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SOBER REVIEW TIME - what are the actual data we can use to assess GME as of today?
 | Edit: There's a lot of great responses and info about my questions in the comments! Will try to incorporate that into the post as I go, or make a followup tomorrow! First off, my position: 1900 shares of GME @ 30, plus 5 calls @ $250. Peak value was nearly 500k. https://preview.redd.it/96g5d07z45f61.png?width=1007&format=png&auto=webp&s=4e983f8d1a6b56bcf4201d32a56b0c2535886d5b This is not financial advice, I'm not an expert, etc **WHY SHOULD WE STILL HOLD?** I know there's a lot of sentiment around solidarity, and sticking it to the man, and 'fuck it, I'm down so much anyway'. NONE OF THESE ARE GOOD REASONS TO HOLD. I'm here to talk about the actual reasons to hold. Here's our biggest problem: Misinformation There is a lot of information being spread around like manure. Mostly unread, mostly un-disseminated, basically just a whole bunch of positive sounding claims meant to serve as confirmation bias. How do we ensure we're not just buying into bullshit? By determining exactly what data we have available to make decisions as of right now. That is what I intend to review (and hopefully gather from you apes) here today. A REVIEW OF THE FORCES ACTING ON GME - Fundamental Value: This isn't relevant right now. GME is presently a $20/share company, even with Ryan Cohen shooting magic rainbows out of his ass it's not worth more than $60 until they actually start changing their business model. When that happens the value will go up, for now 30% above expected online revenue growth doesn't mean shit in the bigger picture.
- Momentum: This is the biggest reason we hit $500/share, and the biggest reason we're still at $90, way above fundamental value. Here's something to consider: Momentum, not the squeeze, is why the share price is where it is - rather, the growing global awareness of the squeeze provided the evidence needed for everyone to rush to get onboard. But, people are also idiots. Momentum can change directions quickly from an upward to downward pressure, and can be easily manipulated, as we've seen.
- THE SHORT SQUEEZE: What actually causes the high short interest to result in raised share prices? Short sellers who are actually (not theoretically) pressured into closing their positions at an overall loss, and en masse. If most of the shorters can wait out or hedge against their losing positions, then there never has to be a mad rush to buy up shares at whatever price. Do you actually think Melvin Capital was at any point margin called? If/when they exited, they did so in an orderly fashion that best served their interest, to the point that they were straight up given a multi-billion dollar bailout by their competitors! These people don't play by the same rules as you, you fucking braindead monkey.
- The Gamma Squeeze: Last Friday, for the second Friday in a row, a vast majority of calls expired In The Money, and a bunch of call owners were owed shares by today (T+2 rule). The theory behind the gamma squeeze is that call sellers didn't have good risk models and didn't hedge their calls well enough, and so didn't actually own enough underlying shares to hand over, and now need to rush to buy them at market price. Could that be why there was a massive spike from 80 to 150 this afternoon? Maybe. But a gamma squeeze can also backfire. All those people assigned shares may not have the tens of thousands in cash ready to buy, or the margin to borrow. That means all those shares get dumped back on the marketplace.
- Straight up motherfuckin dirty illegal manipulationOh, best believe it happened, and is still happening. Just to review the hits:
- DTCC and/or Retail brokers prevent buying, artificially suppressing demand for Thu price drop and locking up people's money till they could transfer elsewhere.
- Sudden increases to margin requirements and severe margin calling
- A massive media campaign to announce shorts closed positions and everyone is in Silver
- Retail brokers cancelling orders, restricting limit prices, enforcing unwanted stop losses (eToro),
- Illegal coordinated short ladder attacks to drive down price and fish for stop losses and paper hands.
OK, BUT YOU KNEW ABOUT ALL THIS. WHAT'S IMPORTANT NOW IS WHAT EVIDENCE DO WE ACTUALLY HAVE ABOUT THE CURRENT STATE OF PLAY? No, really, I'm asking. Our advantage is in our ability to crowdsource information. I will edit and update this list as information is shared. Meanwhile I'll try to flesh out a framework as best I can. Argument #1: The Squeeze is not Squoze because Short Interest is still high - Claim: As long as the Short Interest exceeds the Float, there is a supply problem for short sellers. This may translate into pressure from lenders on short sellers over time, driving the squeeze.
- Evidence needed: What is the current short interest?
https://preview.redd.it/7e4mes1qf5f61.png?width=277&format=png&auto=webp&s=cfb3da83d0aaaeb2256e11bf7a3e3eaf8b31de90 https://preview.redd.it/yo2s5e2cg5f61.png?width=1691&format=png&auto=webp&s=d83701a452b5aaa079e3a3948cecbbb3feb77b5a - REAL DATA: The SEC releases reported short interest twice a month. The most recent data we have is from Jan 15, and wasn't released to the public until Jan 27.**On Jan 15 the SI was 131%.**The next report for Jan 31 won't be available until Feb 9.Frankly, we can't rely on the REAL data, because it's delayed too long to be relevant.
- Evidence needed: What is the actual free float?
- I still need help finding this. I know 71 Million shares have been issued overall, but a lot of that is locked up in institutions that would have to report any selloffs within 3 days. If 27 million shorts still need to close, how many shares are readily available?
- Yahoo Finance puts Float at 46.89 mil shares, FWIWSource: https://finance.yahoo.com/quote/GME/key-statistics/
Argument #2: There hasn't been enough trading volume for shorts to possibly close - Claim: assuming ~27 mil shorted, not enough shares exchanged hands since the price blew up to close those positions.
- Evidence: Someone explain to me how this isn't enough volume for shorts to cover. Mark Cuban said pretty much the same thing in his AMA today.
| Date | Trade Volume | | 2/2 Tue | 77.8m | | 2/1 Mon | 37.3m | | 1/29 Fri | 50.5m | | 1/28 Thu | 58.5m | | 1/27 Wed | 93.3m | Argument #3: Short Sellers will are under pressure to close, so the squeeze is coming - Claim: Short sellers are bleeding money trying to outlast us with their losing positions, and will eventually prefer (or be forced) to close out the loss rather than be caught in the squeeze.
- Evidence needed: Shorts are (on average) in a losing position at current share price ($90), and can't just close right now at profit
- Evidence needed: Any external pressure on shorters to close their position at a loss rather than waiting us out for the price to drop further
Argument #4: Market manipulation shenanigans didn't work, and retailers didn't sell off en masse, creating the liquidity shorts need to close cheaply. https://preview.redd.it/5jnmtl00l5f61.png?width=1021&format=png&auto=webp&s=d9e676fbd3e0811f826463f14d4b9c12971ed6b2 - Counterargument: Order counts don't mean shit. For every share traded there is a buyer and a seller. So 100k buyers buy one share each, and 40k sellers sell 3 shares each. Or 20k buyers place 5 buy orders for one share each, and there are less buyers than sellers overall. WHO KNOWS? This strikes me as very insufficient evidence for bullishness, serving only as confirmation bias for bagholders.
- Evidence needed: Something more concrete that better proves that more shareholders held than sold.
- Evidence needed: other brokerages data on buy vs sell orders. Fidelity is just one broker, and a retail broker at that. Hedgies don't trade with Fidelity.
Argument #5: The biggest dips were driven by short-ladder attacks during low volume periods - Claim: the decrease in price from 500 to 90 is mostly fueled by artificial suppression of demand and fake selling (short ladders), and not so much by change in momentum.
- Evidence: At this point its guesswork based on limited evidence provided by redditors. Essentially, round share numbers sold within microseconds at fractional prices
- Counterargument: short ladder attacks are straight up not real, conspiracy theory confirmation bias invented by WSB itself: https://www.reddit.com/wallstreetbets/comments/latax6/short_ladders_are_not_real/
- Evidence needed: I've seen but can't find better video evidence showing the stream of rapid trades at fractional prices and round share counts (100 shares at a time), could use that. \
- Counterargument: The artificially reduced volume from Robin Hood and other brokers limiting access has now been largely removed, as RH allows 100 shares and by now people had time to transfer funds to another broker. Damage to momentum was done, but if there is still a valid thesis it should just mean people can buy the dip, right?
- Evidence needed: That the price dips over the last 48 hours haven't been accompanied by massive trading volume. I'm seeing a lot, especially compared to Thursday's artificial suppression:
https://preview.redd.it/77a0euotp5f61.png?width=1884&format=png&auto=webp&s=62b0af04608cb5fb235895d8bbd03b9e19a00588 Argument #6: 'You are here on the VW short squeeze chart' - Claim: See how the famous VW short squeeze also had a massive price drop before it blew up? That's us right now.
- Evidence: A single, solitary chart
https://preview.redd.it/mx6fs2f5r5f61.png?width=1242&format=png&auto=webp&s=60cc9096c46097b7328c59c2572b3466e5241131 - Counterargument: the VW scenario was not the same as the GME play. VW share liquidity plummeted literally overnight when it was revealed that Porsche had bought up 90% of the float (check me on that fact, I'm repeating secondhand info). See the big dip AFTER the squeeze? How do we know we aren't there?
- Evidence needed: IDK, some kind of coherent explanation of why VW dipped like that, and why a similar dip would be expected in the GME Play
Will edit with more, my primate fingers are hurting from trying to press the keys and my handler needs to readjust my helmet. submitted by smohyee to wallstreetbets [link] [comments] |
True value - an open letter from Billy Markus, co-founder and original creator of Dogecoin
Hi folks! I can't believe this place is over a million members now - back when I was active we had less than 10% of this! So I'd like to introduce myself to many new folks - I am Billy Markus, the original creator of Dogecoin. As you may have heard, it was indeed created for sillies after Jackson Palmer made an flippant tweet about it that idea being the 'next big thing' and I threw it together, without any expectation or plan. It took about 3 hours to make, with the bulk of that time making alterations to the client to make the text Comic Sans and some custom graphics and wording for different pieces of the UI.
As I mentioned on my
twitter, I'm no longer part of the Dogecoin project, I left around 2015 as the community started to strongly shift from one that I was comfortable with. I don't currently own any Dogecoin except what has been tipped to me recently, I gave away and/or sold all the crypto I had back in 2015 after being laid off and scared about my dwindling savings at the time, for about enough in total to buy a used Honda Civic. I'm not struggling - I work full time as a Software Engineer - but I'm mentioning this to set the record straight, as there are many incorrect assumptions around about my involvement and stake in the project.
So if I'm not involved in Dogecoin, why did I want to post? I wanted to give a little perspective and history for some of the founding principles of Dogecoin, for anyone who was willing to listen.
Dogecoin message With the recent Dogecoin mania going on, my inbox was being flooded by people demanding me to do things for them so they would become richer. This was a bit jarring for the reasons I mentioned above - and while I am sympathetic to those struggling and understand how emotional and important money can be, especially right now with this pandemic, I couldn't help feeling pretty down about it. My mom is currently struggling to make her home payments and will likely lose her house, and if I hadn't "messed up" my crypto investments years ago, I would be able to comfortably help her.
But I did receive some encouraging words and a few small tips - and honestly, that did help take the sting off everything and elevate my mood. And more relevantly, it reminded me of one of the original messages of Dogecoin - one of unexpected generosity. I'll explain that message with a story.
"Save Dogemas" The first few weeks after Dogecoin was released was incredibly fast moving, and I think I would succinctly describe it as "complete utter insanity." It went from a silly joke to something worth something to people very quickly, and a community was developing fast, with lots of shady people and lots of new people, quickly putting up services and infrastructure around it.
One of those things was an online wallet - instead of having to download the clunky and slow main client where you have to download the whole blockchain, someone had provided a service to hold people's Dogecoin for them. Online wallets in the history of cryptocurrency have a history of being sketchy, however, and sure enough, on Christmas, the wallet was hacked, and 21 million Dogecoins were stolen in the process.
This type of story was all too common in cryptocurrency world, but what happened next was not. Some members of the community got together and started a Dogecoin fund to "Save Dogemas" - to try to return money to those who had lost it, and the community - to my great surprise - was willing to help. The Dogecoin community donated millions of coins to help those who had been victims of the bad actor - and that spirit didn't stop, the community would donate Dogecoins for both good causes, such as helping build
water wells in Africa,
helping connect service dogs and kids, and silly and amusing causes, such as helping
send the Jamaican Bobsled team to the Olympics, or
sponsoring a Nascar driver.
