Article by Jon Doe.
In January 2021, a short squeeze of GameStop and of numerous other securities traded on various stock exchanges took place, causing major financial consequences for certain hedge funds. The short squeeze increased the stock price of GameStop, a video-game retailer, almost 190 times from its record low, hitting a high of nearly $500 per share on January 28, 2021, and causing large losses for short sellers. Approximately 140% of GameStop shares had been sold short and the rush to buy shares to cover these positions only drove the price higher. The short squeeze was mainly triggered by users of the forum r/wallstreetbets on Reddit through commission-free trading apps such as Robinhood.
Spend $15,000 a year on a Bloomberg Terminal and you can get:
"immediate membership to a community of 320,000 of the world’s most influential decision maker"
"Collaborate across markets"
"instantly share live data"
"Communicate, tag and share your ideas"
All so you and your buddies can manipulate the Markets.
Use Social Media to stop a parasitic Hedge Fund from destroying a company and you get:
Banned
Prevented from Trading
Called Alt-right
Called a Nazi
@polemics
Ironic.
On January 28, Robinhood halted the buying of GameStop and other securities, attracting criticism and accusations of market manipulation from several politicians and businesspersons, including Senator Ted Cruz, Representative Alexandria Ocasio-Cortez, businessman Donald Trump Jr., and Tesla CEO Elon Musk among others. A class-action lawsuit was also filed against Robinhood in the United States District Court for the Southern District of New York.
What is short selling?
Short-selling is a finance practice in which an investor, known as the short-seller, borrows shares and immediately sells them, hoping they can buy them back ("cover") later at a lower price, return the borrowed shares (plus interest) to the lender and profit off the difference. The practice carries an infinite risk of losses, because a stock can, in theory, rise infinitely. This is in contrast with taking a long position (simply owning the stock), where the investor's losses are limited to their initial investment only (at most losses can be 100%). For an example, if a short-seller borrows shares at $20, and then covers at $50 (the stock rose 150%), they would have lost $30 per share, representing a loss of 150%.
Running up to the squeeze, approximately 140% of GameStop's float had been sold short, meaning shorted shares were re-lent and shorted again. Observers congregating around r/WallStreetBets believed the company was being significantly undervalued, and with such a high amount of the shares being short, they could trigger a short squeeze, by driving up the price to the point where short sellers had to capitulate and cover their positions at tremendous loss.
What's Gamestop?
GameStop, an American chain of brick-and-mortar video game stores, has struggled in recent years due to competition from digital distribution services, as well as the economic effects of the COVID-19 pandemic, which decreased the number of people who shopped in person. As a result, GameStop's stock price declined, leading many institutional investors to short sell the stock. However, in September 2020, Ryan Cohen (the former CEO of online pet-food retailer Chewy) revealed a significant investment in GameStop and joined the company's board, leading many to believe that the stock was undervalued
Possible causes
During the COVID-19 pandemic, consumer spending was drastically lowered due to a decrease of in-store shopping. There was more money in the hands of investors as a result of historically low interest rates and of inability to spend their money elsewhere. Other suggested factors include a culture of taking massive gambles on the stock market, hoping to make money quickly, and anger from some investors towards the Wall Street hedge funds for their role in the financial crisis of 2007–2008.
Timeline
In January 2021, Reddit users on the r/wallstreetbets subreddit initiated a short squeeze on GameStop, pushing up the stock price significantly. This occurred shortly after a comment from Citron Research predicting the value of the stock would decrease. The stock price increased more than 680% on January 26, and its high volatility caused trading to be halted multiple times. In conjunction with the the short squeeze, the resulting increase in options volume triggered a gamma squeeze as a result of market makers needing to buy shares to hedge their increasingly short exposure. Basically, market makers seek to profit via arbitrage, by ensuring the prices of stocks and options are linked, thereby keeping the market efficient. Specifically, market makers "write" (sell) options to investors seeking to buy them, and delta-hedge their position by buying the stock; in other words they're agnostic on price moves, but profit off of price discrepancies between the options market and the stock market.
After the GameStop stock closed up 92.7% on January 26, 2021, business magnate Elon Musk tweeted "Gamestonk!!" along with a link to the r/wallstreetbets subreddit. A brief, sharp rise in the share price to over $200 followed Musk's tweet. As of January 28, 2021, the all-time highest intraday stock price for GameStop, excluding extended-hours trading, is US$483.00 (nearly 190 times the record low of $2.57).
On January 27, 2021, r/wallstreetbets triggered a short squeeze on AMC Theatres (AMC), a company in a similar position to GameStop. The value of AMC Networks (AMCX) also increased in value significantly, which was believed to have happened because of the stock's name being similar to AMC's. Disruptions and restrictions limiting trade have been reported on multiple brokerages such as Charles Schwab Corporation, its subsidiary, TD Ameritrade, and Robinhood. According to Bloomberg, US trading volumes on January 27 (in terms of share count) exceeded the peak set in October 2008 during the financial crisis, and was the third-highest in dollar terms within the last 13 years on record.
On January 28, 2021, GameStop shares opened higher in pre-market, reaching a high of nearly $500 per share. However, Robinhood delisted GameStop, AMC, BlackBerry, Nokia, and other volatile stocks from its trading platform; traders could no longer open new positions in the stock, although they could still close them. Other exchanges soon followed suit. Many traders were furious, and called for class-action lawsuits in multiple popular reddit posts. After the markets closed, Robinhood announced it would begin to allow "limited buys" of the affected securities starting the following day, although it was unclear what "limited buys" entailed. Anthony Denier, the CEO of Webull, stated that increased collateral requirements for their clearing house meant Webull themselves were restricted from opening new positions.
