Even The White House is now monitoring this GameStop situation. Who can blame them for wanting what executives at hedge funds have, or at least for them to fail?īut others are worried about The People finally learning how to invest in stock. What I do know is that every person who can be described as “extremely online” now cares about the stock market and is learning how to buy and sell shares. If you want get to get into the nitty-gritty, I’d suggest giving this New York Times explainer a read or this Bloomberg article a look. Now, I’m not going to pretend I understand how the stock market or money works, especially when this fiasco just makes it seem like money is make believe anyway, and the above explanation is definitely oversimplified. Thank you to whoever explained this – is incredible But when the Redditors started buying up GME stock, causing the share price to skyrocket, Melvin & Broke Sons were suddenly facing a HUGE loss. had originally borrowed those shares and sold them in the hopes that they’d drop below the price they’d paid for them before buying them back and returning the shares to the broker, pocketing the difference and turning a profit in the process. In a scheme known as a “short squeeze,” Melvin Boat Shoes Corp. had planned when it bet against GameStop and borrowed those GME shares. Meaning that, under current stock market regulation, Melvin would have to pay the massively inflated price of those GameStop shares in order to get them back from those pesky amateur investors. This put multi-billion dollar finance bro outfit Melvin Capital in deep shit, since they’d borrowed and sold those same exact GameStop shares for much less and would soon have to buy them back and return them to the broker. This all started when subreddit r/wallstreetbets, a collective of amateur investors, whose financial strategy ranges from well-reasoned due diligence to, quite literally, risky “YOLO” investments, rallied its more than 4 million members to begin buying up cheap GameStop shares in order to raise the price at an exponential rate. But none of this has made this drama any less juicy. Today, GME shares went from $347.51 to $132 in just a matter of hours (although the price seems to be going up again as some investors move to other apps like Fidelity). It seems to be mostly working too, as panicked investors are rushing to sell back their shares to prevent a loss as the prices drop. If so, good luck doing so on the popular Robinhood app, which has halted the ability for amateur investors to buy up those sweet GameStop shares (as well as Nokia, AMC, and Blackberry) in what some are calling an attempt to save beloved hedge funds like Melvin Capital (they were so screwed 24 hours ago). Perhaps you’re even watching YouTube videos titled “Everything You Need to Know About the Stock Market in 5 Minutes” in order to cash in on some GME stock. Maverick, increased its stake by 164%, or 2.9 million shares, leaving it with 4.7 million shares, regulatory filings show.You’ve probably heard by now that the poor hedge funds are in trouble. Hedge fund Senvest, which told the Wall Street Journal that it scored a $700 million profit on the GameStop position, increased its position in the company by 56% when it bought 1.8 mln shares. 27, a gain of nearly 1,750% from its market value of $3,768,000 at the end of December. Shellback, for instance, could have seen its 200,000 shares reach a value as high as $69.5 million had it held through Jan. Had each fund sold its shares of GameStop near the record closing price of $347.15, they would have banked gains of 1,600% or more. 30, according to a regulatory filings known as 13-Fs. Hedge funds including Maverick Capital, Shellback Capital, Landscape Capital Management, and Engineers Gate Manager LP were among those that added a new position or increased their stakes in GameStop during the quarter that ended Dec. FILE PHOTO: A GameStop store is pictured in the Manhattan borough of New York City, New York, U.S., January 29, 2021.
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