Merged Wall Street Bets subreddit / Too late to buy Gamestop stock?

[lomiller]

Thats a forward looking statement in investment speak. We don't know for 100% that GME was heading towards oblivion. Their executives may turn things around....

Maybe, or maybe they are just wasting more money and hurting more people by keeping the company running. Normally this would get sorted out by the interplay between buyers\sellers and short\long investors.

What these would be raiders are doing plays no part in that and just an attempt to profit at someone else's expense.

 

[lomiller]

Maybe. But no one is saying, "Buy GME because it's WAY undervalued!"

So what? Just because they are not guilty of one crime doesn't mean they are not guilty of something else. They are buying and encouraging others to buy specifically to ramp up the share price. This has been illegal since 1934, and it's been illegal for a reason.

 

[Beelzebuddy]

RH is probably dead meat.

If the latest rumors are right, they are now. They've started selling their users' Gamestop stock, "for their own good."

 

[Modified]

From what I heard: Robinhood offers free trades.

Everyone has free trades now. That started over a year ago. I thought Robinhood would fade away when the big guys started free trades, since their trading platform is crap (at least, it was then). For some reason it didn't happen.

 

[JoeMorgue]

Yeah what little trading I've done, never got into it hardcore but I have a small Motley Fool managed portfolio, was all through my normal bank's standard app.

 

[Suddenly]

Maybe, or maybe they are just wasting more money and hurting more people by keeping the company running. Normally this would get sorted out by the interplay between buyers\sellers and short\long investors.

What these would be raiders are doing plays no part in that and just an attempt to profit at someone else's expense.

What would be kinda fitting is if GameStop sold off treasury stock at these prices that gave them just enough cash to reorganize with some genius business model and then eventually became valued more than this inflated valuation.


This may have spoiled the underlying plot for Trading Places II: The Revenge of The Dukes.

 

[Modified]

You could have bought and sold today with perfect timing and made 140%. With the worst timing, you'd have lost 73%.

So no, it was not too late.

 

[marting]

As I said before AMC is a different beast. Short sellers could actually kill a potentially viable business.

I see this stated often without explanation. How does "short selling" kill a viable business?

Generally, stock price has no effect at all on a business unless the business is forced to raise money by selling more shares to survive. And a company that is illiquid or with a negative book value is going to have a hell of a time selling shares at all.

When a company decides to sell shares it does so after assessing that current shareholders will benefit more from the additional liquidity and growth this enables v loss from the dilution of the new shares. Companies that sell shares have to issue a prospectus first hence they tend to be companies with good prospects.

 

[JoeMorgue]

Man life is so much easier when you stick to buying and selling things that actually exist.

 

[Dr. Keith]

Man life is so much easier when you stick to buying and selling things that actually exist.

My Beannie Baby portfolio is going to take off any day now.

 

[lobosrul5]

I see this stated often without explanation. How does "short selling" kill a viable business?

Generally, stock price has no effect at all on a business unless the business is forced to raise money by selling more shares to survive. And a company that is illiquid or with a negative book value is going to have a hell of a time selling shares at all.

When a company decides to sell shares it does so after assessing that current shareholders will benefit more from the additional liquidity and growth this enables v loss from the dilution of the new shares. Companies that sell shares have to issue a prospectus first hence they tend to be companies with good prospects.

You're talking about issuing new shares. Yes, for a company in trouble that's not likely to work. They can sell shares of common stock that they hold, at any time they want on the open market. Even indirectly the ability to do that can help. AMC actually just got a rather large loan, company owned shares could have been seen as collateral.

There is another issue as well when a corps shares get really low, below what their tangible assets are worth. A group can swoop in buy them up then sell everything off to make a quick buck. That, I believe, is what happened to Toys 'r Us.

 

[lomiller]

I see this stated often without explanation. How does "short selling" kill a viable business?

Generally, stock price has no effect at all on a business unless the business is forced to raise money by selling more shares to survive. And a company that is illiquid or with a negative book value is going to have a hell of a time selling shares at all.

When a company decides to sell shares it does so after assessing that current shareholders will benefit more from the additional liquidity and growth this enables v loss from the dilution of the new shares. Companies that sell shares have to issue a prospectus first hence they tend to be companies with good prospects.

