Ok, some of you are probably asking, what the hell is going on with GameStop? How did its market price go from 5 dollars to 500 in a few months? What is a stock market? How money work help plz?!
Alright well, let me briefly explain now that you probably are seeing mainstream media start their siren machine on a old narrative that they have been essentially keeping under the rug for numerous years…
First, lets consider that our beloved GameStop has found its way out of bankruptcy and with new management lots of awesome possibilities can transform the way this company works on a fundamental level. From speculation to reality, one can consider GS going strong into the gamer community, even holding tournaments between store regions and creating a whole new type of entertainment value, as well as possible rumored crypto connections? Don’t hold your breath, nothing is written in stone yet.
Now, what and how the heck did one company share of GS go from 5$ to nearly 500$ in such a short amount of time? Is the company doing that great?? The simple answer is no, the complicated answer is corrupt bankers and hedge funds over-leveraging their market making tools… So… let me guide you through some market basics.
People in suits thought GameStop was a dead company.
They sold shares early at a higher price to buy later at a lower price for profit.
Public got fed up with these rich bastards.
Public pushes price higher.
Suits start sweating bullets due to huge money losses (over 7 billion since January)
The war rages on as I am writing this.
AMC Theatres is the next target based on countless streamers, forums, and even identified as 100/100 short squeeze risk on Fox Business
What is a share?
At its base, consider a share a piece of official paper that gives you part ownership of a company, own 51% of a company’s shares, and you can essentially call all the shots (Look at Michael Cohen and GS).
But What is a share?
Nothing really, just like paper money, its paper… with a set value target… that inflates. So realistically, its nothing, but our economic system decides that we can buy and sell (exchange money for shares) so thus we enter the stock market exchange.
The GameStop Gamble
What happened with GS shares?
Simple yet complex… so lets consider the simple factor:
Imagine you have a Charzard Holographic card that’s worth 1,000 dollars on the market, but you have no intention of selling it. So I come by (as a hedgefund/banker/suit/shill) and ask you if i can “borrow” that share for a week. You say, “Sure as long as its in the exact same condition” and I pay you 25$ per day of lending. I say ok cool. (Enter the “short selling” concept).
So of course I want to “borrow” your Charzard card not to just stare at it for a week, but because I heard that the price will drop because more cards of this exact kind will be released at the end of the week, thus reducing its value due to supply. So I immediately sell “your” card on the market for 1000$ of its market worth.
6 days later, I waited for the price to drop, and sure enough thousands of new Charzard cards were printed and one card now costs 300 dollars! Horah! I sold it for 1000, bought it back for 300, and paid you 25 per day (6 days, 150$) and actually made profit! 1000-300-150=550$$$, not bad huh?
Well yes, this happens with shares as well, called short selling, but now imagine…
If more cards never were printed, in fact what if they found out there were far less Charzard cards than initially counted on the market… so now the whole narrative is flipped, that card I sold for 1000$ 6 days ago is now 5000$… but I can’t just not return it… what if you were a Mafia boss ready to break my knee’s and I’m not a fan of sleeping with the fishes, too salty.
So now I legally HAVE to buy it back for 5000$ and return you the card back. Got it? Good, now multiply one Charzard by millions of shares that were borrowed and never returned. Starting to paint the picture?
So maybe now you can see what happened when hedgefunds thought GameStop would go from 5 dollars to 4…3..2..1…0, dead. Why even bother writting papers for a 0$ company? You can just clear all the lent shares out cause they are worthless… well… not when the reddit community took a sniff. You can start seeing how all this became a loosing gamble for the suits and ties.
The Public Backlash
It started with a forum, then it continued to streaming, and recently to mainstream news media… the Naked Shorts were in main focus. (No not see-through trousers).
As the general public started buying up the shares, the price increased, forcing hedge funds to hold on to their lent shares, praying on their knees that the price will go down below 5 again… but so far their greasy pressed hands did them no service. Due to obvious historic repetition, remember the 2008 crash? Yeah, basically same thing as above, just real estate.
In fact after 2008 the government made naked shorts (fake shares being sold) illegal, so the subject has now grown into the airwaves of the masses.
As I am writing this I can’t say that I am also invested in this sporadic event, but I can say that I would never not let an opportunity like this go by. Though it is a very risky bet, it has been baring fruit so far, like lots of green fruit man, it’s almost surreal.
But with a pissed off public watching their tax money used to bail out gambling men in suits, I am not in the least surprised Capitalism finally approaches a rebalancing of justice to those that were pushed to the side and used for bailouts.