@BlueLake2
Yep. It was completely legal public knowledge. Actually I've made money through options a few times by "accidentally stumbling" to the conclusion about overshorted stocks. Nowhere near this scale lmaooo
And just for clarification: the stock price was inflated from legal public knowledge but it's being tanked from very illegal insider tactics and hedge funds are profiting off of it/crushing retail investors using insider knowledge.
A day or two ago everything seemed like manipulation but there wasn't anything too concrete about it. Today they just stopped hiding it. Their short positions skyrocketed just before their partner froze buying for bullish demographics, causing the price to tank and their new positions to print big.
@execle has a good explanation, one more important thing:
One of the major hedge funds pulling this illegal short is Melvin Capital. They lost a crapton of money so now they're being "bailed out" through Citadel LLC (this isnt a government bailout, just a private company investing in another to save it). As it turns out, Citadel LLC owns 40% of Robinhood and is Robinhood's biggest customer of user data. Basically: Robinhood makes money off Citadel who makes money off Melvin Capital.
GME goes up, Melvin wants it to go down. It won't go down. They won't be able to pay back Citadel. That hurts Robinhood. What do they do? Half an hour before the market opens, Robinhood cancels all pending buy orders and freezes buying for GME. Nobody is allowed to buy, but you can sell. Mass selling tanked the stock price from $475 to $130. Note that people speculate if buying was enabled, it could've instead climbed up to $650, but instead it looks like Robinhood cut off the main way stock prices climb. This inability to buy is what enabled the hedge funds to tank the stock price with little interference (the price was so low, except anyone who only had an account with Robinhood couldn't actually buy into it. A potluck only for the royalty)
Other things to note:
Motherboard reports half of all Robinhood users own a stake in GME. Halting buying has significant impacts on the price, which ultimately benefitted Robinhood and it's partners.
There are reports (not yet confirmed, last I checked) that hedge funds doubled down on their shorts just before Robinhood froze buying. That basically means hedge funds knew about this in advance (and probably orchestrated it with threats of yanking investments in Robinhood) and knew they could abuse it.
There is a post circulated of an alleged Robinhood employee claiming that he overheard the CEO talking about how the white house pressured Robinhood to shut things down. Be wary, it's unverified and sounds incredibly fake. There's also a crapton of fake defamatory accounts being made to slander the retail investors, and some media outlets are trying to paint retail investors as alt-right/qanon. I think this is an attack to make WSB look like it's full of rightists in tinfoil hats, but this is a bipartisan movement.
Hedge funds illegally short sold a bunch of gamestop shares, in fact, they naked shorted over 140% of GME stock.
This is should be impossible and illegal but one stopped them from doing this because "rules for thee not for me" on wall street, and loopholes only very wealthy firms are able to exploit. The biggest
Short selling in this way is essentially betting on a business failing (a rather scummy practice), they have sold stock and agreed to pay it back at a later date, which profits them if they drive the price of the shares lower than what they bought it for. Hedge funds have tons of ways to try to drive stock prices down, like a short ladder attack (which they did today) where hedge funds ping pong a tiny bit of stock from a high price to a low price between themselves. When they do this, it tricks the stock price into temporarily plummeting.
A common tactic of hedge funds is to try and short a business into bankruptcy so they can be bought for crap.
The biggest hedge fund shorting Gamestop is Melvin Capital, who were possibly trying to bankrupt Gamestop. Because of their illegal naked short selling, they have the potential for INFINITE LOSS
They have to pay the $GME back, no matter how high it goes.
Everyone else in the world has little to lose by trying to drive up the price of GME as high as possible by buying and not selling. The squeeze that will skyrocket the stock when hedge funds have to buy back the stock will probably result in huge profits for people, but most people are willing to accept loss just to throw a middle finger at wall street.
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Yep. It was completely legal public knowledge. Actually I've made money through options a few times by "accidentally stumbling" to the conclusion about overshorted stocks. Nowhere near this scale lmaooo
A day or two ago everything seemed like manipulation but there wasn't anything too concrete about it. Today they just stopped hiding it. Their short positions skyrocketed just before their partner froze buying for bullish demographics, causing the price to tank and their new positions to print big.
One of the major hedge funds pulling this illegal short is Melvin Capital. They lost a crapton of money so now they're being "bailed out" through Citadel LLC (this isnt a government bailout, just a private company investing in another to save it). As it turns out, Citadel LLC owns 40% of Robinhood and is Robinhood's biggest customer of user data. Basically: Robinhood makes money off Citadel who makes money off Melvin Capital.
GME goes up, Melvin wants it to go down. It won't go down. They won't be able to pay back Citadel. That hurts Robinhood. What do they do? Half an hour before the market opens, Robinhood cancels all pending buy orders and freezes buying for GME. Nobody is allowed to buy, but you can sell. Mass selling tanked the stock price from $475 to $130. Note that people speculate if buying was enabled, it could've instead climbed up to $650, but instead it looks like Robinhood cut off the main way stock prices climb. This inability to buy is what enabled the hedge funds to tank the stock price with little interference (the price was so low, except anyone who only had an account with Robinhood couldn't actually buy into it. A potluck only for the royalty)
Other things to note:
Motherboard reports half of all Robinhood users own a stake in GME. Halting buying has significant impacts on the price, which ultimately benefitted Robinhood and it's partners.
There are reports (not yet confirmed, last I checked) that hedge funds doubled down on their shorts just before Robinhood froze buying. That basically means hedge funds knew about this in advance (and probably orchestrated it with threats of yanking investments in Robinhood) and knew they could abuse it.
There is a post circulated of an alleged Robinhood employee claiming that he overheard the CEO talking about how the white house pressured Robinhood to shut things down. Be wary, it's unverified and sounds incredibly fake. There's also a crapton of fake defamatory accounts being made to slander the retail investors, and some media outlets are trying to paint retail investors as alt-right/qanon. I think this is an attack to make WSB look like it's full of rightists in tinfoil hats, but this is a bipartisan movement.
But it also is exposing a lot of very hypocritical people on the losing side of it doing some questionably legal stuff.
This is should be impossible and illegal but one stopped them from doing this because "rules for thee not for me" on wall street, and loopholes only very wealthy firms are able to exploit. The biggest
Short selling in this way is essentially betting on a business failing (a rather scummy practice), they have sold stock and agreed to pay it back at a later date, which profits them if they drive the price of the shares lower than what they bought it for. Hedge funds have tons of ways to try to drive stock prices down, like a short ladder attack (which they did today) where hedge funds ping pong a tiny bit of stock from a high price to a low price between themselves. When they do this, it tricks the stock price into temporarily plummeting.
A common tactic of hedge funds is to try and short a business into bankruptcy so they can be bought for crap.
The biggest hedge fund shorting Gamestop is Melvin Capital, who were possibly trying to bankrupt Gamestop. Because of their illegal naked short selling, they have the potential for INFINITE LOSS
They have to pay the $GME back, no matter how high it goes.
Everyone else in the world has little to lose by trying to drive up the price of GME as high as possible by buying and not selling. The squeeze that will skyrocket the stock when hedge funds have to buy back the stock will probably result in huge profits for people, but most people are willing to accept loss just to throw a middle finger at wall street.