GME Resources, an Australian mining company, saw their shares significantly [quantify] increase in value on January 28. This was speculated to have occurred as a joke given the identical ticker symbols on different exchanges. Trading platforms such as UK based Trading212 and eToro blocked buys of GameStop and other stock while continuing to allow sales. Webull halted buy orders for stocks affected by the squeeze, and soon thereafter allowed orders to continue.
Link between Robinhood and Citadel Securities
Citadel LLC § Regulatory issues
Bloomberg previously reported that 40% of Robinhood's revenues were derived from selling customer orders to firms such as Citadel Securities and Two Sigma Securities, in a practice known as payment for order flow. As Robinhood limited trading of GameStop shares, users alleged a conflict of interest. Citadel Securities stated that they did not instruct any brokerage to suspend or otherwise limited trading
Impact on hedge funds
As of January 28, 2021, Melvin Capital, an investment fund shorting GameStop, had lost 30% of its value since the start of the year. Citadel LLC funds and firm partners then invested $2 billion into Melvin, while Point72 Asset Management’s investment added $750 million, for a total investment of $2.75 billion, [before Melvin stated to CNBC that they covered (closed) its position on January 26. The exact amount was not disclosed. Reportedly Citron Research, another hedge fund, had also shorted the stock and claimed to have closed the position with a 100% loss. According to Morgan Stanley, a number of hedge funds covered their short positions and sold shares in their portfolio to reduce leverage and market exposure, in some of the largest such actions within 10 years. On January 26, 2021, it was reported that short sellers lost a total of $5.05 billion due to the squeeze.
Losses on short positions in U.S. firms topped $70 billion. Ortex data showed that as of January 27, there were loss-making short positions on more than 5,000 U.S. firms.
Reactions
Senator Elizabeth Warren (D-MA) (known for her racist attitudes towards Native Indians) called out the investors and hedge funds which were criticizing the rally, saying they "have treated the stock market like their own personal casino while everyone else pays the price". 🎰🂡 Similar sentiments were expressed by Senator Ted Cruz (R-TX) , Socialist Representative Alexandria Ocasio-Cortez (D-NY), Representative Rashida Tlaib (D-MI), Representative Ted Lieu (D-CA), Donald Trump Jr., Libreal CNN anchor Jake Tapper, Fox Business host Charles Payne, Neo-Con Ben Shapiro and conservative political commentator Rush Limbaugh, and libreal billionaire investor Mark Cuban. Some lawmakers, such as Cortez, Ted Cruz and Ro Khanna also expressed frustration at Robinhood and other's decisions to close individual trading of GameStop, among other stocks. In an interview with CNBC, Reddit co-founder Alexis Ohanian compared the rally to Occupy Wall Street, saying that "it's a chance for Joe and Jane America—the retail buyers of stock—to flex back and push back on these hedge funds." Numerous journalists have also drawn comparison to the movement.
On January 27, 2021, White House press secretary Jen Psaki said that Treasury Secretary Janet Yellen and others in the Chinese partnerd Biden administration were monitoring the situation. Libreal Speaker of the House Nancy Pelosi said that Congress will be reviewing the situation. Senator Sherrod Brown (D-OH) announced that the Senate Banking Committee would hold a hearing on the state of the stock market and the alleged market manipulation surrounding the GameStop short squeeze. Representative Byron Donalds (R-FL) called for Congress to launch "an immediate investigation into Citadel, L.L.C. and Robinhood. Representative Maxine Waters (D-CA) announced she will convene a hearing in the Financial Services Committee. After Robinhood shut down trades for GameStop stock, Paul Gosar called for a Department of Justice investigation into the trading app, and their relationship with the Citadel hedge fund
Various news media across the political spectrum have raised concern over potential conflict of interest in regards to Yellen, because she had received $810,000 from Citadel after the end of her term as Chair of the Federal Reserve, as well as $7,000,000 in total from various firms.
The reason why so many U.S. politicians from both parties and all over the spectrum is because all of there investments are in the stonks.
"Oh shit our money is at risk! Reeeee! Prosecute Robinhood!"
Disgruntled users review-bombed the Robinhood app on the Google Play Store after it halted the trading of GameStop securities, pushing its ratings down to one star. Protesters also showed up outside Robinhood headquarters in Menlo Park, California, at the Securities and Exchange Commission headquarters in Washington, D.C., and the New York Stock Exchange. Google Play deletes over 150,000 Robinhood app reviews after frustrated users leave one-star ratings. Facebook is already shadow banning content related to Robinhood and GameStop.
(Censorship at it's finest.)
(Screenshot from Wikipedia as of 1/28/21)
So...
The TL/DR...
1. Janet Yellen is Biden's Treasury Secretary.
2. Yellen has made $7M from Wall Street speaking fees. $810K specifically from Citadel LLC.
3. Citadel and Point 72 invested $2.75 Billion in Melvin Capital... who jusked got nuked by Reddit.
4. Citadel also has paid Robinhood to "allow Citadel to profit much more of Robinhood trades than other brokers."
5. Yellen / "White House" allegedly rang up Robinhood CEO Vladimir Tenev...
6. then $GME, $NOK, $BB, $AMC are suddenly pulled from Robinhood's platform and no more buys (and only sells) are allowed
If it is true that Yellen is behind the scenes and either prodding or soothing consciences of the Wall Street investors who have paid her millions over the years...
Qs:
Is this a massive Cat's Paw liability for the Biden Administration / Treasury Secretary Janet Yellen?
How many others did Yellen / Biden Admin contact to possibly assure them of no repercussions for market manipulation?
@ChesterBelloc
Honorable mentions reactions from Humanity.
Makes you think, huh?....
Buy low¡ Sale high!
Gamestonk: Power to the People. ✊🤑💸💰🂡
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