Short sellers target companies that are overvalued. Overvalued companies may not have the same difficulty raising money this way.

That said, in the long run keeping an unprofitable business alive by selling shares at inflated prices only to lose that money keeping the business going for a few more years ultimately harms nearly everyone, except maybe the executives collecting a paycheck from the failed business. .

 

[Distracted1]

My Beannie Baby portfolio is going to take off any day now.

It's amusing to imagine an investor somewhere who was holding GameStop because he actually believed that CD's were poised to come back in a big way now being a multi-millionaire.

 

[TragicMonkey]

Long-term, the stock is likely to be a dog.

I just bought ten thousands shares of Lazy Beagle, a thousand of Goofy Pug, and five hundred thousand of Hyperactive Labrador. I shall be a billionaire! because everybody likes dogs.

 

[marting]

Short sellers target companies that are overvalued. Overvalued companies may not have the same difficulty raising money this way.

That said, in the long run keeping an unprofitable business alive by selling shares at inflated prices only to lose that money keeping the business going for a few more years ultimately harms nearly everyone, except maybe the executives collecting a paycheck from the failed business. .

That was the point of my question. I don't see how short sellers kill viable businesses. But I do see people often state it as some sort of obvious fact. It's certainly not an obvious fact to me.

 

[Andy_Ross]

"Why don't the poor invest their money"?
"OK"
"Wait stop, not like that"

 

[Beelzebuddy]

I see this stated often without explanation. How does "short selling" kill a viable business?

Generally, stock price has no effect at all on a business unless the business is forced to raise money by selling more shares to survive. And a company that is illiquid or with a negative book value is going to have a hell of a time selling shares at all.

When a company decides to sell shares it does so after assessing that current shareholders will benefit more from the additional liquidity and growth this enables v loss from the dilution of the new shares. Companies that sell shares have to issue a prospectus first hence they tend to be companies with good prospects.

It also impacts the ability of a company to borrow money, which almost every company these days is wholly dependent on. lomiller's optimistic explanations are based on short selling happening in a perfect economic vaccuum, which never happens in reality. Gamestop was shorted for 140% of its shares, literally more than it could possibly be worth at any price, and it was made plain enough that it was being taken down that a guy on reddit figured it out. Any outstanding debts either needed to get called in or defaulted on. It was a simple hit job.

That was the point of my question. I don't see how short sellers kill viable businesses. But I do see people often state it as some sort of obvious fact. It's certainly not an obvious fact to me.

Imagine I could take out life insurance on some random shmuck, Jerry down the street, in case he gets hit by a truck. It's just between me and the insurance company, right? But then I go on TV and say we're all going in on Jerry life insurance, and a thousand other people also take out the same anti-truck insurance on Jerry with me. How long do you think Jerry's going to be around?

 

[ponderingturtle]

That was the point of my question. I don't see how short sellers kill viable businesses. But I do see people often state it as some sort of obvious fact. It's certainly not an obvious fact to me.

Well Betting on Zero is a documentary on a wallstreet mogul trying to destroy a company with a short position on it.

Of course the company is a pyramid scheme so it makes it even more questionable who is the bad guy there.

 

[marting]

You're talking about issuing new shares. Yes, for a company in trouble that's not likely to work. They can sell shares of common stock that they hold, at any time they want on the open market.

No they can't.

A company can buy it's own shares on the open market. However, it can't turn around and sell those shares back on the open market without a prospectus for those shares which involves a non-trivial amount of work/money. It can sell shares privately to people/entities that meet eligibility requirements such as accredited investors with a significant discount to the public market price. Those are restricted shares and require either a prospectus to be sold publicly or a waiting period.

 

[Mader Levap]

Short selling doesn't make the bankruptcy come any faster.

This is lie. It can contribute to it.

Short selling gets a stigma because they

..they have strong financial incentive to lie about companies they short and contribute to their fall using all available means.

Short sellers target companies that are overvalued.

Or those that shortseller thinks he can convince everyone it is overvalued, killing viable company (for example, startup in need of money by issuing shares) in process.

It greatly amuses me that you fervently pretend that shortsellers are such innocent creatures. Are you shortseller, perhaps?