True Value People are talking about Dogecoin going to $1 - that would make the "market cap" larger than actual companies that provide services to millions, such as Boeing, Starbucks, American Express, IBM. Does Dogecoin deserve that? That is not something I can comprehend, let alone answer.
Again, I have no real say in this, and everyone has the right to value the coin in any way they wish - it is just my wish, as the original creator,
that Dogecoin and the Dogecoin community can be a force for good. And I don't mean that in some sanctimonious way where the only thing of value is giving to charity or directly helping others - anything that is amusing or fun has value as well. The fiat value of Dogecoin is quite literally whatever someone else is willing to pay for it at any point in time, and the intrinsic value is not something I will ever be able to define, so when I talk about value, I'm not talking about those things. I'm talking about "True Value", which I'd define as the positive things Dogecoin brings to the world.
Pump and dumping, rampant greed, scamming, bad faith actors, demanding from others, hype without research, taking advantage of others - those are all worthless. Worse than worthless, honestly, bringing more negativity to an already difficult world. As the creator, some have called me the "doge mother" so I say this with that mask - when I see things like that - and I've seen plenty of it through the last 7 years - I'm not mad, just disappointed.
Joy, kindness, learning, giving, empathy, fun, community, inspiration, creativity, generosity, silliness, absurdity. These types of things are what makes Dogecoin worthwhile to me.
If the community embodies these things, that's True Value. If you read this far, I appreciate it. Keep educating yourself as much as you can on how cryptocurrency works, how these markets work, never risk more than you could safely lose, be vigilant and aware. I wish you all the best.
For the newcomers: the top 50 Cryptocurrencies, each explained with one sentence.
I tried summing up the top 50 coins in 1 or 2 sentences. It is not perfect and you obviously shouldn't make any decision based on this list, but hopefully it will help newcomers find some projects they're interested in and understanding a little bit better this technology.
If something is wrong or misleading, feel free to comment and I'll edit the post. Obviously in 2 sentences is hard to describe the whole project idea, but I tried my best.
- Bitcoin (BTC): the original. According to the creator (or creators?) Satoshi Nakamoto, it was created to allow “online payments to be sent directly from one party to another without going through a financial institution.”
- Ethereum (ETH): Ethereum is the wonder child of crypto, acts as an infrastructure for most decentralized applications. Introduces smart contracts, which are like programs with specific procedures that, once deployed, no one can change.
- Tether (USDT): a centralized stablecoin tied to the dollar (so Elon, please don’t try to pump it)
- Polkadot (DOT): open-source protocol aimed at connecting all different blockchains and allowing them to work together, allowing transfers of any data.
- Cardano (ADA): Another blockchain, trying to improve scalability, interoperability and sustainability of cryptocurrencies. Those who hold the cryptocurrency have the right to vote on any proposed changes in the software.
- Ripple (XRP): centralized coin, most people don’t see a future for it after SEC went after it.
- Binance Coin (BNB): coin associated with the Binance exchange, so valuable since it is the most popular centralized exchange.
- Litecoin (LTC): Bitcoin’s cousin, with faster transactions and lower fees.
- Chainlink (LINK): the main idea is to LINK smart contracts with real-world data, verifying that this data is correct.
- Dogecoin (DOGE): Wow, such high ranking! (Okay, now please let’s get Stellar back in the top 10).
- Bitcoin Cash (BCH): fork of Bitcoin (so a copy with some differences), which tries to lower transaction fees and increase scalability but has been surpassed technology-wise by many other coins aiming to do just the same.
- Stellar (XLM): talking about currencies, XLM is one of the coins aiming to do just that, with fast processing times and low fees. It has also already become a stablecoin! (I’m kidding).
- USD Coin (USDC): another centralized stablecoin tied to the dollar, like USDT.
- Aave (AAVE): take a bank and make it decentralized, where the liquidity comes from the users and they earn fees from borrows. This is Aave.
- Uniswap (UNI): Another DeFi like Aave, but this time it’s an exchange like Binance, just decentralized.
- Wrapped Bitcoin (WBTC): It’s just bitcoin wrapped in ethereum to be used in DeFi applications.
- Bitcoin SV (BSV)*: Bitcoin Scam Variant
- EOS (EOS): another blockchain, aimed at being highly scalable for commercial use. It aims to make it as straightforward as possible for programmers to embrace the blockchain technology.
- Elrond (EGLD): Blockchain architecture focused on scalability and high throughput, achieving this by partitioning the chain state and an improved Proof of Stake mechanism
- TRON (TRX): have you seen Silicon Valley, when they try to create a decentralized internet? Yeah, Tron’s founder is Richard Hendricks. It is also one of the most popular blockchain to build decentralized applications on.
- Cosmos (ATOM): several independent blockchains trying to create an “internet of blockchains”.
- NEM (XEM): instead of controlling just money, you can control stock ownership, contracts, medical records, and stuff like that
- Monero (XMR)*: if you need drugs
- THETA (THETA): decentralized video delivery network (peer-to-peer streaming). The token performs various governance tasks within the network.
- Tezos (XTZ): another blockchain for smart contracts, but more eco-friendly and overall trying to encompass different advancements introduced by different blockchains in a single protocol.
- Terra (LUNA): aiming to support a global payment network, it tries to create a decentralized stablecoin with an elastic money supply, enabled by stable mining incentives. Its related stablecoin is TerraUSD
- Maker (MKR): MakerDAO is the organization behind DAI, one of the most famous stablecoins. MKR is a token that allows you to receive dividends and vote in governing the system.
- Synthetix (SNX): protocol on the ethereum blockchain aiming to allow trading of derivatives (shorting or going long on a certain asset).
- Avalanche (AVAX): open-source platform aiming to become a global asset exchange, where anyone can launch any form of asset and control it in a decentralized way with smart contracts. It claims to be lightweight, with high throughput and scalable.
- VeChain (VET): a blockchain focusing on business use-cases more than on technology, bringing this technology to the masses without them even knowing they’re using it.
- Compound (COMP): It’s the Bitcoin of DeFi. It was the first-mover and without him many other projects wouldn’t be around today.
- IOTA (MIOTA): open-source decentralized cryptocurrency engineered for the Internet of Things, with zero transaction fees and high scalability since it uses a blockless blockchain where users and verifiers of transactions are the same (it may sound wrong but it’s actually a genius concept, impossible to sum up in a single sentence).
- Neo (NEO): Blockchain application platform and cryptocurrency for digitized identities and assets, aiming to create a smart economy. It was one of the coins that suffered most after the 2018 bull run.
- Solana (SOL): another blockchain aimed at providing super-high-speed transactions. It claims to be able to process 50k transactions per second and be perfect to deploy scalable crypto applications.
- Dai (DAI): the decentralized stablecoin of MakerDAO, tied to the dollar.
- Huobi Token (HT): it’s the official token of Huobi (a centralized exchange), providing advantages similar to BNB (Binance’s), for example fees discounts.
- SushiSwap (SUSHI): a clone of UniSwap (so a decentralized exchange), where there’s a token (SUSHI) given as an additional reward for liquidity providers and farmers.
- Binance USD (BUSD): Stablecoin issued by Binance, tied to USD.
- FTX Token (FTT): It’s a token related to FTX, a platform allowing you to trade leveraged tokens based on the Ethereum blockchain. The token allows for lower fees and socialized gains.
- Crypto.com Coin (CRO): the token of Crypto.com public blockchain, that tries to enable transaction worldwide between people and businesses.
- Filecoin (FIL): a decentralized storage system, trying to decentralize cloud storage services.
- UMA (UMA): it builds open-source infrastructure in order to create synthetic tokens on the Ethereum blockchain
- UNUS SED LEO (LEO): another token, this time related to the iFinex ecosystem which allows you to save money on trading fees in Bitfinex.
- BitTorrent (BTT): BitTorrent is a famous peer-to-peer file sharing platform. It is trying to get more decentralized by introducing its token, which grants you some benefits such as increased download speeds.
- Celsius (CEL): Celsius is one of the first banking platforms for cryptocurrency users, where you can earn interest, borrow cash and make payments/transfers. The CEL token grants you some benefits such as increased payouts.
- Algorand (ALGO): Algorand is a blockchain network aiming to improve scalability and security. ALGO is the native cryptocurrency of the network, used for a borderless economy and to secure stability in the blockchain.
- Dash (DASH): It is a fork of Litecoin launched in 2014, focused on improving the transaction times of the blockchain and become a cheap, decentralized payments network.
- Decred (DCR): it is a blockchain-based cryptocurrency aimed at facilitating open governance and community interaction. It achieves this by avoiding monopoly over voting status in the project itself, giving to all DCR holders the same amount of decision-making power.
- The Graph (GRT): Trying to become the decentralized Google, it is an indexing protocol for querying networks like Ethereum. It allows everyone to publish open APIs that applications can query to retrieve blockchain data.
- yearn.finance (YFI): part of the DeFi ecosystem, it is an aggregator that tries to simplify the DeFi space for investors, automatic the process of maximizing the profits from yield farming.
*EDIT:
A couple of coin descriptions were just jokes, here are the actual explanations:
- Bitcoin SV (BSV): It is a fork of Bitcoin Cash (which is also a fork of Bitcoin). Once again, the reason behind this is to "stay true to Satoshi vision", trying to improve scalability and stability.
- Monero (XMR): Monero's goal is simple: to allow transactions to take place privately and with anonymity. Even though it’s commonly thought that BTC can conceal a person’s identity, it’s often easy to trace payments back to their original source because blockchains are transparent. On the other hand, XMR is designed to obscure senders and recipients alike through the use of advanced cryptography. Obviously this made this coin the go-to on the dark web.
(GME DD) One DD to rule them. One DD to find them. One DD to to bring them all and in the darkness bind them.
