Shorting Gamestop
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@MrL said in Shorting Gamestop:
What's gamestop?
Retail video game store.
Related:
GameStop Announces That Due To Skyrocketing Stock, They Can Now Afford To Pay Up To 25 Cents For Your Used Games
GRAPEVINE, TX—According to market experts, magical and mysterious forces have somehow pushed GameStop's stock price up by 680% in January alone. Because of this incredible windfall, Gamestop has announced they will soon be able to afford to pay gamers up to 25 whole cents for their used...
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@boomzilla said in Shorting Gamestop:
@MrL said in Shorting Gamestop:
What's gamestop?
Retail video game store.
Related:
GameStop Announces That Due To Skyrocketing Stock, They Can Now Afford To Pay Up To 25 Cents For Your Used Games
GRAPEVINE, TX—According to market experts, magical and mysterious forces have somehow pushed GameStop's stock price up by 680% in January alone. Because of this incredible windfall, Gamestop has announced they will soon be able to afford to pay gamers up to 25 whole cents for their used...
How the hell did a store like this survive till 2021?!
Only in America I guess.
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@MrL said in Shorting Gamestop:
How the hell did a store like this survive till 2021?!
Not sure what you mean. Don't most console games come on physical media still?
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@boomzilla said in Shorting Gamestop:
@MrL said in Shorting Gamestop:
How the hell did a store like this survive till 2021?!
Not sure what you mean. Don't most console games come on physical media still?
I don't know, I'm a PC Aryan. But around here game shops died a long time ago. Some multi-purpose stores have game corners, some electronics shops have game sections, but game stores - all dead.
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@MrL said in Shorting Gamestop:
How the hell did a store like this survive till 2021?!
Only in America I guess.Oh, the German ones also still exist in the larger cities.
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@Rhywden said in Shorting Gamestop:
@MrL said in Shorting Gamestop:
How the hell did a store like this survive till 2021?!
Only in America I guess.Oh, the German ones also still exist in the larger cities.
Also, while I have no idea about whether the meme they pay $1 for your used game in mint condition is true, I checked their sale prices once and can get new games cheaper on Amazon than what they sell used.
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So like are any of you guys going to buy gamestop stock to stick it to wallstreet?
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@dangeRuss I don't buy individual stocks.
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@dangeRuss said in Shorting Gamestop:
So like are any of you guys going to buy gamestop stock to stick it to wallstreet?
If I'm understanding this video correctly, there's a proxy war going on using Gamestop stock?
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@dangeRuss said in Shorting Gamestop:
So like are any of you guys going to buy gamestop stock to stick it to wallstreet?
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@dangeRuss said in Shorting Gamestop:
So like are any of you guys going to buy gamestop stock to stick it to wallstreet?
I almost never buy individual stocks. When I do, I buy on... okay, being honest here, uninformed optimism. (I bought Visa a while back when it was going up ~40% per year. It's since plateaued, and I sold it a while ago.)
I was briefly tempted to short Tesla a while back. But the stock market is weirder than I think, and Tesla has almost tripled in value since I was thinking of that. I think Gamestop is another case of the market being way weirder than I think. Even though "139% of stocks have been shorted" is practically a guaranteed win... it's just so weird. The company is still being hammered by online game stores. I've only ever walked into a Gamestop to buy used games. (Maybe that's where it's getting its money?) I don't think the fundamentals have changed.
The other issue is that, on the platforms I'm on, I'm not sure how to short long-term. Last I looked, there was a limit of a month or so, and I'm not brave enough to say that's enough time. (Side note: I seem to have lost access to Robinhood. It's two-factor-by-SMS-only now, and I think I put my land line in as my phone number. Time to call support...)
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I buy stock through the Employee Stock Purchase Program, which lets me buy company stock at a 15% discount. And I hold.
I've been doing it for nearly a decade now, and the stock has more-than-doubled since I started. I'm sitting on about $300k of it right now.
Filed under: When the company does well, I do well. Our interests are aligned.
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Good lord, I just checked the live stock ticker and since that video from yesterday it's doubled again, currently at $310.
I'm certainly not going to buy anything, that doesn't make sense because I'd have the exact same problem as the people stuck in the short squeeze and come the right time it will crash down hard. But until then, they're still in the squeeze and it's rising further for some salty tears.
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@PotatoEngineer said in Shorting Gamestop:
I've only ever walked into a Gamestop to buy used games.
