R/wallstreetbets vs. institutional investors. GameStop stock manipulation

https://www.youtube.com/watch?v=4EUbJcGoYQ4

by zerof1l • 5 years ago

13 2 5 years ago

It's interesting to see how mainstream media is framing this as "bunch of idiots on reddit manipulate market to make money" instead of reporting on the fact that the investment funds got caught with their hands in the cookie jar and are now paying the price for it

https://youtu.be/xaVql5X44Pk

https://www.wsj.com/articles/citadel-point72-to-invest-2-75-...

curryst• 5 years ago

There's two sides to this, and his portrayal is a little disingenuous.

To quote the video:

So if I'm an investor and I'm able to find this information, I might want to buy GameStop because I see that I know they're going to have to convince me to sell my shares.

And unless you have no idea what you're doing, you also know that by buying shares, you reduce the shares available to short sellers, thus increasing the price of the share you bought.

I don't see a way to argue that isn't market manipulation. The value of the shares has nothing to do with the value of the company, it's entirely about manipulating the flow of shares. I don't see a way that this is different from a pump and dump scheme, it just happens in reverse and is entirely unavoidable.

If this isn't market manipulation, shorting stocks is dead. Institutional investors will add checks that scan for stocks that are above 50% shorted and analyze if buying enough stock to push it to 120% or 150% shorted will make them money. They could buy 50,000 shares of a company, sell 25,000 of them at 3x the price, burn the other 25,000, and still come away with a 50% return on investment.

That's why people are calling it manipulation. Shorting stocks was already risky, but adding in a risk that a hedgefund will come in and ruin an otherwise-healthy investment makes them extremely unappealing.

R/wallstreetbets vs. institutional investors. GameStop stock manipulation

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