 | Ok retards listen up. Been seeing lots of cucks writing small DD pieces of bullish or bearish shit. You cucks need to read this cos this is the whole fucking thing. this is also basically my magnum fucking opus so upvote retards. Dont give me awards, legit go buy a powerup membership for a year. Cant tell you to buy shares because we gonna get closed down by SEC somehow. im also not some fininacial advisor or whatever just read this and make your own conclusions degenerates. Im not fucking liable lmao but i am balls deep 125 shares @ 19 average now, its literally all I have on this earth. TLDR: GME DD sumarized, Margin wont affect longs the same way as shorts right now. Dont buy shares on margin though and get ready to supply collateral regardless. Short interest is up and some smart retards are on our side. Read the post to raise your IQ from 8 to 9 though. 🐻 🌈s mega fuk and even posting high level bear shit to scare us. Compulsory 7 rockets so you autists dont start having a seizure or something: 🚀🚀🚀🚀🚀🚀🚀 Basically been seeing posts about "blah blah margin this, short interest this, WS to clever blah". Going to split this post into distinct sections but im no english degree cuck so dont expect any bear bloomberg level shit or something 1. GME is a fucking steal regardless of squeeze. Buy now or be left on a dying planet while we head to alpha fucking centauri. So basically everyone here knows about Ryan cohen and his horsemen of the apocalypse coming to steal melvins lunch money. This man bought apple stock in 2017. Hes fucking rich. Hes also an eccommerce wizard, taking CHEWY from a measly 100k co-founded company to a $4 Billion company in 2017 at which point he sold it to petsmart or something. Its now valued at $40 Billion, granted anything eccommerce now gets money thrown at it like a stripper in a high flying strip club or some shit idk im a virgin so dont listen to me, so it may well be a bubble. Regardless the thing grows its revenue like bacteria doing binary fission on agar jelly 🚀🚀🚀🚀. THEY SELL FUCKING PET FOOD. the market for that is like what? $1?. Gaming is going to the moon and is basically recession proof because of how cheap game is compared to other things for how much you get out of it. Any bears saying that Gamestop cant compete with digital or with amazon. Ryan cohen already slapped amazons head in with a no name brand. Hell fucking do it again. About digital everyone here already knows, microsoft deal, Ryan cohen also mentioned the possibility of having "Digital game exchanging" or something, image below. Online trade ins. It says online.🚀🚀🚀🚀🚀🚀🚀 He also mentions streaming, digital content etc and aside from all the digital stuff wants GME to move to a community centric structure where big stores operate with VR centres, Internet cafe, table games like Dungeons and dragons and 40k (rapidly growing somehow will boom post covid) and as we now might know due to this post: https://www.reddit.com/wallstreetbets/comments/kypuyb/gme_dd_buildapc_kiosks_coming/ BUILD YOUR OWN PC KIOSKS. This is the literal smell of money. Go to your Gamestop to build your PC with your kid? Gamestop is already the goto place wher your parents go to get you your latest digital fix so now they can go build PC's and it cant go tits up? Now for some pussy boomer talk (aka fundametals or something). The expected Q3 EPS was -0.84$ or something close to that. The actual loss was -0.53$ but boomzoids only talked about the revenue drop. No shit sherlock its closing all its dead weight stores. In the holiday report I will talk about a bit more below, 11% of stores were closed and revenue dropped only 3%. Comparitive store sales increased nearly 5%. They cant get enough consoles to sell so expect the momentum to carry on for the whole year I expect. Eccommerce is up 300% over holidays. In Q3 they reported 800% to date. In 2020 Gamestops eccomerce went up 24x. YES YOU READ THAT RIGHT. Online sales now account for ~33% of Gamestops sales now. This is literally gold dust for ryan cohen. We are still trading at 0.38 P/S at this price. The average P/S for the SP500 is 2.753. Massive upside on these two numbers alone. Burry got in this for the MOASS and the intrinsic value. At the time intrinsic value was like $22 and this will pump up as RC takes it to new heights. GME in Q3 somehow halved the expected loss. Big Bad Boomer sherman somehow didnt fuck it up that bad by saying "omnichannel" at the speed of light. Yes the revenue dropped 30% but thats covid for you. As the PC kiosk post above shows GME now sells small items basically so fast they have to have fake stock lmao. The new console cycle always spikes the share price sky high too, as youll see in a crayon drawing later. The potential revenue that this console cycle brings in could be huge. Biggest ever is potentially a true statement and Gamestop sells every fucker they get. Combine the fact that they share game pass ( a massive hit) revenue from the xboxes they sell, something no other retailer has, revenue could be sky high. Now I know you autists are starting to develop short term dyslexia or something but keep reading. This could be the most important piece of shit you read in your life. How do you think I feel? My brains overheating just trying to write coherent sentences. Holdiay report was a bear trap imo, saw people saying the decrease in revenue was bearish blah blah blah. Lies. Comparitve store sales rose 5% and thats with some towns having like 4 gamestops. When the leases dont get renewed and these stores get liquidated (Also in Ryan cohens letter) they can just get this influx of cash and pay down debt and invest in logistics and marketing and new growth. Gamestop realistically needs like 1/2 the stores they have now and just need to improve efficiency. https://www.entrepreneur.com/article/349890 this article the messiah himself wrote. In it he states: At Chewy, we had maniacal discipline when it came to how we spent money. The company-wide culture of frugality came from his example. Free cash flow was our unwavering governor of growth. We grew Chewy from $200 million in sales in 2013 to $3.5 billion in 2018 while spending only $130 million in capital, all of which went into opening distribution centers across the country and acquiring new customers.
Maniacal. Thats all I need to say. The guy is going to get to mars before papa musk and he wont even break a sweat. When FCF starts to catch up to WS expectations every analyst who donwgraded them is gonna get ditched and upgrades will start to happen. So in the heading i said its a steal. That implies some future higher price target right? Well here is my guess for a conservative price target based on the information above and also some more I probably forgot cos im a retard. The difference is where share price looks to be and where market cap places us is due to difference in outstanding shares (another reason shorts are fuk) The difference is where share price looks to be and where market cap places us is due to difference in outstanding shares (another reason shorts are fuk)
This alone means if for not inflation adjusted terms we reached 9.8Bn or whatever the crayon chart says we should reach: 9.8/2.48 = ~3.95 3.95 * $35.5 = ~$140. The share price now to reach old mkt cap is $140 fucking dollars. Thats a 4 bagger from now. It gets better. from statista : Considering the annual inflation rate in the United States in recent years, a 2.24 percent inflation rate is a very moderate projection.
If we take 2.24% inflation, the this share price target in todays money means we should reach $182 because of $140 * 1.0224^12, = $182 in adjusted. Thats more than a 5 bagger. basically we could see $10 GME price from short manipulation and buying more is basically a lottery ticket! I really dont understand the bear thesis. The only bear thesis ( short term this one) was that margin would affect longs more but I looked at it on ortex and its basically bullshit. Buy shares with cash though dont use margin. Own your piece of GME dont borrow it. Bears just spout "DigITaL" or "BlOCKbuSTER" so much Ryan tweeted a shit emoji at them. All the bears think theyre clever. What the fuck makes those cucks special? How are they different now than the ones from $2, or $4, or $10. Bears are betting against: Ryan fucking cohen, buisness legend CHEWY from 100k investment, now 40 billion Michael burry, Investing legend, predicted the housing crisis and is in GME since april u/DeepFuckingValue , the new WSB god chad, now basically a whale Reggie Fils-Aimé, gaming and buisness legend, former COO of nintendo Senvest, a mega fund thats actively managed Norweigan sovereign wealth fund Fidelity, Vanguard and blackrock own this shit and are never selling they literally dont give a shit All of WSB has now formed a shield wall against the bears Microsoft gave GME highly discounted azure deals and free office use for all employees and a revenue sharing agreement. Bears are stupid if they think MSFT didnt vet GME. Some valid bear thesis left now (the only ones left) -- Ryan Cohen dies. 2. Now some analysis on the short squeeze and some technical data on puts and calls and ortex data. Ok everyone on here and their cat, dog, bedbugs and wifes boyfriend knows about the squeeze. Jimmy chill aka cramer even talking about it. Gamestop is literally the most shorted stock of all time and space. The squeeze makes every autist salivate because its basically free money while cucking big money out of like what 1% of their fund. Although I know all you cucks hate shares, and hate holding, if the squeeze doesnt happen selling is probably the most retarded thing anyone could do. Its literally buy high sell low and you fucking disgust me. STONK ONLY GOES UP. This squeeze is so monumental that its been sucking sharks in like fresh blood. Most of the funds where shorting this from 30-15 dollars before this year so they didnt really care. It all changed with 2 people. u/DeepFuckingValue and Dr. Michael Burry. These guys are as OG as it gets with GME. I think u/DeepFuckingValue may have even sniffed this trade out before the legend himself. Since then funds will have churned this through their rules and started jumping on this train. Ive been in since $13 with 125 shares. If I had more money Id be buying but im just some stupid student ok. Im merely a medium for this money made information. The stats for this stock now short wise are, from ortex: Concrete short interest as of 31 December 2020: 71 Million. Estimated short interest, January 11th data: (This isnt predicted, this is from data in flow, has margin of error) : 77 Million Short shares on loan 7 days ago: 50 Million Short shares on loan now (This breaks the bearish margin calls affect longs more thesis): 54.2 Million % of known float short: 147% as of 31 December 2020 % of know free float on loaned shorts: 108% as of January 11th. Some guy on here took into account extra buying on wednesday, Institutions, Burry, RC's extra 7% and WSB ownership (something so stupendously retarded no serious firm will do it) that float on short could be in the 100s of %. Total short float now I would say could be 200-400% if the numbers are correct. This pisses on all other short squeezes. Some countries ban shorting above 100% cos of how autistic it is. The recent hike in interactive brokers available shares is probably a mix of sell off on friday (remember some guys are now buying lambos with GME money. If they held they could buy 10), calls exercising and puts being covered and brokers ditching the shares. Nakedshort even reported 5 million naked GME shorts on friday. This is bullish as fuck because the best the shorts could do on a red market day was -10%. Gamestop is still on the SECs threshold list for 27 days now. This shows naked short selling and downwards pressure hasnt capitulated Need rockets 🚀 🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀: Ok so now if WSB owns an estimated 6-8% of the stock and we all know to move over to cash accounts now to avoid margin calls, we should be minimizing longs getting margin called. Every bear on stockwits is a clueless cuck who spouts "blockbuster" and these guys dont even know what margin even is so my bet is the colossal 54 Million shares short on loan are gonna be affected by the margin calls more. Why? Because every long on margin is in the green, and now a true zealot/extremist/autist for ryan cohen so will supply their account with collateral to avoid margin call. Shorts are in the massive red zone. How do I know you ask? Ortex data from Jan 4th 2021: This is the data from ortex for short interest for Gamestop for Jan 4th So this shows for jan 4th the estimated short interest is 66.98 Million shares. From the exchange reported 71 Million on december 31st this makes a lot of sense because the share price fell from ~21 to ~17 so shorts took profits. The shares on loan arent for longs too. This is all purely short data, and 47M shorted at $17 this shows. These shorts are in a circle of hell we cant comprehend and makes satan scared. 🚀 🚀 🚀 🚀 🚀 🚀 🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀 Now for the data for this week: Ortex short data for Jan 14th for Gamestop SHARES ON LOAN HAVE GONE UP. BUT 87% OF LOANED SHORTS WHERE SHORTING AT SUB $20. Cost to borrow is also up, estimated short interest is up to a cataclysmic amount. Longs on margin need to supply collateral, but we are in the massive green zone, shorts are underwater. Margin calls will ravage the shorts and sting the longs. We also have the uptick rule in place until the end of the day, so shorts can only short on the way up. Im not saying itll happen but this shit is skewed in our favour big time. we need to 💎 🙌💎 🙌💎 🙌💎 🙌💎 🙌💎 🙌💎 🙌💎 🙌. 🚀 🚀 🚀 🚀 🚀 🚀 🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀 Seen a lot of talk about Gamma hedging and delta. You realize that the fucking bankers and brokers dont understand gamma hedging right? That shits up their with the black-scholes equation and feynman-kac solution. Forget about it. The retards claiming to understand it are either payed by hedge funds or lose money. The guy who took out outs thinking options exercising and gamma hedging would lead to a collossal sell off on friday lost money on his puts because no one except some quants in a goldman sachs server room know this shit. The idea is simple about neutral delta on options that people take out, but the simple system interacts with every other thing in the stock market, and wow who couldve guessed it, like nearly any other element of the stock market predicting something by the day is nigh impossible. That guy talking about Gamma , Delta and margin calls is on weeklies. Hes no more autistic and equally retarded as all of us. Hes a chill guy though so dont berate a fellow brother. Now weve established the likelihood of longs getting margin called is far smaller than shorts, on to the options distributions Two images now: Top one is before the end of the 15th, the other one is after market close: This shows the suspected melvin puts (51000 contracts, 5 Million shares, rolled up from july, strike price $24) and lots of big ITM calls. 🚀 🚀 🚀 🚀 🚀 🚀 🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀 This shows the big put contract didnt get rolled over and the big ITM calls got exercised on friday. Large puts are underwater big timem while calls are in the big tendy zone. These two graphs, show before market close and after. As we can see the massiver 51000 put contracts didnt get rolled over and the chances that those were melvins july puts rolled up is very high. They expired worthless. Lots of calls are printing big time while huge amounts of puts are worthless and bleeding money. Something else we can extrapolate from the charts is that massive options trades are not present on the scale we saw before (tens of thousands). 🚀 🚀 🚀 🚀 🚀 🚀 🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀 We are seeing a discrepancy in the number of puts/calls opening up at the higher prices with calls gaining fast. This could show that some funds are now becoming optimistic on the long or short term prospects of gamestop. There are also more puts than options and if we assume this for shorts vs longs on margin (without even taking into account that all shorts are borrowed shares and pay interest further bleeding cash) then shorts are likely on more margin than longs. Regardless fellow autists my main point is two show that the bears are underwater and the bulls are flying high with regards to options. Now lets compare this possible squeeze with others. Bear in mind this is the most shorted stock of all time, but differences in free float change the share price differently. Kodak went from $2.16 to $33.2 Volkswagen went from ~200 euro to nearly 1000. Overstock went from ~$21 to $123 Blue apron went from $2.31 to $18 Ive been seeing some estimated that 1 million shares is roughly a dollars move in share price. This maths is about to be pretty autistic so bear with me degnerates. $1 now is 2.81% of the share price. Everything in the markets is exponential and based on percentages. So if we assume a full squeeze of ortexs estimated short interest (This assumes no sell off and no new shorts, new shorts can be positive or negative depedning on when in the squeeze they happen) $35.5 * 1.0281^77 = $299. GME to moon. 🌑 . This shit can happen. Hold on. GME has squeezed and been manipulated before and it always happens around the console cycles. Shorts never win and they wont win now. This post right here I found months ago and got me in the squeeze from the honourable and valiant u/Uberkikz aka Rod Alzman Basically the crayon chart shows green (outstanding shares) orange ( short shares) purple (Market cap) and cyan (Share price). In 2006-2008 the share price rose in tandem with short interest ( Like now ) Until console releases when you can see an abrupt squeeze happend mooning the share price. This happend to a degree in 2013 with the xbox one but worse conditions for the company and a worse console launch lead to slow short covering but the share price still mooned. Now we get to the best part. History is repeating itself for the third time and the shares sold short are literally higher than the outstanding shares, which have been decreasing since 2010. Short shares are also at the highest point ever and GME hasnt had a brighter future, well ever. Ps5 and Xbox Series X. are the two most hyped consoles since the Ps2. This is setting up the foundations for massive price movements weve never seen before. This shit has literally never happend, ever. Uncharted waters and we are the captain. For the insurmountably retarded autists who think that the squeeze has happend look upon this and despair: https://www.reddit.com/wallstreetbets/comments/kwpf6k/gme_gang_there_hasnt_been_a_short_squeeze_yet/ IHOR IS A MEGA WIZARD Ihor I quote: A long-buying tsunami ... is the primary factor for the price move
Ihor Dusaniwsky is managing director of predictive analytics at S3 a firm similar to ortex. He told bloomberg that the squeeze hasnt happend yet and that this was long buying. If someone knows this shit its him. He was talking about the tesla squeeze in january 2020. He has access to resources we can only imagine. Barrons cut his comment that the squeeze hasnt happend yet out it was that fucking bullish. All the media ramming down "Short squeeze has happend" down peoples throats because bears are fucking scared. The bots on stocktwits spamming bearish sentiment should show how rattled they are. Edit: You fucking degens just enlightened me that cramer pump is real, funds are ruminating over the long weekend, and stmmy bills pumps stonks and that stimmy bill buys many an xbox. See you at andromeda! Also more rockets. Edit**: Some autists thought lottery ticket was misleading so instead, gauranteed lottery numbers!** Edit 3: RYAN FUCKING COHEN TWEETED THE HOMIE JUST TWEETED. PEANUT EMOJI. HES 1) NUTTING 2) SAYING 35 IS PEANUTS 3) GIF SAYS THERES A CHANCE, SHORT SQUEEZE IMMENINT HOMIES Edit 4: Amazing post here showing that unlucky prize guy was wrong like I said. Ihor also talked about the hypothecation agreement. Edit 5: This is true and I forgot to add from u/luncheonmeat79 via /wallstreetbets sent 2 minutes ago
There’s also the chance of a ratings upgrade. Moody’s and S&P have GME at B3 and B-, which is rated “highly speculative”. Ratings are reviewed every quarter, and a review might be due this month (i.e. this coming week or next). Good chance that the agencies might upgrade GME to a B2/B, or even better to the next higher band (Ba/BB).
