GameStop rockets, as 'Roaring Kitty' returns; shares halted

https://www.thestreet.com/investing/stocks/gamestop-shares-rocket-pounding-short-sellers-as-roaring-kitty-returns

by breck • 2 years ago

49 38 2 years ago

cs702• 2 years ago

Market cap is now close to ~$11B, for a company that over the last 12 months burned ~$240M in cash. Revenues declined by ~11%. Net cash on hand is ~$600M. It's hard to justify purchasing the shares at the current price based on the company's recent results. Its future prospects don't seem particularly promising either.

A stock's price is set by the marginal buyer and seller. For example, a single share that trades at 50% less than the last price instantly brings market cap down by 50%. Once all the retail investors loading up on the stock have purchased as much as they can hold, very little marginal trading volume can bring the stock price back down.

---

Reposting comment from duplicate OP: https://news.ycombinator.com/item?id=40343460

belter• 2 years ago

Ok, so what you are saying it's almost like GameStop shares are just like a virtual identity, that can be transacted for whatever value the parties attribute to it, with no other economic consideration that the trend of the moment...sounds like Bitcoin....

codedokode• 2 years ago

Sounds like Tesla shares.

vkou• 2 years ago

For example, a single share that trades at 50% less than the last price instantly brings market cap down by 50%.

It's not a single share trading low that brings the price down, it's the entire buy order book above that price being emptied out.

Which, in effective markets, should happen reasonably quickly when a stock is overpriced, after the market has time to react to a pack of retail apes maxing out their credit cards to buy it at 'any price'.

underlipton2• 2 years ago

IIRC, NBBO isn't affected by odd lots except outside of regular trading hours. You'd have to trade shares in multiples of 100. That's after the order book emptied to the ask/bid and a corresponding trade appeared. Then, someone could immediately decide that price was too high/low and the next trade moves it back, where the consensus keeps it.

kjhcvkek77• 2 years ago

Yes, but... if existing holders don't believe in the valuation they are free to become marginal sellers.

(N.b. I'm personally staying away from meme stocks)

thehumanmeat• 2 years ago

Short it then.

bishbosh• 2 years ago

Mind walking me through that process? I'm genuinely interested in doing so.

ramesh314• 2 years ago

Short it then

Many stocks are simultaneously terrible short and long positions to hold as an individual investor.

coffeebeqn• 2 years ago

The most baffling bit is that I’m sure a fairly large part of the meme buying frenzy is gamers who know better. No one uses GameStop - it was a joke before all this started already. They have no chance against steam and epic and game pass.. ie. They’ll give you $5 in store credit for selling them a brand new game.

I also wouldn’t be surprised if the next Gen consoles go the way of PC and don’t ship optical drives anymore - what would be the business of GME at that point ?

_mlbt• 2 years ago

I suspect GameStop knows this.

All of the ones near me have reconfigured their stores to emphasize game and geek-culture related merchandise and memorabilia instead of games.

I think there’s probably still a decent market for used console games from the 8-bit and 16-bit eras, and all the generations of Gameboys, and of course they could sell both new and used consoles and accessories. I think they could survive in these niches if they consolidate their stores a bit, as they have far too many locations given current market conditions.

john_cogs• 2 years ago

Happy to see this silliness return.

ramesh314• 2 years ago

That whole community is really pathetic and depressing at this point. People with their entire life savings holding -80% bags that will never recover, spending their days obsessing over tea leaf divinations of their pending salvation. Please don't encourage this.

forgetfreeman3• 2 years ago

How do you feel about crypto?

all2• 2 years ago

I'm confused. I own some GME for the lulz. Not for the hopes of making a profit or for some greater cause of justice. Purely for the sake of chuckling and getting laughs from family and friends when the subject comes up.

mckn1ght• 2 years ago

I chuckle about it with family and friends without having bought any shares. It’s not a requirement.

ramesh314• 2 years ago

I own some GME for the lulz. Not for the hopes of making a profit or for some greater cause of justice.

