Through ALL of these Links and earn some Crypto/Money Yourself! https://allmylinks.com/zealdorn
Disclaimer: These lines are not a substitute for investment advice, investments in the crypto market are made at your own risk. Invest only as much as you are willing to lose. I get commissions for purchases made through links in this post.