Edit 6: We are scraping 42 in frankfurt. Granted its low volumes but pre market should open at these prices I think? Conclusion: Buy shares with cash not margin. Hold shares forever unless RC dies (Shame hes a cybernetic demigod), Melvin bad, Shorts fuk, 🐻 🌈 posting bearish shit are doing weeklies for the second time after they expired red on friday, GME to $200 without squeeze, Ryan cohen a god, GME is still a value play, Good luck have fun. |
The community doesn’t understand game development - A very long post from a game designer
I’ve been playing Destiny for quite some time and I’ve enjoyed the community around it a lot, but the one thing that frustrates me the most about Destiny is how little the community actually knows about game development. It’s driving me crazy, so I wrote this whole thing down. I’m a game designeproducer myself, I’ve never worked on a project as massive as Destiny (not many people ever do), but I have worked on several gaming projects, some of them big in large companies, some of them small gaming apps. I know enough to explain the basics here, but I’m definitely not the ultimate authority on videogames and I’m not representing Bungie whatsoever, everything here is only from my experience. My goal here is to give you some useful info and calm my mind about this.
The Destiny community is incredibly vocal, especially this sub, which is generally a good thing, but the lack of understanding really damages not only the enjoyment of the community members but also the game itself IMO. I’ll explain some of the basics I think any hardcore fan should know here with an example and then I’ll outline some specific problems.
How Games Are Made A videogame pipeline can be simplified into this flow:
Demand from the top/the market -> top management decision -> design and prototyping -> development and feedbacks -> in house testing -> public testing -> marketing and publishing -> data collecting and analysis -> feedback implementation. It’s a circle that applies to everything from the big picture like the main campaign, to the smallest details like colors of shaders or proofreading of even the smallest posts. Every decision made in this system, even the tiniest ones, has to be debated, supported by data and expertise, approved in multiple places based on the priority, and checked multiple times after it’s implemented.
Game developers, especially in a powerhouse like Bungie, are very skilled, talented, experienced, and passionate people who always do their best to navigate that flow to satisfy the demands with a quality product delivered on time. I can’t stress this enough, developers (including QA testers, designers, artists, marketing, publishing, the whole team) are pretty much always incredibly hard-working people with a love for video games, because otherwise, they would never stay in this scummy business. They’re underpaid, overworked, and most likely overqualified for what they have to do. Some of them know almost everything there is to know about their field and they’re always improving as well.
Because video games, especially gargantuan living games with real-time action combat like Destiny, are insanely complicated, you need sometimes hundreds of experts to put them together. The pipeline needs to be perfectly planned, flexible so you can adapt to problems, and also easy enough to implement so you can deliver the product on time. All of these factors result in a tight-rope walk that never ends.
Now it’s time for an example. Let’s say during Season of the Worthy you get an assignment to create a catalyst for Thorn that would make it more popular in PVE, but doesn’t make it overpowered in PVP. Seems simple enough, right? There are dozens of posts about this topic on this subreddit, how hard can it be. The answer is, very, very hard.
You start working on your designs. You analyze all other exotic catalysts and hand cannon perks in the game - how they were made, their philosophy, psychological effects, and how they influence gameplay, you discuss everything in your team. When you create your first version, your design lead tells your whole team that hand cannons are getting a range buff and Thorn is now a 140 RPM and you have to adjust your design. After that, your priorities get shifted to helping with Beyond Light and the DSC weapons so it’s finished on time, so you put Thorn on hold. You don’t want to waste time though, so you give the art team an assignment to create the catalyst icon.
After two months of work on Beyond Light, you come back to Thorn, but now you basically have to start over because the future meta has changed so much. You create new designs and this time they’re approved by management, so you move onto prototyping. Developers are way too busy debugging and QA testing Beyond Light, so they have no time for Thorn and that task gets put into their To-Do list. You have no choice but to move onto your other tasks and start working on weapons for seasons 13 and 14.
When development starts finally working on Thorn, they find an exploit in your design that would allow it to two tap in PVP, you have to rework it again and hope they’ll have time to implement it this time. They don’t and the Thorn catalyst now officially misses its deadline and is pushed from Beyond Light. The marketing team doesn’t hear about it though, so they publish the icon you had made four months ago, leaking the catalyst coming out. This is of course your fault, but these things happen during all the chaos and there was almost nothing you could have done.
When you finally push this task through and it’s checked and approved dozens of times in different places (weapon design team, design lead, writing, sandbox team, development, QA, studio director, etc.) you have to make sure it’s published correctly in the right build, it has all necessary descriptions and marketing texts done and translated into all languages and the community managers know about it so they can get ready to collect data.
This single task took you a year to complete even when you did your best to do it fast and well and I left out about 90% of problems you would normally encounter. THIS is game development.
Community Attitude and Feedback Now we get to why the uninformed community hurts the game so much. This sub would only see Thorn getting a catalyst and it would immediately be flooded with posts like “The catalyst sucks in PVE, buff pls”, “Bungo doesn’t care, the catalyst sucks for Warlocks” and a few “Why catalyst for Thorn, but not for Skyburner’s Oath”, completely missing the point of the catalyst and adding nothing to the discussion.
Bungie devs are way more informed, skilled, and experienced than us, the community. The only feedback they are interested in from us is quantitative - basically what we like and what we don’t like about the game. Any posts giving them ideas, elaborate reworks, or straight up negative outrage will accomplish nothing, because they already know everything about the game and discuss it daily in way more detail than we could ever imagine. The only qualitative feedback they should collect and measure is from content creators and the top 1% of the player base because those people actually know some aspects of the game Bungie doesn’t. I know it may sound like the hated “Bungo only listens to sweats and Youtubers”, but that’s kinda the point, they should be listening.
It doesn’t mean that our voices are ignored or not listened to. I would bet all of my money that all forums are constantly monitored and analyzed. The truth is, however, that the only valid opinion we can give that Bungie should consider is what aspects of the game we like, and what aspects we don’t. Anything beyond that we already tell them through data they collect from our play sessions.
As I wrote above, any change within this massive game is complicated and could take months or years to be implemented, so being upset we don’t have everything now is just useless. Bungie is hard at work to make good stuff, we should respect them more and not bring out the pitchforks every time a season slows down a bit and we can’t play for four hours a day every day for the whole year. There will always be problems in a live game and they are doing a fantastic job, I can’t even imagine how much work must go into it. So before you post about something in the future, take a moment to think about the process and figure out what exactly you can provide to the devs with your feedback, because otherwise, you’re fanning the flames on something that probably isn’t actually burning. It’s just taking its time as it should.
With all of the above said, it isn't the community's fault that we're not informed. The fault lies entirely with Bungie not educating people enough and this problem could be avoided.
Reasons Why Things Suck I’ll close by giving my two cents on why the game isn’t perfect and never will be, just so you know where the community's frustrations should go.
- The biggest reason that influences everything - Bungie is a company owned by a group of shareholders that will always force the studio to grow and provide more profit. With every extra dollar, the value of the company grows and the board of directors gets richer and because of the super predatory capitalism we live in now, Bungie has to justify every single decision with a monetary value. It's not the fault of the devs, they don't make much money themselves.
- The game is massive and always online. I’m pretty confident that no other studio would be able to support Destiny for so long without the game completely crashing down. Technology always evolves and it’s almost impossible to keep a living game up to date, so some parts of the front end of the game will always suck because Bungie has to upkeep the back end we will never get to see.
- The project has been going on for a decade, which leads to people wanting to naturally move on. Replacing team members on a living game is very difficult, which leads to problems and delays.
- The community is not educated about the game enough, which is why I ended up writing this. The continuous cycle of negative outrage that comes from a lack of understanding damages the game because the devs are forced to deal with it without disclosing information. If people knew more, they could help Bungie, but no company that wants to make big profits will ever open up its communication because it would show just how many decisions are influenced by the search for profit.
That’s it, sorry for the length of this essay. I hope you learned something and let me know if you’d be interested in more stuff like this (takes on sunsetting, sandbox, etc.). I would like to give people more info so they don’t waste their precious time on stuff completely outside of their control and maybe educate people about the industry. I love the game and I hope you’ll appreciate it a bit more now.
Edit 1: This post is not meant as a defense for the faults of the game or an excuse for bad decisions, it's meant as a resource to give you perspective and information. If you believe the game is not as good as it was promised to be or disagree with some design choices made, you are of course entitled to your own opinion, and there are quite a few things I myself absolutely hate in Destiny. I can't answer questions related to design on Destiny with confidence, because I don't work for Bungie and I won't speculate much on why certain decisions were made. I can give you my opinion on stuff like sunsetting based on my experience in another post, but ultimately it's only speculation with little benefit. All I will say is that there is always more stuff we don't know about the game than we do know and design should be judged in context.