I think the only time I've ever been in one was shortly after they incorporated ThinkGeek merchandise into their stores, and I went there for the sole purpose of buying ThinkGeek stuff (birthday present, maybe?); I didn't realize before I got there that the ThinkGeek store was inside a GameStop, and I don't think I even looked at any game stuff while I was there. I've avoided GameStop since an online acquaintance a number of years ago described working there; AIUI, employees are (or were) paid 100% on commission, which means they are chronically underpaid and tend to be very pushy about selling you more than you want to buy in order to avoid starving.
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@HardwareGeek said in Shorting Gamestop:
@PotatoEngineer said in Shorting Gamestop:
I've only ever walked into a Gamestop to buy used games.
I think the only time I've ever been in one was shortly after they incorporated ThinkGeek merchandise into their stores, and I went there for the sole purpose of buying ThinkGeek stuff (birthday present, maybe?); I didn't realize before I got there that the ThinkGeek store was inside a GameStop, and I don't think I even looked at any game stuff while I was there. I've avoided GameStop since an online acquaintance a number of years ago described working there; AIUI, employees are (or were) paid 100% on commission, which means they are chronically underpaid and tend to be very pushy about selling you more than you want to buy in order to avoid starving.
The only reason I would buy games from GameStop was when they offered DLC codes for exclusive in-game content with purchase.
Oh, and when a controller would break I'd buy a used one, and return the old one as if I'd just bought it.
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@error said in Shorting Gamestop:
If I'm understanding this video correctly, there's a proxy war going on using Gamestop stock?
That's correct. With the PS5 and XBSX/S now offering consoles without the ability to use retail physical media, retail stores for that physical media are doomed -- especially with COVID killing a year of potential sales -- and Wall Street investors correctly placed bets that GameStop was going to die. Some a lot harder than others, and far more in total than nearly any other company.
Then some Redditors were all "oh, FUCK Wall Street!" With them driving the stock price high enough, anyone holding a short position on it will have whoever's providing capital for the short say "your bet didn't pay off, now buy the stock at the current price." Automated trading amplifies this effect, even without real humans going "oh, GameStop is going up, I should buy!
" Thus, Wall Street was forced to purchase a doomed stock at ridiculous prices to satisfy the bet they made that they're now on the wrong side of. Losing billions.None of this changes anything about GameStop itself. They're still doomed, they still won't pay dividends, they still have no meaningful revenue or earnings, and their market capitalization affects almost nothing about their real-world value. It's just fate that their stock had a large number of short positions held by acceptable-target financial companies. Several other stocks are in the same boat.
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@TwelveBaud said in Shorting Gamestop:
@error said in Shorting Gamestop:
If I'm understanding this video correctly, there's a proxy war going on using Gamestop stock?
That's correct. With the PS5 and XBSX/S now offering consoles without the ability to use retail physical media, retail stores for that physical media are doomed -- especially with COVID killing a year of potential sales -- and Wall Street investors correctly placed bets that GameStop was going to die. Some a lot harder than others, and far more in total than nearly any other company.
Then some Redditors were all "oh, FUCK Wall Street!" With them driving the stock price high enough, anyone holding a short position on it will have whoever's providing capital for the short say "your bet didn't pay off, now buy the stock at the current price." Automated trading amplifies this effect, even without real humans going "oh, GameStop is going up, I should buy!
" Thus, Wall Street was forced to purchase a doomed stock at ridiculous prices to satisfy the bet they made that they're now on the wrong side of. Losing billions.None of this changes anything about GameStop itself. They're still doomed, they still won't pay dividends, they still have no meaningful revenue or earnings, and their market capitalization affects almost nothing about their real-world value. It's just fate that their stock had a large number of short positions held by acceptable-target financial companies. Several other stocks are in the same boat.
So, basically, it's massively multiplayer online game and some gankers have been ganked.
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@MrL said in Shorting Gamestop:
How the hell did a store like this survive till 2021?!
Kind reminder that Americans still use checks to pay for groceries.
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@Gąska said in Shorting Gamestop:
@MrL said in Shorting Gamestop:
How the hell did a store like this survive till 2021?!
Kind reminder that Americans still use checks to pay for groceries.
Kind reminder that it is usually boomers that do that.
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@TwelveBaud said in Shorting Gamestop:
their market capitalization affects almost nothing about their real-world value.
That's the weird part of stocks for me. If the stock's value has nothing to do with the company's actual financial status, then what bearing does the latter have on the former? Is the stock just a fiat currency with an arbitrarily assigned value based on demand? Then why does the company's financial status affect it at all?
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@TwelveBaud said in Shorting Gamestop:
@error said in Shorting Gamestop:
If I'm understanding this video correctly, there's a proxy war going on using Gamestop stock?
