Beginner question regarding gamestop debacle

Discussion in 'Ask any question!' started by HUSSAIN SAJWANI, Jan 27, 2021.

  1. HUSSAIN SAJWANI

    HUSSAIN SAJWANI New Member

    Joined:
    Jan 27, 2021
    Messages:
    2
    Likes Received:
    0
    I don't have a strong financial background so with that assumption please answer this question using layman's terms.

    I understand what happened with the Gamestop stock ... However, my question is 1) is it public knowledge which stocks have large hedgefunds shorted and if yes how can this not become a trend and now the 'herd' move on to the next stokc that hedgefunds are expecting go down and the herd starts buying them as well to make the price go up like they did with Gamestop ... 2) if the information is not public knowledge, how did this one become public knowledge (i.e. that hedgefunds were shorting gamestop and their options were about to expire).
     
  2. anotherdevilsadvocate

    anotherdevilsadvocate Well-Known Member

    Joined:
    Apr 3, 2016
    Messages:
    3,554
    Likes Received:
    2,787
    It is public knowledge, although not so easy to get current up-to-the-day data about this. I have seen some people post it though.

    The thing about Gamestop is they have $6 billion revenues per year. They had free cash flow for years, and even paid a big dividend until last year. Not many companies can say that (Facebook and Google have never paid dividends, for instance).
    However with Gamestop, people believed they were in a dying business; everyone is calling for the death of physical stores (which is not going to happen imo, they just need to diminish). That is why hedge funds were willing to short it so much. But it looks like Gamestop is turning their business around, they finally have a partnership with Microsoft to sell online.

    It may not be the greatest business model, but there is money in that business. Hedge funds thought the model was too weak and got overzealous. The irony is now Gamestop is bigger than ever, by stock price.
     
  3. StockJock-e

    StockJock-e Brew Master
    Staff Member

    Joined:
    Apr 3, 2016
    Messages:
    8,887
    Likes Received:
    3,150
    Yes, there are resources online for that, but all these stocks have been running for a while now, BB, NOK, AMC etc... everybody has been trying to do the same thing now.
     
  4. HUSSAIN SAJWANI

    HUSSAIN SAJWANI New Member

    Joined:
    Jan 27, 2021
    Messages:
    2
    Likes Received:
    0
    Cool! Thank you for the quick and informative replies. Yes!! I hear NOK being next because AMC is getting too much attention and getting blocked from being purchased ...

    The legality of all this is so very interesting as well!
     
  5. StockJock-e

    StockJock-e Brew Master
    Staff Member

    Joined:
    Apr 3, 2016
    Messages:
    8,887
    Likes Received:
    3,150
    Typically if there was one single firm or individual orchestrating a move like this, they could be legal repercussions.

    But what the hell do you do when its 100,000 retail traders from some subreddit?
     
    B Russ likes this.
  6. B Russ

    B Russ Well-Known Member

    Joined:
    Sep 25, 2017
    Messages:
    532
    Likes Received:
    327
    Haha,well, for starters, we all learned that you illegally AF (IMO) protect the big boys and make it where you can make closing orders only when the shorts are getting said shorts ripped off along with their faces. Until they have a chance to close their short positions….it was asked once here before. If retail could only close on those breaks….who was doing the buying….the shorts. Its disgusting
     

Share This Page