this post was submitted on 23 Feb 2024
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Lol in the article it says ppls proposed shotlrting Reddit stock. I love some of those apes so much, they got great ideas.
I hope they short it into oblivion and make all the tendies in the world.
Most you can short it in a day is 10 percent right? I dunno if they're disciplined enough.
I'm not knowledgeable about it for sure, it just seems rather next to impossible to tank an IPO with borrowed shares alone.
I'm retard.
What actually happened to the gamestop thing. Did the government end up getting involved and shutting it down? There was some shady shit going on for a while.
How would reddit even tank the price? Shorting is just a way for them to lose money if they are wrong.
Short selling is used when you expect a stock to drop in price. You “borrow” a stock from someone and immediately sell it for the current price. You have an agreement to return the borrowed stock to them within [x] time. So let’s say you borrow the stock and sell it for a nice even $100.
But you’re expecting the stock price to drop significantly. So when it drops to $60, you’ve now made $40. Because you sold it for $100 and now you can buy it at $60 to return it to the lender. If the price has dropped, you make money because you keep the difference between your sale price and your purchase price.
The issue with this is that your potential for loss is technically unlimited. If the price never drops, you never make money. Or even worse, if it increases, you stand to lose money. And since there’s no price cap on stocks, you can theoretically lose an unlimited amount. Since you’re legally obligated to return that stock to the person you borrowed it from, you can be forced into buying the stock for exorbitant prices if it increases.
The GameStop thing was caused by something called a short squeeze. Basically, a bunch of people expected the stock to drop, so they were all shorting it. Someone realized this, posted about it, and people started buying up all the available stock and refusing to sell. Now all of those people who had sold the stock and were hoping to buy it back cheap found that there was nobody to buy it from.
They increased their offer price. Still nobody to buy it from. They increased the offer again. Still nobody to buy it from. And as more shorts matured and more people were legally obligated to buy the stock, the more the price increased. It’s a simple supply and demand calculation: The demand was rapidly increasing as more people were legally obligated to return the stocks they had borrowed, and the supply had suddenly evaporated because people were outright refusing to sell. And this has a cascading effect, as people see the price spiking and refuse to sell because they expect it to continue to climb. This is where all the “to the moon” and rocket memes came from, because stock owners planned to hold until the price made it all the way to the moon.
Some vendors like Robinhood stopped allowing people to buy GameStop stock. The idea was that it would limit the shorters’ potential losses, by keeping the dwindling supply from being completely bought out. The hope was that once people were banned from buying more, they would begin to sell. But this only pissed a lot of people off, because it was a blatant attempt at manipulating the market. It was a blatant shield for the trust funds who had historically had a stranglehold on the markets. It was seen as the rich helping the rich, because that’s exactly what it was.
Amazing explanation, thanks!
So where are we at currently?
Yeah, I remember watching all of this live, but that was years ago. Then wsb started posting nothing but tweets by some Cohen guy and that's where I lost all interest.
I'm kinda assuming the whole thing blew over and nobody had to face any consequences at all, because reality sucks, and because any win for the wsb folks would be repeated by them everywhere ad nauseam.
This is nonsense. The SEC already came out with a report confirming that the run up on GameStop wasn’t caused by shorts closing.
Hedge funds are short game stop. They are still short on GameStop. The real squeeze hasn’t happened yet. Whether it will or not is another debate.
I get all that I was there for that. But then lost interest. Wondered what happened after that.
Are people still holiding? There was talk that the government was going to allow people to settle their shorts for low prices or something. I guess people that made money was because of the bubble nature and memes of the whole thing, rather than any shorting factors.
But more importantly how does shorting hurt reddit?
There are still some who are diamond handing, unclear how many. There's a subreddit called gme_meltdown you can check out if you want a rundown on what's happening.
Shady shit did go down but a lot of money was moved from the wealthy to the not as wealthy. I don’t think the government did anything except interview a few of the major players.
Every once in a while you’ll see a fancy car with a license plate that references gme, mooning, or wsb.
The GME thing resulted in lots of people losing lots of money, whereas many of them were convinced they were going to become millionaires.
The "GME thing" resulted in a couple of hedge fund firms going belly up. So yes, you are correct that a lot of people lost a lot of money. A few people did become millionaires from the fiasco.
Sure, at the very beginning there was some action for those very few early enough to the party, but the vast majority of people who bought in to GME did so after this happened and have only lost money.