That's correct. With the PS5 and XBSX/S now offering consoles without the ability to use retail physical media, retail stores for that physical media are doomed -- especially with COVID killing a year of potential sales -- and Wall Street investors correctly placed bets that GameStop was going to die. Some a lot harder than others, and far more in total than nearly any other company.
Then some Redditors were all "oh, FUCK Wall Street!" With them driving the stock price high enough, anyone holding a short position on it will have whoever's providing capital for the short say "your bet didn't pay off, now buy the stock at the current price." Automated trading amplifies this effect, even without real humans going "oh, GameStop is going up, I should buy!
" Thus, Wall Street was forced to purchase a doomed stock at ridiculous prices to satisfy the bet they made that they're now on the wrong side of. Losing billions.None of this changes anything about GameStop itself. They're still doomed, they still won't pay dividends, they still have no meaningful revenue or earnings, and their market capitalization affects almost nothing about their real-world value. It's just fate that their stock had a large number of short positions held by acceptable-target financial companies. Several other stocks are in the same boat.
Toby faire, GameStop has been working with M$ to arrange some sort of marketing / lifecycle agreement whereby they can potentially earn a cut of digital game sales on consoles they sold. Though obviously any potential from that doesn't justify the current moves in the stock price.
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@TwelveBaud said in Shorting Gamestop:
None of this changes anything about GameStop itself. They're still doomed, they still won't pay dividends, they still have no meaningful revenue or earnings, and their market capitalization affects almost nothing about their real-world value. It's just fate that their stock had a large number of short positions held by acceptable-target financial companies. Several other stocks are in the same boat.
The really interesting part - at least to me, who's not got much experience with stocks - is that the short sellers' bet is still the right one. The stock will come down, eventually. But they've played their hand so badly that they need to buy back right now, not eventually, so they're stuck in the squeeze.
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@MrL said in Shorting Gamestop:
How the hell did a store like this survive till 2021?!
I mostly stuck around for their rewards program, which offered you a rebate (paid in store credit) on your purchases. If I was buying a game right when it came out (as opposed to during an end-of-year sale), I would go to them and buy the download code from their cash register rather than directly from the Xbox store. (I would also go to them to actually buy a console because the return policy doesn't require me to fuck around with mailing shit.)
The rewards program got shittier right around the time console gaming got shittier, and so I haven't made a purchase there in a little while.
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@topspin said in Shorting Gamestop:
But they've played their hand so badly that they need to buy back right now, not eventually,
That's how shorting works, AIUI. You're not simply betting that the stock will go down eventually; you're betting that it will go below $value by $date, and both $value and $date are fixed at the time you place the bet. If the stock goes below $value on ($date+1), you're screwed.
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@Gąska said in Shorting Gamestop:
@MrL said in Shorting Gamestop:
How the hell did a store like this survive till 2021?!
Kind reminder that Americans still use checks to pay for groceries.
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@error said in Shorting Gamestop:
I buy stock through the Employee Stock Purchase Program, which lets me buy company stock at a 15% discount. And I hold.
I've been doing it for nearly a decade now, and the stock has more-than-doubled since I started. I'm sitting on about $300k of it right now.
I used to sell my ESPP shares the moment I got them, but I've switched to a more tax-efficient strategy (but with the Tax Cuts And Jobs Act, the advantage has been reduced to less than 5% tax savings, sadly...): hold the shares until 2 years from purchase, then sell to get long-term gains instead of regular income tax. (Technically, 2 years from the beginning of the ESPP period.)
The idea is that if my company pulls an Enron, I don't lose my income and my savings on the same day. I'll admit that I'm hedging against a pretty unlikely scenario, but it makes me feel better to be diversified.
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@PotatoEngineer Bigger market upsets have happened, but if my employer goes down it's taking a lot of other companies with it.
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@error said in Shorting Gamestop:
@TwelveBaud said in Shorting Gamestop:
their market capitalization affects almost nothing about their real-world value.
That's the weird part of stocks for me. If the stock's value has nothing to do with the company's actual financial status, then what bearing does the latter have on the former? Is the stock just a fiat currency with an arbitrarily assigned value based on demand? Then why does the company's financial status affect it at all?
The company must not go bankrupt, or otherwise cancel the issued stocks (yes, they can do that). And I'm being told that some companies still pay out dividends to stockholders sometimes.
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@Gąska said in Shorting Gamestop:
some companies still pay out dividends to stockholders sometimes.
Like the one I work for.
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@topspin said in Shorting Gamestop:
But until then, they're still in the squeeze and it's rising further for some salty tears.
Yep. Kinda cheering on from the sidelines.