When it comes to questions related to Bungie's scummy tactics when it comes to monetization and bad communication, I agree with you, as I said above. Money is the biggest factor of why Destiny suffers and the best way for us to do anything about that is to stop buying it. I know it's a cliche statement, but it's true.
And lastly, for the comments saying stuff like "shut up, Bungie sucks and you know it", please read what I said again and think about it. The devs most likely love the game just as much as you once did, if not much more.
Edit 2: I'll add one thing that keeps popping up. It's clear that Destiny is a product developed for profit, so if your outlook is "I don't want to know about development, I'm just an unhappy consumer that didn't like this product", I agree as would most likely everybody that it's absolutely a valid stance, but that's not what my post was about. If that's how you see any product, you should tell the producer why you didn't like it if you care enough to do so and move on. The post is meant to inform people who don't want to move on from Destiny, especially those who continuously engage with the product from a place of understanding even if they don't have it, which wastes their time and does nothing for the product. If you don't like this game or any other game, it's absolutely OK and you should move on from playing it, complaining about things you don't want to understand won't help you achieve what you want and only makes the game worse. As I said above, the best way to show your disagreements is not to support the company and if you don't like Destiny, please stop playing it and take care of yourself. Your time is valuable, don't give it away to someone you don't agree with.
Edit 3 This will be the last edit on this post. I appreciate all the awards and great discussions happening below, but holy cow did this get a lot of vitriol. I expected a lot of negativity, but it still surprised me. It's partially my fault for trying to talk about so much with not enough room so I'm sure I made a few mistakes. I'll reply to a few things that I want to make clear and then leave this alone, it's way too long anyway.
If you see any malicious intent, attacks, arrogance, or "Bungie shilling" between the lines, I put none there, at least not on purpose. My goal was to inform, as I said right at the start, so if you see any other agenda, it's not there and my writing either wasn't clear enough, or you're looking for something that I didn't write. Take the post for what it is, a stranger on the internet telling you something you may not know from their experience. If you disagree with me, downvote the post and explain why, no need to insult anyone, you're once again wasting your precious time.
I didn't mention management as a problem on Destiny, because I don't know enough about it. Leadership is very often a problem on any collaborative projects but calling someone out without the necessary data is exactly what I warned about in my post, so I won't comment on it, but feel free to disagree with me. Maybe you know more about the subject than I do and I'll be happy to read your reply.
I never put myself up as an ultimate authority on the subject, all of this is just basics I thought hardcore fans should know and I communicated that. This post was already very long and I didn't have time, nor did I want to describe theory in detail, so insulting me over not explaining how scrum works in a post meant for people with no experience is not necessary. If you want to argue about production methodologies, my reasoning on examples given, and how healthy management looks like with me please feel free to message me and I'm sure we'll have a cool conversation, I'd love to hear about your experience from working in gaming.
And that's it, I hope you got something out of this. Have a great day and see you around.
Are your Boomer parents as baffled by your $GME gains as mine are? Feel free to use my G-rated, very basic explanation of what the fuck is going on!
So to start, you need to know what "shorting" a stock is. When someone thinks a stock is going to go down or a company will go bankrupt, they can borrow shares from their broker to open a "short" position. They then sell the shares immediately at the current market price. They have a specified amount of time to return the borrowed shares to the brokerage.
If the stock does go down, the investor buys that number of shares at the now lower current market price, and then returns them to the broker. He/she keeps the difference.
If the stock goes up, they have to "cover" their position. They can "buy-to-close" whenever they want, but many of them will wait for a very long time because they are large firms who have a lot of money and leeway with their brokerage. However, if a stock keeps going up and up, the brokerages can call the investor and demand the shares back to hedge
their losses. This forced buying drives the price up even more, which then causes other brokerages to make the same phone call to their clients, and so on and so forth. This is called a "short squeeze".
---
GameStop is a declining brick-and-mortar video game retailer. Their management has not adapted to the digital world where many video games are downloaded instead of on discs. They have been making some moves in the right direction, such as closing underperforming stores and paying down some debt, but they need to reinvent themselves to succeed. Many large investors/firms have seen this coming and took out short positions a few years ago. The stock kept going down so the brokerages and banks hadn't called yet. GME is the most-heavily shorted stock on the market. More shares are shorted than are in circulation. It's called "naked short selling", it's complicated, and some of it is probably illegal but the SEC looks away.
Ryan Cohen founded Chewy.com when he was 25 and sold it six or so years later for $3.5 billion. Last August, he purchased 9% of GME's shares. When it was disclosed in the SEC filings, the stock went up 22% in a day (which is a LOT in normal circumstances). The thought being that he was going to attempt to take over the company. There was a lot of speculation online. In late November he wrote a
strongly-worded letter to the Board of Directors.
Shortly before Christmas, he disclosed that he had bought more shares and now owns 12.9% of the company. He bought the new shares at $16ish, after buying the first batch around $4. When someone owns 10% or more of a company, there are heavy limitations on how much they can sell at one time, in a given period, and they have to disclose everything.
This signaled that he wasn't in it for a quick buck and he probably really was going to try to take over and modernize the entire company. Gamestop has something like 55 million members in their club/newsletter thing, and that data can be used to make a lot of money through targeted advertising and such. There have also been confirmed rumors that the company will be making a serious run at the fast-growing PC gaming market (many serious gamers build their own computers). Video game competitions are also very popular and can be capitalized on. The stock continued to slowly climb, with some sell-offs and such along the way. It was not for the faint of heart.
Fast-forward to January 10th, when it was announced that Cohen and two of his board members from Chewy were officially appointed to the GameStop Board. It was really looking like the theories from last fall were correct. The news sent the stock soaring and the investors who had short positions were in big trouble. Some of them started covering their debt, but many didn't and still haven't. The ones that did have incurred losses in the collective billions, and there are many more billions still out there that will be lost by short investors.
For the past two weeks, the pro-GameStop investors have shown great interest in the potential turnaround story of a store that plays a big role in their childhood memories. With the presence of Cohen and his buddies from Chewy, an e-commerce giant, small investors can see that GameStop is now undervalued to those who believe in the new Board members.
The stock has been incredibly volatile as the large investment firms try to drive the price down. One way they can do this by opening massive new short positions (AKA selling large chunks of shares all at once) as other shorts return their borrowed shares to the pool. This can be seen many times along the daily charts of GME, in nearly vertical declines. Knowing the potential of both Cohen and the short squeeze, small investors have been buying up all the dips. If the shares are being held, and not sold, they are unavailable to be returned to brokerages. This drives the price up even MORE as the short investors scramble to buy whatever shares are available to fill their debt before the price continues to rise. Eventually someone is left holding the shares purchased at the highest possible price, but in this once-in-a-lifetime case, it probably won't be someone with a net worth under $100 million.
Position: Go fuck yourself, shorts
The descent into GME groupthink: a deep dive
Hi, guys. I know we're trying to limit the old WSB talk, but I've been thinking a lot about the GME threads, and this won't fit as a comment, so I hope it's alright that I post this here. I'm shocked by what the community has become, and I'm sure you're seeing it, too: the onslaught of misinformation, delusion, emotional volatility not unlike GME's volatility, and (since Friday) sells at massive losses and debt... Oof. It hurts to see it. (But I still can't look away.) WSB has experienced massive communal losses like this before, but never like
this. How did it go from a simple stocks subreddit to an echochamber of GME hype and conspiracy theorists? The threads from even just a
month ago were radically different than what they were a
week later, and even more different than they are now. It's fascinating. It certainly raises a lot of questions.
Here's my opinion: The GME community has plunged into groupthink faster than their stock price plunged to the ground (if you're not familiar with groupthink, check
this out). But how did this happen
so quickly?
Let's take a deep dive.
Forming a collective identity
We'll start at the basics. Formation of a collective identity is a necessary first step; you can't develop groupthink without the group part. From where I see it, WSB as its own collective identity certainly helped speed up the process of forming GME's identity. When the sub boomed, most members were, at first,
generally welcoming (if not by old sub members, then by the thousands of new ones pouring in), and the lingo was easy to learn. It was easy to feel apart of the community. Not only that, it was
exciting for new subs: GME brought a sense of solidarity. Just check out this
thread to see what I mean. Whether their goal was to 'stick it to hedge-funds' or get rich quick,
all new subs who didn't know much about investing felt an expectation, and maybe even certainty, in their GME investment: an upward spike
was coming, it was only a matter of when.
Rhetoric
Rhetoric is very important to a collective identity. It's like an inside joke; other people might not get it, but
you and your friends do. I was playing a multiplayer video game the other day, and someone came in the lobby with the username GME. Another player in the lobby got excited when he saw it. He said, "WSB?" and the first person answered, "to the MOOOON!" Instant friendship. Rhetoric strengthens camaraderie. It makes you feel like you're part of the "in" crowd.
This is another reason that the existence of the WSB community probably aided in the rapid formation of GME identity: new subs quickly took on WSB rhetoric. Diamond hands vs. paper hands, to the moon... you get the drift. New investors wanted to feel part of WSB, and rhetoric is one of the easiest ways to do it.
I want to talk specifically about the terms "diamond hands" and "paper hands" for a moment. These are very important terms for the GME identity. Prior to the GME explosion, I think WSB members would agree that diamond hands and paper hands didn't
really mean that much. I would even say that diamond hands were viewed somewhat negatively.
Regardless, those terms are loaded with some heavy positive and negative correlations, and without the self-deprecation and self-awareness generally present in WSB, the use of those terms could easily slip into the beginnings of discrimination-- which is exactly what happened when GME took over. To newcomers, diamond hands sounded great! If you're investing in GME, you're not only part of the
in crowd: you've got
diamond hands. The sellers? They've got paper hands. They suck. You don't want to be one of them; they're gonna wish they were one of
you. Now, we're subtly digging deeper into that "us vs. them" narrative.
A sense of urgency
Throughout the GME boom I saw a lot of people ask, "is it too late to get in now?" The general response: No. But you need to get in
NOW.
There was a real feeling of time sensitivity, and there was a lot of uncertainty surrounding it: who knows if you missed your only chance in? Easily-swayed, brand-new investors
wanted to get in. The idea of making easy money was certainly appealing, and there was an undeniable FOMO factor. When the young investor became interested enough to ask if it's too late and became spammed with comments to
get in now, it probably felt like an easy decision to make. It probably made GME profits feel like an inevitability. Who were they to know any better?
Even if our brand-new investor had a chance to profit on GME, there were a lot of red flags in their decision to invest at all. They were emotionally investing, and there's lots of signs that point to it. And just like any emotional investor, once they were in, the easy-swayed, brand-new investor felt the
actual implication of investing
actual money like they'd never expected. They might have been certain of GME's upward movement before, but now, they felt the dips a lot more. I don't need to tell you how volatile GME's dips were-- they were bad. Our brand-new investor probably tried not to panic; the diamond hands vs. paper hands rhetoric probably played a large role in their ability to stick around. Our new investor didn't want to be a paper-handed fool. And they probably tried to convince other people to get in with the very same rhetoric, too. They had to!
Their money was on the line now, and the end goal was to get enough people to invest so that the squeeze will happen, right? Right??
Oh, the squeeze. The very reason for our GME adventure. Because of its role, there was a
lot of information being touted about short squeezes, a lot of copy-and-paste action, and a
lot of outdated sources. People relied on a website called
isthesqueezesquoze.com without much consideration into
who was running it, or if it was updating in real time, or even how it would determine if the squeeze had been squozed. Eventually, the message seemed to become: if other people sell when they want to, then the stock price and volume will go down, and hedge-funds will cover their shorts, and our brand-new investor will be left with nothing. That's not fair, right? We can't even squeeze if people aren't buying on the dips, right? We're all in this together, right, guys??
Uh oh. You see where this is going?
Group polarization
Group polarization, which is a common red flag for groupthink, is the tendency of a group to make decisions that are more extreme than the initial inclination of its members. You've seen it: that leftist friend you have starts hanging out with other leftist people, and they become even more leftist.