Sure, plenty of people do. But those arent the ones making daily /r/Superstonk posts with their crazy-board yarn lines connecting some CNBC article they found from 3 years ago to a cryptic new tweet from an anonymous "insider" about the impending squeeze. A ton of people who knew absolutely nothing about investing lost everything over this, and it's sad to see it play out.

jcranmer• 2 years ago

I thought I knew how bad it was, and then I saw Folding Idea's video on the post-crash meme stock phase here: https://www.youtube.com/watch?v=5pYeoZaoWrA

So, apparently a lot of the people who are still holding onto the stock have engaged in full-on apocalyptic cult insanity. They're under the delusion that the "Mother of All Short Squeezes" hasn't happened yet, and that when it will happen, it will be an absolute financial calamity, as literally all Gamestop stock will be held by "true" holders [1], who can therefore extort any price from the short sellers desperate to buy the stock back to cover the short squeeze, causing the price to hit millions of dollars per share, allowing the true holders comfortable retirement as billionaires.

It really is an apocalyptic cult mindset, people seeing themselves as the sufferers who will receive redemption in the imminent apocalypse as their (currently more successful foes) receive absolute punishment at the same time. Although even compared to most apocalyptic prophecies, this one is particularly far-fetched: the means of deliverance is extremely vague, with the closest hint of an idea is essentially that the Big Bad who is currently oppressing them will somehow turn around and reward them handsomely for their perseverance (usually stated with some amount of cognitive dissonance--you get the sense that the adherents don't really believe this, but they need to justify deliverance somehow and there's no better option than this).

[1] There's a belief that most of the shares are fake.

rsynnott5• 2 years ago

This is something I'm fascinated by; did this type of financial cult always exist, or is it a new thing? Like, people investing in the South Sea Company had some very silly ideas about it, but they didn't believe it was going to bring around a fundamental restructuring of society or anything. The first manifestation of "if you invest in this, you will become part of the ruling elite in a pseudo-apocalyptic new world order" I can think of is Bitcoin (remember the citadels); the meme stocks seem to have taken that absence of crypto-nonsense and dropped the crypto bit.

tptacek• 2 years ago

I really can't recommend this video enough. It's startling. You'll get a bunch of ideas for Google and Reddit searches from it, and I think you'll find --- especially if you go back in time just a little bit --- that he's underselling it.

I thought the GME/Robinhood/Citadel conspiracy theory was, you know, conspiracy-theoretic. But that's not even scratching the surface of how weird this gets.

sumofproducts• 2 years ago

Thank God. The cult was getting horribly boring after coasting on leftover nonsense for a few years and I'd quit doing much but checking in every couple of months to watch them lose money. Here's hoping this produces a fresh generation of bagholders to perpetuate my weird trainwreck-staring hobby with a fresh injection of fascinating new madness!

ChrisArchitect• 2 years ago

[dupe]

Some more discussion: https://news.ycombinator.com/item?id=40343460

mrtksn• 2 years ago

Are we sure this is not a hacked account or something? He seems to be posting clips from movies etc.

Maybe someone well versed in the WSB culture can explain what's going on? What happened to the guy through the years?

rsynnott5• 2 years ago

Oh, wow, that would just be the crowning glory on this nonsense.

matteoraso• 2 years ago

I don't get why GameStop didn't try to revitalize their business after the 2021 short squeeze. They had (and still have) access to a large amount of capital, but they didn't try to launch an online storefront to rival Steam or transition to a closely related industry like game development. Instead, the only real changes that I've seen are an NFT store that nobody uses and rebranding all the EB Game stores here in Canada as GameStop to grift the cult of stock holders.

rsynnott5• 2 years ago

You're not going to be rivalling Steam with a billion dollars and no prior experience in doing anything like that. Like, if that were sufficiently easy that GameStop could do it, someone would just go to a VC, get a billion dollars, and do it.

GameStop rockets, as 'Roaring Kitty' returns; shares halted

Related Stories