Does suck for Gamestop to some degree. How do you try to run a company whose stock value is mainly driven by having become an internet meme?
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@cvi said in Shorting Gamestop:
@topspin said in Shorting Gamestop:
But until then, they're still in the squeeze and it's rising further for some salty tears.
Yep. Kinda cheering on from the sidelines.
Does suck for Gamestop to some degree. How do you try to run a company whose stock value is mainly driven by having become an internet meme?
Probably more easily. The stock price used to be driven by "This company is going to collapse and liquidate any minute."
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I'm sort of ambivalent about the death of Gamestop. On one hand, they were a shitty company with a shitty business model. But on the other, I feel like videogame retailers as a whole represent gamers in society. It's like we've carved a little niche into the mainstream by having brick-and-mortar stores, and they're also a place to meet other people with similar interests.
I guess fuck Gamestop in particular, but I don't want physical game retailers to vanish altogether.
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@error said in Shorting Gamestop:
@PotatoEngineer Bigger market upsets have happened, but if my employer goes down it's taking a lot of other companies with it.
Oh, it's probably the same for my company.
I guess my biggest reason for selling the stock is just that my value as a worker and the company's stock value are 99.995% un-correlated. I've worked for companies where the stock value went down for no particular reason I could tell. (And, when it went up to some very nice highs, the water cooler conversations turned to how it's time to sell our options, because there's no really good reason why the stock price increased.)
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@HardwareGeek said in Shorting Gamestop:
@topspin said in Shorting Gamestop:
But they've played their hand so badly that they need to buy back right now, not eventually,
That's how shorting works, AIUI. You're not simply betting that the stock will go down eventually; you're betting that it will go below $value by $date, and both $value and $date are fixed at the time you place the bet. If the stock goes below $value on ($date+1), you're screwed.
Well, this may be naive thinking of me, but isn't shorting requiring you to buy back stock at your ($date +1)? Couldn't you limit the damage at least somewhat by buying stock before that date and holding that until it's time to return it?
Granted, you'd still lose money but at least you'd have a definite upper limit to the damage.
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@Rhywden said in Shorting Gamestop:
@HardwareGeek said in Shorting Gamestop:
@topspin said in Shorting Gamestop:
But they've played their hand so badly that they need to buy back right now, not eventually,
That's how shorting works, AIUI. You're not simply betting that the stock will go down eventually; you're betting that it will go below $value by $date, and both $value and $date are fixed at the time you place the bet. If the stock goes below $value on ($date+1), you're screwed.
Well, this may be naive thinking of me, but isn't shorting requiring you to buy back stock at your ($date +1)? Couldn't you limit the damage at least somewhat by buying stock before that date and holding that until it's time to return it?
Granted, you'd still lose money but at least you'd have a definite upper limit to the damage.
Yeah, you can hedge your stocks/shorts by buying/selling various options and puts, so you have some guaranteed (but not mandatory) buy/sell prices. That costs extra, of course, and will eat into (and occasionally eliminate) your profits. I believe the most common way for a trader to "blow up" and cost the broker more than the trader ever made in profits is to sell naked options where you don't hedge your prices with other options/puts.
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@HardwareGeek said in Shorting Gamestop:
@topspin said in Shorting Gamestop:
But they've played their hand so badly that they need to buy back right now, not eventually,
That's how shorting works, AIUI. You're not simply betting that the stock will go down eventually; you're betting that it will go below $value by $date, and both $value and $date are fixed at the time you place the bet. If the stock goes below $value on ($date+1), you're screwed.
No, that's how puts work. Shorting is simply the normal buy/sell process in reverse. (You sell first and then you buy later, and your profit/loss is whatever the difference in price was just like with a normal buy.)
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@Rhywden said in Shorting Gamestop:
@HardwareGeek said in Shorting Gamestop:
@topspin said in Shorting Gamestop:
But they've played their hand so badly that they need to buy back right now, not eventually,
That's how shorting works, AIUI. You're not simply betting that the stock will go down eventually; you're betting that it will go below $value by $date, and both $value and $date are fixed at the time you place the bet. If the stock goes below $value on ($date+1), you're screwed.
Well, this may be naive thinking of me, but isn't shorting requiring you to buy back stock at your ($date +1)? Couldn't you limit the damage at least somewhat by buying stock before that date and holding that until it's time to return it?
Granted, you'd still lose money but at least you'd have a definite upper limit to the damage.
