from Hacker News

GameStop, 'Reddit rally' stocks slide more, Yellen vows scrutiny

by Moody_10001 on 2/5/21, 9:15 AM with 68 comments

• by Cookingboy on 2/5/21, 10:09 AM

  On Reddit, especially /r/wsb, many people painted it to be a common folks vs. Wall Street hedge funds story. But I've always thought the reality was that it's a hedge funds vs. hedge funds story where plenty of big players made millions, if not billions last week, then shorted the stock at $3-400 and made millions more on the way down. The retail players were probably just caught between a group of 800lbs fighting gorillas. I wouldn't even be surprised if Melvin Capital made all their money back by shorting near the peak.

  Additionally I'm beyond disgusted at how "any publicity is good publicity" turned out to be so true and Robinhood came out stronger than ever from this whole debacle: https://www.cnbc.com/2021/02/03/why-investors-were-willing-t...

  > “It’s the fastest growing consumer app, and has better engagement than social media,” one investor said. “The majority of those new traders won’t be trading GameStop.”

  Having "User Engagement" as a benchmark for an investing app is beyond immoral. Robinhood has always been extremely predatory at encouraging users to actively gamble with their investments, and utilizes all kinds of user manipulating tactics such as gamification that has no place in a finance app.

  They will have a very successful IPO, and the top shareholders/investors will make billions, all from a product named Robinhood that excels at almost nothing but transferring wealth from the masses to the elites.

  And it will be hailed as a true Silicon Valley success story.

• by WA on 2/5/21, 10:04 AM

  Look at the chart. The VW infinity squeeze already happened in a way. What else do you expect? Old shorts were squeezed out, new shorts entered the bet. Too many people apparently haven't looked at the right side of the VW chart: the steep drop-off from the ATH of ~1,000€.

  This is /u/Variation-Separate "market makers engineered next leg down all the way to SPX 1,800" all over again.

  So many people are now holding the bag. They apparently also don't understand that in the stock market, the price is determined by the last transaction. If less people buy (and who should buy, because every gambler is already in), gravity pulls the stock down. Party is over.

  And Musk should be investigated by the SEC a bit more often.

  Edit: One thing to add: I refuse to believe that retail ONLY forced the price up. I'd bet some big players participated in the pushing of the price all the way up, selling at the top and now retail is holding the bag, because they thought they make up most of the volume, whereas they have been played.

• by throwaway346434 on 2/5/21, 10:02 AM

  Oof. Having sat in those communities and seeing media narratives - from reuters as well as others - about "reddit attention shifting to silver" despite a lack of that actually happening to the degree claimed, this is disappointing to see promoted.

  Objective facts: sentiment has changed, prices have decreased, people have likely lost money.

  Its frustrating to see a narrative - and not as far as I know out of the SEC themselves - talking about one particular focus of investigation while ignore other dubious areas, even if they arent technically illegal.

• by PartiallyTyped on 2/5/21, 10:14 AM

  Retail can not move markets like that and if you genuinely disagree, take it from somebody like Dr. Michael Burry, in a recent tweet [1]:

  > The correlation coefficient between $GME and $SAVA today was 0.884648, nearly unity. Video game retailer on one side, biotech on the other. There should be no correlation but for.... Both traded multiple $billions. #BigMoney building you staircases and knocking castles down.

  This sentiment is repeated in his tweets, though he often deletes them.

  However, I am certain that the whole story was a ploy for whales to hide behind. But again, what do I know.

  [1] https://twitter.com/michaeljburry/status/1357528669271388160

• by teekert on 2/5/21, 10:18 AM

  I really hate how big hedge funds can consistently pull money out of the market using tools normal people don't have access to. When it bites them because they get caught with their hands in the cooky jar, they call the market "irrational" or that the "market is disturbed". But their profits are disturbed by people that play "their" game by the rules. Nobody likes to see a a billionaire get even more rich just by shuffling money around while the rest of us are down here providing real value to the world in the form or goods and services. They should be happy it's just a short squeeze and not a full blown revolution.

• by hans1729 on 2/5/21, 10:04 AM

  I would love to know what events exactly took place during the hype, people and hedges bought in at 60 and sold at 300? And now there is immense uncertainty on wether the squeeze already happened?

  I don't see GME falling below 40 anytime soon, the core group that started all of this should be holding if anything said until a week ago had any meaning or sincerity at all. Just the people who hold should suffice to keep the stock above 50. How did it drop to 40 Euros yesterday?

  And whats going on over at wsb? There's astroturfing, trolls, people who bought in at 300, the core that pushed the hold-narrative - who's to be believed? The post on r/stocks about the second squeeze? Man, what a ride.

• by DSingularity on 2/5/21, 10:13 AM

  Let her scrutinize, we welcome that. The question is what will her conclusion be? Will it be that social media manipulated the market? Or will it be that when big players got squeezed and got caught with their pants down they changed the rules of the game to avoid losing? Free markets right?

• by ckastner on 2/5/21, 10:27 AM

  I've occasionally browsed WSB over the last few days, and it became just too depressing to read.

  There are vast numbers of financially illiterate people pouring what little money they have into this pipe dream that a short squeeze can still be effected.

  And these people are fueled by incessant bullshit that approaches, and in some cases even exceeds, the level of QAnon.

  The facts of the matter are that (1) the cat was out of the bag last Wednesday and (2) since then, WSB has been playing poker with their cards face-up, calling every single raise thrown at them.

  This is a hedge fund's dream come true. You have an army of saps still willing to pay you $60 for a stock that is worth $20 or so, and they simple won't stop.

• by rmm on 2/5/21, 10:17 AM

  What happens to the shares of all the people who install Robin Hood, lose their money and just delete the all. Do they just go stagnant?

• by hrns on 2/5/21, 10:00 AM

  At this point I'm not sure if the WSB anticipated short squeeze is going to happen, or maybe it has happened already last week.

• by Beltiras on 2/5/21, 10:03 AM

  If they removed the trading restrictions on the stock it would shoot back up again.