Gamestop and Wallstreetbets
The Wallstreetbets saga seems to be winding down.... for now.
The share prices of the meme stocks have fallen this week and some folks who took part in the mania are realizing their losses (and now more precarious financial position).
1) Stories of some investors who lost money, and one who did not
2) Article from the Financial Times, suggesting that social media personalities who should know better, encouraged naïve folks to do reckless things with money they can't afford to lose. Namely these 3:
Chamath Palihapitiya
Palihapitiya tweeted on January 26 that he had bought “YOLO” call options on GameStop — a bet on rising share prices — after seeing the social media buzz. The next day he tweeted again, “r/wallstreetbets is now the largest hedge fund in the world. Excepts [sic] it’s completely decentralised and entirely democratic”.
Elon Musk
A “Gamestonk!!” tweet from Tesla’s Elon Musk on the evening of January 26 linked to the r/WallStreetBets forum, and was liked more than 250,000 times. GameStop shares climbed another 60 per cent in after-hours trading that day.
Mark Cuban
Cuban on January 28 said “LOVE LOVE what is going on” at r/WallstreetBets, revealing that his 11-year-old son had also made money from a WSB trade. On February 2 the billionaire owner of the Dallas Mavericks basketball team held a Reddit “ask me anything” session where he urged GameStop buyers to hold on to their stock if they were able to, and hailed the site. “Thanks for changing the game. Thanks for taking on Wall Street,” he wrote.
Did he say his 11 year old??
The reporter interviewed a lady from Wales:
We’ve lost so much money now that the only way to stand a chance of gaining any money back is holding,” Barry said. She is closely tracking the debate on the WSB forum and believes the shares could rise again. “I rate Elon Musk quite highly and trusted him . . . his tweet was a big influence. With his support it appeared that the retail traders would win,” she said.
These 3 people are actual billionaires who have seemingly taken on the persona of a "for the people against the elites" populist. It looks like some of their followers could be facing financial ruin because of this.
Short sellers attack
Chamath and Elon in particular, have feuded with hedge funds who short. A SPAC associated with Chamath (Clover Health NASDAQ CLOV) was just targeted in a short report from Hindenburg. Surprisingly, Hindenburg did not follow the usual script of
1) accumulate a short position in company
2) release short report to market
3) take profit
Their stated intention is to demonstrate the value of short sellers in a well functioning market, exposing frauds.
Hindenburg report here
Clover's response here
Hindenburg's response here
This is a developing story
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