For the GME-community, mid-to-late January was likely the biggest push for polarization. At this time, we had the emergency of more GME-community "enemies:" the mainstream media and big brokers. MSNBC called the GME movement a terrible idea, hedge-funds cried about their losses on air, interviewees suggested that WSB could be considered insider trading, others called WSB's move cheap and illegal. Shortly after the media attacks, Robinhood and other brokers began to shut down trading. The media coverage sucked, but this was a lot worse. Now, it was
personal. GME couldn't trust the news, but now, GME couldn't even trust their brokers.
GME was
angry. The threads were spammed. The general sentimentality was hurt, betrayal, mistrust, and war cries: how come hedge-funds are allowed to play dirty tricks but
we're not? The news is owned by a bunch of rich guys, so of course
they would be against the GME movement. The "us vs. them" narrative dug deeper, and now, it had more meaning:
we're the underdogs! We'll fight our way up to the top by ourselves!
Us vs. them! The more that the GME-community grew, and the longer that they gathered in their threads, the more they mistrusted the stock market, and the easier it became to blame a lot of things on them. Not only that, but they felt more right. GME
will skyrocket. This is getting national attention because we
are succeeding.
You can literally see the real-time descent into group polarization in the memes they used: "GME $100 is not a joke" became "GME $1,000 is not a joke," and then $5,000, and then $10,000, and then $20,000..... I believe there are some people out there that genuinely thought GME could break 5 digits. A
lot of people genuinely thought it would break $1,000.
Stock peaked Thursday morning around $470, but that wasn't enough for GME. Even after it dipped back down to $200 at close, the community was certain it would boom again. GME $1,000 was not a meme. I can't figure out why, but somewhere before or on Friday, a lot of the community began to believe that $320 was
the number to hit. The squeeze
would happen after they got back up to $320. People went with it.
Friday morning, the stock struggled to go back up. When the market began to close, GME had one goal in mind: close at $320. Minutes before closing, the GME thread exploded, comments rolling in the thousands per minute, filled with the now-familiar GME rhetoric: "hooooold" and "buy guys! we need you to buy!!" and "GME TO THE MOON!" among many, many others. The ticker looked like a tug-of-war.
Market closed at $328. GME won the battle.
This is exactly where it went downhill fast. GME had an entire weekend to fill until the U.S. market would open again, and their win left them glowing all weekend. Here was the proof that they needed; if they could win a battle, they would win the war. Just take a look at the
weekend thread to see what I mean. "Be prepared for the fight next week." "The media is going to try to scare me into selling? Nah." Rocket emojis. "Hold the line." Remember, this was an
entire two days of celebrating their win: the more they celebrated, the further polarized they became, and the more they mistrusted everyone else. The romanticism might've been strong before, but it was getting stronger. I saw one comment comparing GME-investors to movie superheroes.
MOVIE superheroes. Jesus.
In the midst of their celebrating, what did they do when someone said they should sell?
GME-specific rhetoric and the WSB fracture
Now that GME had effectively polarized itself, it needed some new rhetoric. The WSB stuff just wasn't extreme enough for them anymore. Hedge-funds became hedgies. People who doubted GME were spreading FUD. Hedgie-bots were a huge issue. GME needed to "hold the line." Do you notice a lot of the rhetoric became blatantly war-related? Wonder what the benefit of
that could be.
But what about the old WSB community?
Towards the end of January and up through now, the ones who sold their stocks and talked about it were downvoted to hell. The polarized hivemind had decided that
anyone who sold for any reason at all were weak, paper-handed, they would regret everything. The ones who cautioned others to do the same were even more so. And don't even think about talking about other stocks. What do you think this is? A subreddit for
the whole market?
Some
studies suggest that online rhetoric is tied to an increase in aggression. When a user feels like they're part of community identity, they'll behave the way they think they're supposed to, and the way that they see others behave. Our new investor sees someone call someone else a paper-handed tard for selling? Well, they'll do the same. Even if they don't feel
that strongly about it, they might do it anyway, just to feel like they belong. It's all pretty much subconscious. There's not a lot of critical thought in the beginnings of groupthink.
If you said GME wasn't going back up, you weren't just
wrong, you
being wrong made them very angry. I commented something about how people should sell GME and one user replied, "you clearly haven't been paying attention at all. That is the most stupid bullshit I've ever seen. You truly are the tippy top tard of all tards." It's the perfect example for this: using the retard rhetoric, full-on aggression, etc.
Old WSB members were a new enemy of sorts. Anyone who said anything against GME were hedgie-planted bots aimed at creating FUD. (See how complicated this rhetoric is getting as polarization gets stronger?) Any other stocks? Distractions. Stupid bot, the hedgies won't fool
me into buying anything else. The
entire subreddit served only one purpose: GME, and GME alone. Everyone else can get out.
I think it's clear that we've arrived at the end of the line...
The fall of GME
So, the stock market opened up Monday, and GME charged into battle again. But it didn't go as expected: GME went down fast.
People were getting scared. A lot of them had probably invested a lot more than they were willing to lose-- there were stories of loans taken out, inheritances given early, rent and grocery money being spent. Even if they weren't on the brink of financial devastation, the losses were massive for some. That shit
hurts. For emotional investors, it might feel like the end of the world. So, here's our brand-new investor staring at some deep red numbers on the screen, maybe more terrified than they'd like to admit being, wondering where to go next.
Well, good thing our brand-new investor had a daily thread to turn to! What would make them feel better than to settle comfortably into their echo-chamber? Here were users calling them brave and intelligent. Diamond hands! Keep up the good work! Tasty dip, get these discounts! There were
copy-
and-
pasted messages. Our brand-new investor was swayed into buying this easily, so wouldn't they feel reassured this easily, too?
Then came the negative brigade. A lot of people came back for their 'i told you so's: get out while you can, stupid bagholders, can't believe you guys are still holding, etc... To the brand-new investor, these negative comments were like a cold slap of doubt-- at this point in the game, with our investor possibly thousands of dollars under on the first stock trade of their life, they can't
handle the doubt. They probably can't even process their losses yet; it cannot possibly be real. The echo-chamber was certainly convinced it wasn't... So, these negative comments
must be bots. Nobody really has any doubt. If anyone does, they just have paper-hands.
As the stock fell harder, the GME-community got
really desperate. They tried to appeal to your
pathos. There was a lot of "if you never sell, you'll never
actually lose." A lot of "if DFV isn't selling, I'm not selling," ignoring the fact that DFV had sold more than enough to cover his initial investment. It became downright misinformation:
Mark Cuban's comment urging GME-holders to keep holding was frequently turned into "if Mark Cuban isn't selling, I'm not selling." The VW squeeze was referenced
several times as a comparison. Here's a great
list of the misinformation spewed from someone's post earlier.
This was where the delusion
really began to set in. Nothing, absolutely
nothing, could be attributed to the fact that GME was steadily falling. At the end of every day, the narrative changed: the squeeze would happen
tomorrow. No, the next day. No, sorry, the day after that. No one can be trusted anymore: the news is fake, the negative subs are bots, and hedgies are cheating! That dip was just a short ladder attack. That dip was just the shitty paper hands selling. That one was the hedgies cheating. Thousands of comments rolled in by the minute. Millions were accrued in losses, many by those who couldn't afford it, and yet, the GME-community lashed out at everyone else for doubting them. Wednesday rolled around and the stock could hardly break $100. But WHO were the idiots? The paper hands. The liars. The cheats.
GME will return, they said anyway.
The media is wrong. There was
misdirected anger.
Memes rooted in the thought that GME would rocket.
You guys knew the utter delusion that the threads became. I don't think I could describe it well, even if I wanted to. But here's the most delusional comment I've seen, the one I think perfectly sums up the GME-crowd:
"Stop questioning. You are told to buy and hold. Just follow directions."
Stop questioning. Just follow directions.
That is fucking groupthink. What now?
I could really get into other contributing factors here. There have been a lot of IRL events that have probably been a catalyst for this; we've been seeing a lot of mistrust of the mainstream media, growing support for the rich vs. poor narrative, and mistrust of the government lately. There's been a lot of conspiracy theories and echo-chambers online.
I don't know the future of GME. I also know that there's some truth to the things that the GME-community has said: I'm sure there
were bots in the subreddit. I'm sure there
was market manipulation. But, like all truths man-handled by groupthink, it was warped beyond belief. Not everyone disagreeing with GME was a bot. Not all downward dips were market manipulation. But that's exactly what they believed.
So, where do we go from here?
There are many implications this phenomenon will have on an individual investing level and, with WSB, on a group-wide level. I hope that investors burned by the GME movement will learn the implications of emotional investing and FOMO-- we've certainly all been there before. I hope GME doesn't continue to become a massive conspiracy similar to Qanon (the rhetoric has evolved to be something scarily similar).
I'm curious to hear what everyone else's thoughts are. Let me know what you think.
The "Gamma Squeeze" Explained: Gamma Theory for Monke
Since GME's gamma squeeze 2 weeks ago, every monkey seems to think that GME is primed for another "gamma squeeze" every single day. Veteran WSBers almost certainly understand what a gamma squeeze is because a) It's not complicated b) Gamma was all the rage last March as SPY plunged into oblivion...but the 6M monkeys that have flooded into these sacred gates within the last 2 weeks seem to be pretty oblivious. So, I want to help spread some knowledge so our community isn't filled with fucking idiots.
I'm going to try to explain some basic gamma theory, diluted-down so even you peanut-brain baboons can understand. You do have to be literate to understand this, so maybe there is no hope for many of you. You need to have a basic understanding of
options greeks, namely delta and gamma. I will briefly discuss them so we're all on the same page, but I'm not going in-depth because there are hundreds of posts in this sub explaining them in-depth, not to mention all the boring bullshit that gets posted in places like
options.
EDIT: Putting this at the top since apparently many people are confused.
A "gamma squeeze" has absolutely nothing to do with a short squeeze. Gamma squeezes are driven by large numbers of OTM option buying, whereas short squeezes have to do with short hedge funds buying back shares to cover their ass.
A short squeeze can happen without a gamma squeeze, and a gamma squeeze can happen without a short squeeze. DISCLAIMER:
I have no idea what I'm talking about. This has nothing to do with my career and I've learned all of this gamma shit from reading tons of shit online. This is not a lot things, and it's definitely not financial advice. There are probably tens-of-thousands of people in this sub that know way more about this than me, so if I say something incorrect, I will happily edit this to reflect that. If you understand basics options greeks, skip ahead. For the following, assume you paid $100 ($1.00 per share) to buy-to-open 1 call contract with strike price $10 (I'll refer to this as $10C). You are now "long" this $10C. If you sell an option, you are "short" it. Each option contract is worth 100 shares, so you multiply delta/gamma by 100 to get net delta/gamma.
- Delta: For every $1 move in the underlying, your option's price/value will change by delta.
- For example: If your delta is 0.25 (or 25, same thing), then the value of your option will increase by $0.25 for each $1 the underlying increase. I.e. Stock goes from $5 to $6, then your $1.00/share call increases to $1.25/share, netting you a profit of $25. Stock goes from $5 to $4, then your call decreases to $0.75/share, netting you a loss of $25.
- Long calls are positive (+) delta, short calls are negative (-) delta; long puts are (-) delta, short puts are (+) delta. Delta gets larger in magnitude as you go in-the-money (ITM) and smaller as you go out-of-the-money (OTM).
- At-the-money options (ATM) have a delta of approximately 0.50. The delta of deep ITM options approaches 1.0 as you go further into the money. The delta of deep OTM options approaches 0.0 as you go further out of the money.
- Gamma: For every $1 move in the underlying, your delta will change by gamma.
- If you have taken any basic physics course, this will sound like acceleration to you...because it basically is. It's the 2nd order derivative of your option's value function.
- If you have no idea what any of the above means, think about gamma as the gas pedal in your wife's boyfriend's car: when he floors the gas pedal, the car goes faster and faster, increasing in speed exponentially. Once the car starts moving, it starts picking up speed rapidly because of the acceleration, and you go flying into the back of the trunk as your wife gives her boyfriend a quick handie in the front seat.
