I check the GameStop subreddits every once in a while out of morbid curiosity. The content has become a cross between pump spam and conspiracy theories. It’s hard to tell, but I think the masses of GameStop believers aren’t even interested in the dump portion of the pump-and-dump scheme because all of the smart money exited the trade a while ago. Everyone left is convinced that they’re either performing some sort of activism and/or about to become unbelievably wealthy when their conspiracy theories come true and the stock price is forced into the millions.
The “mother of all short squeezes” theory has been debunked over and over again, but the initial price action due to the media frenzy has convinced a lot of people that there’s something else going on. Any information that contradicts the theory is not welcome in their Reddit bubbles, but any “DD” that supports the theory is upvoted rapidly. It was interesting to watch at first, but it’s becoming increasingly depressing as it becomes clear how many people have put too much of their own money into this pump scheme turned conspiracy theory.
Yeah, no kidding, and I'm surprised I haven't seen them talked about much on the internet...for a complete outsider, they're completely insane and nonsensical. And for somebody that kind of knows the history of the subreddits, it's a super interesting study on how being financially invested in something can totally warp your beliefs and thinking.
I've followed the gme saga off and on for the past few months, I've never once seen the theory debunked. If this is actually the case, could you post a link to it?
As far as I understand it, the core aspect of an impending “MOASS” is that GME stock is still shorted > 100%, but SI is currently reported at around 15%[0].
In other words, the canonical measure that represents the ratio of uncovered shorts to the float is ... wrong? There are people who are short, but are not short?
From what I got, the majority of the actual short would be hidden in some method of put-call options shenanigans (not sure what it is now, but there was at some point the equivalent of 2 times the float in $<2 puts a year out)
A lot the bigger theories that they preach can't be disproven because they get updated to take into account new facts. For example, the entire MOASS theory (Mother of all short squeezes) is founded on the idea that hedge funds have shorted the entire float of GameStop multiple times over. This theory was created when GME's short interest was over 100%, but now that it's reported to be down around 20%, the theory has evolved and to say that the short interest we see is a lie because hedge funds a in cahoots with data providers as well as selling through dark pools to hide the actual short interest.
The first version of the theory WAS disproved, so the theory evolved to account for that. You see that same pattern over and over with everything the preach right now. If they correctly predict something it's proof that they're on the right track. If they make an incorrect prediction, they just didn't have the right data and they "discover" something new that will make their theory right.
That being said, if you stalk their sub (its my guilty pleasure), there's plenty of small things they get wrong that are easily disproven. They love to talk about GME's price movement being unique (GME went up 11% today on no news), but it tends to move in tandem with plenty of other speculative stocks, which they ignore. They love to talk about how the reverse repo update that gets posted every day is a sign that they're on the right track even when the first post that brought that data to their sub claimed it wasn't definitive proof of anything, just a weird thing that was happening.
I think the icing on the cake is the one guy from Florida who is a member of their sub who sued GameStop in an effort to get more information. When they held a stockholder vote sometime in 2021 there were 8 different items to vote on and the total number of shares added up differently in one of the votes. In the last vote, if you add up all the yes and no votes, there was one additional vote. GameStop claimed that the difference was because of rounding fractional share votes, but the guy claimed it was proof of naked shorting, so he sued. GameStop's own lawyers said the guy said there was no proof of naked shorting and that the lawsuit was frivolous and are asking the judge to dismiss the case with prejudice and have the guy pay their legal fees.
It's not debunked at all. You have to remember that this is the same corruption level that had the 'buy' command (but not 'sell') turned off just for that stock for a day on RH -- and no one went to jail.
There is growing pressure as more and more investors DRS their shares to push back, so we'll see more articles like the one above, convincing us that the short squeeze is over, trying to convince people to sell. Because once 100% of shares are registered, it's all over.
> once 100% of shares are registered, it's all over.
IF you can extrapolate the rising trend all the way to 100%, then shorting would be quite a bit more difficult for most market participants. But the fact that some investor have DRSed their shares does not mean all the rest will, too. You might equally ask that if it would be so beneficial for shareholders to do this, why haven't all shareholders done it already?
As someone without any direct interest in the whole saga (neither short nor long), it sure looks like the whole thing has been over for at least six months.
> it sure looks like the whole thing has been over for at least six months
I think for passive spectators it may feel that way. For those people in it (and I was in WSB from before this started), it's absolutely right in the middle of the action. They has a steady march of registering shares for months and it's not letting up.