Short selling refers to the selling of securities that the trader does not own, borrowing them from a broker, and using the cash as collateral. This has the effect of reversing any profit or loss made on the securities. The initial cash deposited by the trader, together with the amount obtained from the sale, serve as collateral for the loan. The net value—the difference between the cash amount and the value of loan security—is initially equal to the amount of one's own cash used. This difference has to stay above a minimum margin requirement, the purpose of which is to protect the broker against a rise in the value of the borrowed securities to the point that the investor can no longer cover the loan.
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@Rhywden said in Shorting Gamestop:
@HardwareGeek said in Shorting Gamestop:
@topspin said in Shorting Gamestop:
But they've played their hand so badly that they need to buy back right now, not eventually,
That's how shorting works, AIUI. You're not simply betting that the stock will go down eventually; you're betting that it will go below $value by $date, and both $value and $date are fixed at the time you place the bet. If the stock goes below $value on ($date+1), you're screwed.
Well, this may be naive thinking of me, but isn't shorting requiring you to buy back stock at your ($date +1)? Couldn't you limit the damage at least somewhat by buying stock before that date and holding that until it's time to return it?
I'm not an expert, but AFAIK short contracts and similar instruments are cash-only - you can't pay up with actual stock. Of course there's nothing that stops you from buying the stock at the low point independent of your other transactions. If you sell them at the same time when your short contracts are due, the net result (minus broker fees) should be the same as what you proposed.Nevermind, the whole Gamestop situation is caused by actual stocks being must-have to complete short contract.
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@Mason_Wheeler said in Shorting Gamestop:
You sell first and then you buy later
Ok, but how do you do that if you haven't previously bought the thing you're selling? Unless the "sell first" isn't an actual sale but a contract to sell after you've bought it? And then you're back to put territory.Never mind. @boomzilla's post explained it. You're selling something you've borrowed.
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https://finance.yahoo.com/amphtml/news/gamestop-extends-meteoric-stock-surge-093729588.html
The short sellers haven't given in. I haven't seen a rash of suicides yet.
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@SlackerD said in Shorting Gamestop:
Kind reminder that it is usually boomers that do that.
Kind reminder that in saner countries kids born when cheques were abandoned are now allowed to vote, drink and get married.
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@robo2 said in Shorting Gamestop:
@SlackerD said in Shorting Gamestop:
Kind reminder that it is usually boomers that do that.
Kind reminder that in saner countries kids born when cheques were abandoned are now allowed to vote, drink and get married.
To be fair, I don't think I've ever seen anyone pay with a check. Maybe like once or twice.
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@TwelveBaud said in Shorting Gamestop:
None of this changes anything about GameStop itself. They're still doomed, they still won't pay dividends, they still have no meaningful revenue or earnings, and their market capitalization affects almost nothing about their real-world value.
I have a gut feeling that this is where this is really going to be fun (
?). When GameStop truly crashes, you're suddenly going to see thousands of Redditors whining that their nice stocks that are valued 10x what they bought them, well, are not worth more than the paper they're written on.(alternatively, a similar outcome will happen when professional investors with pockets much deeper than Redditors get their shit together, and at one point the stock crashes back to where it was, or even lower... but it's slightly less funny than the same happening because GameStop entirely keels over)
Hedge funds will recover part of their losses, but probably not all. Some naive Redditors (but I repeat myself) will have lost what is real money to them. GameStop will be bust. Probably the only winners in all that will be the stock broker who took their fee on all transactions, and maybe GameStop executives if they have stock options and can exercise them right now! And lawyers, because like cockroaches, lawyers always thrive, especially on shit.
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@remi Those naive redditors can easily avoid any losses right now unless they bought at the absolute peak. Buy in, wait for the stock to go up even more, sell a part of it to recoup your initial investment, and hold the rest. Worst case scenario you're back where you started and you have a funny story to tell. Anyone sane will do that, and anyone not sane enough to do that deserves to lose his money.
I mean the price doubled yesterday, and WSB have been memeing it for a while, people started buying in at 20 and now it's at 320 pre-market. The guy who started it turned something like 40k dollars into 50 million already.
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@robo2 said in Shorting Gamestop:
@SlackerD said in Shorting Gamestop:
Kind reminder that it is usually boomers that do that.
Kind reminder that in saner countries kids born when cheques were abandoned are now allowed to vote, drink and get married.
Actually those kids are closer to retirement than college now.
I vaguely remember cheques from primary-school age, and was already like 
when I learned in the late 90s that the usual way to pay rent in Brazil is to give your landlord a bunch of pre-dated cheques because their banks haven't invented shit like standing orders.
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@blek That would indeed be the sane way to handle that.
Do I really need to say more?
Margin (finance) - Wikipedia