- Long options all have positive (+) gamma, regardless if they're a put or a call; short options all have negative (-) gamma. Gamma is largest at-the-money (ATM) and decreases as you move both ITM and OTM.
- For example: Delta is 0.25, gamma is 0.05, underlying price is $7. As price goes from $7 to $8 (approaching your $10 strike), delta increases by gamma to 0.30 and gamma increases to 0.10. As price then goes from $8 to $9, delta increases to 0.40 and gamma increases to 0.15. As price increases from $9 to $10, delta increases to 0.55.
As gamma increases, delta grows exponentially...and gamma increases because you are approaching the strike price. If that makes sense, then you basically understand how a gamma squeeze works.
Now before I explain what a gamma squeeze is, I need you to stop slobbering all over your keyboard- you're an ape, not a dog. Just because your wife's boyfriend disciplines you like a delinquent poodle doesn't make you one. You're a fucking ape, have some pride.
Okay anyway, I want to explain what
market makers (
MMs) are because most of you orangutans clearly don't understand them either.
Market Makers When you buy an option, another degenerate isn't selling it to you- a market maker is.
MMs are large banks/institutions that have special agreements with your broker (sometimes they are your broker) to go behind the scenes and fill trades, providing essential liquidity to the market so you can get fills on your faggy delights (FDs). MMs make money by A) getting paid by the broker to create liquidity B) Scraping margins on bid-ask spreads. That doesn't sound like a lot of money, but when you're filling millions of spreads those pennies add up fast.
Since MMs will basically take any trade and
make money regardless of how the trade goes, they want to
hedge the trade so their risk is essentially 0. To do this, they try to be "
delta neutral," meaning they want their net delta to be 0. If net delta is 0, when price goes up or down the value of the overall position/strategy doesn't change.
"
Hedging! I've heard a lot of people use that word when talking about gamma!" is what you're probably thinking. Congrats, you chimpanzee, you're sort of starting to connect the dots.
MM hedging is what creates gamma squeezes. How do MM's hedge options?
Let's go back to that $10C you bought for $1.00/share (delta 0.25, gamma 0.05). A MM was on the other end of that transaction: they sold-to-open (or "wrote") the $10C for $100. Now the
MM is short a $10C, so they have
negative delta and negative gamma; their net delta is -25 and their net gamma is -5. They want to be delta neutral, so they buy 25 shares of the underlying (every long share has a delta of 1.0) and
wallah (edit: I'm stupid) voila! -25 + 25 = 0.
But, what happens when price increases? You add gamma to delta. Your delta increases to +30, and the MM's options delta decreases (becomes more negative) to -30 (-25 + -5 = -30).
Because MM's have negative gamma, their delta gets larger in size. Negative gamma creates gamma squeezes.
Uh oh, now the MM's net delta is -5 (-30 from the short call, +25 from the long stock)...so they re-hedge by buying 5 more shares bringing their net delta back to 0. That share buying can push price up, leading to a vicious cycle of buying/re-hedging.
The Gamma Squeeze!
Everytime MM's adjust their hedge by buying more shares, that can potentially further increase the price. This means delta will increase, and force MM's to buy even more shares to re-re-hedge.
"Gamma" is in the name, so where does gamma come into play? As the underlying approaches your strike price, gamma increases in size. This means that delta increases exponentially. As a result, MM's increase the number of shares they buy each time: first 5 at a time, then 10, then 15 at a time. As price goes up,
MMs buy gamma to hedge their short call. As gamma gets larger, MMs hedge with more shares. Without gamma, the squeeze would fizzle out quickly. The setup: Gamma squeezes don't happen all the time. You need the proper setup for a stock to get "gamma squeezed." That setup involves leverage and HUUUGE (like the size of your wife's-boyfriend's-dong big) AMOUNTS of deep OTM options, two things every fucker here loves.
Let's say a stock is trading at $15. A few million idiots load up on cheap, deep OTM options at $30 and $50. These are stupid fucking options with deltas of basically 0, so MM's don't need to hedge them
initially. In most cases, these will expire worthless. For whatever reason, the underlying's price starts picking up speed and starts approaching those strikes.
Now, all of a sudden
those worthless calls have a non-zero delta, and that delta is rapidly increasing by a further-increasing gamma. All of a sudden, MM's start buying a bunch of shares to hedge and the
rate at which they buy is increasing with gamma. This is all exacerbated by the fact that these FD's were so dirt cheap that
tens (if not hundreds) of thousands of contracts were purchased by fucking brainlets.
So let's revisit 2 Friday's ago, January 22nd. GME opened around $40. The most OTM call strike was $60C with an open interest of 35k to start the day. By the end of the day, the volume at that strike was
180,000. We can't always assume those are all buying-to-open, but looking back I think it's safe to say most of them were probably buying-to-open. Those options were
dirt cheap at the start of the day because their delta was basically 0. By the end of the day, GME closed around $65 and all those $60C expired ITM, meaning a delta of 1.0.
MM's actively hedge during the day as price moves, so that means they had to keep buying shares as price moved closer and closer to $60. Because of this, gamma squeezes happen during market hours.
Again, you can't assume that all 180,000 $60C contracts were bought-to-open, but let's be reasonable and say 100,000 were bought-to-open.
That's the equivalent of 10 million shares that were purchased by MM's during the day to hedge their short calls (total volume for that day was 200M)
- and that's just for the $60C alone. Thus, this was a textbook gamma squeeze that inevitably helped drive GME's 50% increase in price that day.
Will the GME Gamma Squeeze repeat: Now that you hopefully understand the basics of a gamma squeeze, I want to re-emphasize one point: YOU NEED HUGE AMOUNTS OF DEEP OTM CALLS FOR A GAMMA SQUEEZE.
Why did we get a gamma squeeze on January 22nd? Because the $60C were
dirt-fucking-cheap so degenerates could
leverage themselves to the tits with calls. Thousands of calls could be bought for pennies - these calls are worthless until they're suddenly not, forcing MMs to rapidly hedge and yielding
the glorious gamma squeeze. What's different now? Implied volatility (IV) has been record-settingly high on GME options for the past week. Like 700-900%...values that were pretty much unthinkable until this event. That insane IV leads to options prices that get JACKED UP multiple times what they were before, especially at deep OTM strikes.
So those deep OTM options that fueled the first gamma squeeze are now multiple times more expensive, which leads to significantly decreased purchasing and thus cripples the prospects for a gamma squeeze.
Are MM's inflating prices intentionally to prevent a squeeze? Sort of- it's rising IV that's raising the price, but that works in their favor because it stifles the chances of a gamma squeeze.
Parting Thoughts - A gamma squeeze almost undoubtedly contributed to GME's rise, but I think whales took over after the initial squeeze and kept pumping the price. Maybe some shorts covered somewhere in there too. I honestly have no idea, which is why I'm not touching GME - although I am rooting for you monkeys to become bajillionaires.
- In my opinion, GME is not currently setup for an upwards gamma squeeze because there is not enough deep OTM call buying. When you compare recent volume with what happened 2 weeks ago, it becomes obvious we're no where near setup for a call gamma squeeze
- HOWEVER; as IV continues to decrease, that will make OTM call options cheaper again. I am not recommending you buy those deep OTM short-term call options because chances are they will expire worthless. With that said, that kind of ape-strength-fueled OTM call buying is what fueled the first squeeze...and it can certainly happen again. Although I'm not betting on it.
Some important notes - MMs hedge constantly throughout the day as delta/gamma change. The idea that options expiring ITM or OTM will lead to a gamma squeeze after hours is ridiculous because MMs are actively hedging into close. If your long call expires ITM, the MM is already long the 100 shares by market close. This is why gamma squeezes happen during market hours.
- The exceptions are when ATM options expire with non-zero deltas at expiration. In those cases, there is stock tied to those options at expiration and that stock will most likely be unwound in afterhours. This is probably not what happened with GME.
- Gamma squeezes can go up or down. Many of you seem to think that gamma squeezes only go up, but this is just wrong. Squeezes follow the negative gamma (MMs have negative gamma when you buy an option). If there's a lot of deep OTM call buying, that sets up for an upwards gamma squeeze; if there's a lot of deep OTM PUT buying, that sets up for a downwards gamma squeeze.
- Right now, GME put buying heavily outweighs calls so, if anything, we're setup to squeeze lower.
- When there is net option buying (be it puts or calls) that creates negative gamma (the MMs) which fuels volatility and exacerbates price movements.
- When there is net option SELLING, that creates positive gamma which suppresses volatility and favors mean reversion to the largest gamma strike.
- I'm of the belief that positive gamma creates a lot of support for SPY, and I use it to guide my SPY positions. It's worked out well for me, so that's why I use it.
- Seriously, don't buy deep OTM short-term options. 99 times out of 100 you're throwing your money away (that's why the delta is basically 0).
- There is a lot more nuance to this, such as options expiration, IV, long/short positions, and other things that are too complicated to discuss in one post. I've tried to simplify things, and hopefully I didn't make any mistakes in the process. When you consider that MMs are short some options and long others, it makes things more complicated.
Rocket Companies (RKT) - DD on an Undervalued Gem!
This is my first DD post on any company, be gentle.
Disclaimer: I am long RKT. This is not financial advice, and I am not receiving any compensation whatsoever from anyone for this post. I’m not a professional, I’m not even an amateur, this is a Wendy’s.
Sources used: RKT investor relations website and company website, RKT earnings transcripts, SEC fillings, the SEC EDGAR database, sea king al pha, whalewisdom, finbox, yahoo finance, stockcharts, openinsider, Zacks, google sheets.
Summary Rocket Companies (RKT) is a fintech company that operates several brands including the flagship Rocket Mortgage. I think RKT presents an opportunity to buy serious value at a cheap price, because the market has not priced in the underlying fact that RKT is a tech company akin to Square, Paypal, etc.
- RKT has disrupted the lending industry and has embraced a fully digital ecosystem, which will continue to drive customer acquisition and retention in the future
- RKT spends considerable money and resources on UX/UI development, client experience, and marketing. This will also help drive their continued expansion into the lending market.
- The RKT “ecosystem” provides a “full cycle” solution for everything related to real estate transactions and insurance. They serve real estate professionals looking to generate leads, develop those leads, better serve their clients, and make every stage of real estate transactions smoother. From the client side, they similarly just make everything easier - it’s an app, it’s online, it’s doable from home and it’s not complicated. There’s an inherent advantage in what they’re doing here because closing on real estate transactions has always been something that’s complex, unpleasant, expensive, and not well understood. You need lawyers, you need agents, there’s a ton of paperwork, it sucks. RKT is changing all of that.
- RKTs balance sheet, income, and liabilities support a stock price several times higher than the current one in my opinion.
- RKT is currently stagnant in price, and the market appears to be pricing it like a traditional mortgage company, not a rapidly growing tech company (which they are).
- RKT has been around for decades (skips the startup costs that will provide barrier to entry for newer companies looking to do what they’re doing), but somehow seems to still be leading the tech charge in the industry. That’s a unique and potent combination in my opinion.
- RKT needs a catalyst to get the market to value it as a tech company instead of a lending company. Once that happens, and I expect it to sometime within the next year, RKT should approach an appropriate valuation such as 20x earnings. That’s an estimate I pulled out of nowhere, but is commensurate with the low end of P/E ratios for companies I see as similar to RKT.
Key Point - RKT is Priced Like a Legacy Mortgage Company The average estimate for 2020 year end revenue is $15 billion, and the yearly earnings estimate average is $3.85 per share.
This estimate gives a ttm P/E ratio of just over 5.5. The sector median is something like 8-12, which makes RKT cheaply valued relative to the earnings it produces,
even compared to the financial/mortgage sector. What’s key here is, I don’t think that’s really an appropriate comparison. I would place them more in line with companies like Square (ttm P/E ratio of 325x lol), PayPal (ttm P/E ratio of 69x, nice), or Fiserv (ttm P/E ratio of 24x). I used Zacks for all of these P/E ratio lookups.
Let’s assume RKT is conservatively worth 15x earnings, and that it hits the estimate of $3.85 eps.