The more that directly register their shares, the smaller the pool to manage the price. It doesn't have to hit 100% for there to be an effect. But if it ever does hit 100%, wow.
The SEC report confirms that shorts closed their positions and short interest dropped significantly over a year ago, and it has remained low since. You can't have a short squeeze without significant short interest.
Read Section 3.4 "Short Selling and Covering Short Positions". It describes the short covering that took place. Look at the chart of short interest on page 27. It shows the short interest dropping precipitously, meaning the majority of short positions were closed.
It is honestly baffling how many GME conspiracists are apparently illiterate and unable to understand that "X didn't have as much of an effect as Y" doesn't mean "X did not happen". Especially when it is surrounded by multiple paragraphs explicitly talking about the X that was happening.
Look at XRT short interest. There's plenty of information explaining the situation. If you look at the recent votes by the SEC. GG wanted to make better short reporting since that is a big issue. In multiple occasions hedge funds and banks mark their short position long and then get a small fine years later.
Note: I was never a member of WSB. I have researched GME years before this whole saga and hold a position in my portfolio because I saw the value in the turnaround prior to the squeeze saga. That said, as an investor the mechanics of the market need to change.
I think it comes down to priming, at least for those of average intelligence. They don't read the report start to finish with an objective mindset, they are first fed snippets here and there while being told what to read from those snippets. If they ever do decide to really read it, they are primed to take from it only what they have already been told to take from it.
I have read the report multiple times trying to make an educated investment decision. As I mention in other comments, I was following the company way before this saga. Probably for similar reasons than Burry, Ryan Cohen and DFV decided to invest on it, although I admit what caugh my attention was their dividend years ago (no longer pays a dividend). I researched a lot of companies, GME happened to ended up with this craziness all around. I think this is not going be worth millions per share like Reddit says, but it will be worth way more than it is right now. I am far from a bagholder, I've earned a nice return and based on what I have seeing, things are going to be better for the company. The short part of investment is something I had to learn more thanks to the whole saga. I am always looking for bearish thesis about my investments and why this is not going to be worth more in 5 years. Watch DFV youtube videos, he is far from a meme, his videos are very informative about why it is worth it.
That was without counting any work performed by RC and the turnaround.
From for the report:
* Figure 6 shows that the run-up in GME stock price coincided with buying by those with short positions. However, it also shows that such buying was a small fraction of overall buy volume, and that GME share prices continued to be high after the direct effects of covering short positions would have waned.
The SI was 140% of the float. Small fraction of the volume was the short (without counting short volume), you think it was enough volume for both? There's no way to know how much was that. Gabe Plotkin in his testimony even says that short have plenty of time to cover but it didn't seem that was the case. If you look at the SI chart it seems the shorts got closed right away, but the stock manage to have couple of wild runs to 300 and a few to 250. With no retail nor volume to back it up. Why is that? you don't see that with any other company. Maybe some fraud behind?I really don't know.
Anyway, I am not saying there's a 140% short position (nor crazy 1000% like reddit speculate), but the SI is not 10% nor 20%. The price action nor the options market backs those numbers, I may be wrong but I believe there's more to it. It is hard to be sure obviously, but I don't mind to have a few hundred shares and see how it unfolds, long term it is going to be worth more and I am not counting on any squeeze for that. This is not financial advice, it is just my opinion on something I ended up finding fascinating, from the investment side and the human behavior side.
The people still holding AMC are even more deluded given that AMC has already bought back stock multiple times, making plenty of money on the suckers still hanging on.
No, those people lost their own money, since every third word out of DFV (and everyone even remotely reasonable on that site) is that what they're providing is not financial advice.
That's not just boilerplate, it's also 1000% true. If you lose money because you listened to them, the only person you can blame is yourself.
That's like Elon tweeting about Dogecoin and then saying NOT to take his advice. Lol the meme "this is not financial advice" does not follow logic when you create a momentum, get yourself a platform and then essentially trick people. I am NOT saying that is what DFV did though
The “mother of all short squeezes” theory has been debunked over and over again, but the initial price action due to the media frenzy has convinced a lot of people that there’s something else going on. Any information that contradicts the theory is not welcome in their Reddit bubbles, but any “DD” that supports the theory is upvoted rapidly. It was interesting to watch at first, but it’s becoming increasingly depressing as it becomes clear how many people have put too much of their own money into this pump scheme turned conspiracy theory.