That would put its fair value right now at $57.75 per share. I think it’s worth more than that but, we all should do well to remember that it’s really only worth whatever the market will pay for it.
Key Point - Catalysts This thing needs a catalyst. Right now I am loading up. I’m buying shares, I’m selling SHORT TERM covered calls to reduce basis on those shares, but I will be stopping the sale of those covered calls within a couple weeks most likely. The Q4 earnings announcement will be on 2/25. I am not sure that the actual earnings numbers will be enough to wake this thing up, although I expect them to be good. But if that announcement comes with discussion of their focus for 2021 and beyond, and gets the market thinking about them as a tech company first and mortgage lending company second, things will start to heat up. I don’t know when the real catalyst will hit that triggers the run-up, but I think it could start with the Q4 earnings call. I am looking at $21 as the floor for this stock, and I expect the price to double within a year. I will be acquiring OTM LEAPs, expiring next spring.
Supporting information and background follows.
The Business RKT is in the business of providing solutions to financial transactions, including mortgage origination and refinancing, auto lending, and more. Specific subsidiaries and my simplistic view of how they interact:
Home Financing - Rocket Mortgage - The mortgage company. This is a prominent “public facing” part of the Rocket ecosystem.
- Amrock - Amrock provides title insurance, property valuations, and other solutions. I see this as “supporting infrastructure” to keep clients within the rocket ecosystem where they would otherwise need to go elsewhere and is part of what makes RKT a one-stop-shop.
- Amrock Title Insurance (ATI) Company - basically does underwriting for Amrock. The “business end” in my simple understanding of the world.
- Nexsys - provides a streamlined approach to the closing process with their Clear Sign and Clear HOI technologies - taking care of closing day authentications and sharing of homeowners insurance information.
- Lendesk - Lendesk specifically provides solutions for the mortgage market in Canada
- Edison Financial - Basically the “front end” of Lendesk that Canadian clients would interact with.
Home Sale and Search - Rocket Homes - Rocket Homes is a proprietary home search platform and real estate agent referral network. Basically this matches buyers, sellers, and agents, and is a key aspect of keeping clients completely working within RKT for all aspects of real estate buying/selling/financing.
- For Sale By Owner - A digital marketplace designed to let clients buy and sell real estate on their own. I think it’s absolutely brilliant that RKT owns this, but more on that later.
Auto & Personal Financing - Rocket Auto - Supports rental and online car purchasing platforms.
- Rocket Loans - online personal loan solutions for clients.
Media - Core Digital Media - a major advertiser in the mortgage, financial, insurance, and education sectors.
- Lower My Bills - this company is basically a “portal” business model that connects people with providers of various loan and insurance products.
Services & Technology Development - Rock Connections - Basically a sales and support platform that handles appointments, prequalifications, generating leads, and data analysis among other things.
- Rock Central - I will generalize this as “business support”. HR, administration, etc.
- Rocket Innovation Studio - A tech incubator to gather and engage top talent and ideas.
Recent Acquisitions RKT, through Lendesk, acquired Finmo back in October of 2020 (
https://finance.yahoo.com/news/rocket-companies-subsidiary-acquires-fast-182042594.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAALnvnNBoglSnmMP0O61AqgXBJokNS53LjJYuG3NvYKhayp4I6ZH2RpfmFUbSsCAU4xmnBNGMTwiEG-Ly29EabVy1-OjPIGfkYoQ3389gn3Edebs9sIwWOy1tPzqjRwOwwGA_PWg0cNzEFCe7HBTilMwADUT_y0QxWw8vizWecGcv) Finmo is a rapidly growing Canadian digital mortgage platform and this acquisition I think was perfect - it shows RKTs dedication to embracing a fully digital experience, and making sure they’re the ones leading that charge.
Management I do not have much to say here, aside from this. The RKT team is not the new kids on the block, they have decades of industry experience. Also, I value leaders that make people feel valued. And on that note, under CEO Jay Farner Quicken Loans has been in the top 30 of Fortune’s “100 Best Companies to Work For” list for 17 consecutive years.
Financials and Growth When it comes to the numbers, RKT is killing it. I don’t want to just spout a bunch of numbers that anyone can easily go look up so here’s a couple that stood out to me from the Q3 earnings announcement and related data:
$4.63 billion in revenue, which is 163% YoY growth.
From that revenue, they beat EPS estimates with $1.21 for the quarter vs $1.09 expected.
Net income was $2.4 billion which represents a YoY growth of 365%.
Closed loan volume YoY growth was 122% to $89B.
Net rate lock volume was $94.7 Billion (101% growth).
RKT has brought in $13.1 billion in revenue in the first 3 quarters and seems to be on track to close out Q4 with yearly revs above $15 billion.
That’s awesome but what I really like is that they pair this amazing growth with
$3.5B cash on hand. That’s great because I want them to be able to scale as they grow, and make acquisitions as needed (see Finmo) to ensure they can keep that growth going without getting overextended and failing to capitalize.
RKTs ability to recapture clients is one of the keys to their future success in my uneducated opinion. Their recapture rate is 4.6x the industry average. The Q3 earnings transcript includes a statement by the CEO on how when interest rates fall, retention rate falls, refinance activity is larger. The high recapture rate RKT has serves as a natural hedge to their retention of existing clients because their recapture is so much higher than average in the industry.
Quick aside - RKT announced a $1 billion share buyback program. They’ll be able to repurchase shares from time to time starting Nov10 2020, ending in two years. I don’t love the idea of share buybacks because I think this can be detrimental to actual business growth for the sake of shareholder value. However, with the large cash position RKT has (and it doubled from December 2019 to September 2020) I think this is a reasonable way to deploy some of that cash for now.
Ok so what about valuation using DCF, free cash flow analysis, something like that? Honestly I’m not convinced this is as useful as some people make it out to be. It’s nice to know what the numbers indicate, but I don’t spend a lot of time worrying about an exact price target based on anything like this. That said, you can crunch the numbers yourself or check out something like the Finbox resources:
https://finbox.com/NYSE:RKT/models/dcf-growth-exit-5yr I don’t believe that fair value estimate for an instant, but it's a part of the puzzle to consider. Finbox has various models you can check out, but it’s also just a nice place to view aggregate data other than directly from the SEC filings.
Product Channels RKTs direct-to-consumer channel is their main source of revenue right now, but I think they will be successful in their efforts to grow their partner channels as well. Why do I say that? Numbers don’t lie:
- Direct-to-consumer Q3 growth: 131% YoY ($53.5B closed loan volume)
- Partner Network growth 127% YoY ($29.6B closed volume)
- Adjusted Revenue for Partner Network is up 502% YTD vs 2019 ( see Q3 earnings transcript)
The partner network volume is a little over half of the direct-to-consumer volume but the growth rate is just so damn juicy. That revenue growth is hellathicc.
Current Market and outlook Right now, rates are low. The average 30-yr mortgage fixed rate is 2.92% (
https://www.cnbc.com/2021/02/03/mortgage-refinancing-surges-but-high-home-prices-stop-buyers.html)
I cannot say how long interest rates will remain low but I believe RKT is positioned to continue to grow regardless of what rates do moving forward. They just cover so much of the space, and they do it with a focus on applied technology.
Here’s some blatant speculation. I think as we move into 2021 and the vaccine becomes more prevalent, millennials will buy, sell, and borrow against real estate with renewed intensity. I think RKT is uniquely positioned to capture that market.
Positions: RKT shares. Cost basis of $21.14.
GME - EndGame Part 2: Cohen, Market Cap, Potential Investors
Hello again folks. This is an extension of my
DD last week in which I shared some research on short positions, GME’s debt, and some speculation on institutional investing. Since that post, GME is up 75% and there’s been lots of good
bullish /
bearish DD on the short term.
In this post, I’m going to cover 3 topics, focusing on the mid-to-long term prospects for GME: 1) Cohen, 2) GME’s market cap potential, and 3) potential investors that could continue to pile in.
TL:DR; You need to think about GME differently. Not as a trader. Not as an investor. You need to think like a venture capitalist. This is an
unprecedented opportunity, and the first time I’ve gone all-in -
I’m more bullish now than when the stock was trading sub $15. If you’re in GME you need to get in
with conviction otherwise you’re going to lose by selling when it drops.
Quick aside - my history and positions:
I’ve been a passive investor for many years. This is literally the first time I’ve taken an interest in becoming an active investor. I opened an RH account in August to start speculating on GME. My
first post called out some cheap lottery plays that took my speculating account from $5K - $20K in 3 weeks. I’ve since posted a few times on GME,
even trying to tell you to buy the post-earnings dip, and added more to my active trading accounts. I’ve taken $10K -> $130K on RH and $230K -> $480K in IBKR since slowly adding to GME since September.
UPDATE: I have deleted my positions in this post - will explain why in my next post. I'm still holding.
All that being said, thus far I’ve been thinking about GME as a
trade - trying to get in at the lowest cost I could for the maximum upside on a near-term exit, but
I’ve switched completely into thinking of GME is a
ridiculously asymmetric investment with massive potential in the next 2-3 year timeframe - even at $35. Even at $45, $50, $60. That’s why I added roughly 2500 shares on Friday at around $36 despite adding very cautiously when GME was below $20. I’m also completely all-in on RH with options (mostly deep ITM, a few fds) - $0 buying power left.
Grab a drink, sit down. Let me tell you why I’ve gotten more aggressive, and probably why you shouldn’t worry about what price you pay right now, as long as you’re willing to
believe and hold. About Cohen (and friends)
From the
recent 8K about the board changes (which you should
definitely read if you’re putting serious money in):
As part of the Agreement, RC Ventures has agreed to customary standstill provisions*, which provide that from the date of the Agreement until the earlier of (a) the date that is 30 calendar days prior to the deadline for the submission of director nominations by stockholders for the Company’s*
2022 annual meeting of stockholders and (b) the date that is 120 days prior to the first anniversary of the 2021 Annual Meeting (such period, the “Standstill Period”), RC Ventures will not, among other things: (i) acquire beneficial ownership in, or aggregate economic exposure to, directly or indirectly, more than 19.9% of the Company’s outstanding common stock; (ii) make any proposal for consideration by stockholders at any annual or special meeting of stockholders of the Company; (iii) make any offer or proposal with respect to any extraordinary transactions; or (iv) seek, alone or in concert with others, the appointment, election or removal of any directors in opposition to any recommendation of the Board, in each case as further described in the Agreement. As part of the Agreement, the Company has permitted RC Ventures to acquire, whether in a single transaction or multiple transactions from time to time, additional shares of the Company’s common stock to the extent such acquisitions would result in RC Ventures having beneficial ownership of less than 20.0% of the outstanding shares, without triggering the restrictions that would otherwise be imposed under Section 203 of the Delaware General Corporation Law (the “DGCL”), and RC Ventures has agreed that upon acquiring beneficial ownership 20.0% or more of the outstanding shares of the Company’s common stock, the restrictions under Section 203 of the DGCL would apply to a potential business combination with RC Ventures as an “interested stockholder” (as defined in Section 203 of the DGCL). This is critical:
This agreement was the result of a negotiation between Cohen and the existing board.
- After his activist letter calling out the board and then 13D buy after the earnings dip rocketed the stock up from 12 -> 20, it was clear to everyone that RC was the reason GME’s stock was heading up. The GME board was afraid of a hostile takeover / losing their jobs. This agreement allowed Cohen and 2 others on the board as long as he didn’t attempt a hostile takeover.
- Cohen wants it all. In the activist letter, he publicly said “no” to just one board seat. He then publicly bought more as soon as Sherman threatened a shelf offering to dilute him below 10%.
In addition to getting added to the board, Cohen brought along
2 execs who built Chewy with him:
- Alan Attal - the previous COO and CMO of Chewy (2011 - 2018)
- Jim Grube - the previous CFO of Chewy (2015 - 2018)
He’s not fucking around folks. He wants to build another Chewy, and he’s bringing the people who helped him do it the first time to do it again.
As a result of the agreement, he’s limited to buying up to 20% of shares until 2022.
Why not 13%? Simple - Cohen wants the option to buy more. He’s not happy with a single board seat; he’s not going to settle for simply getting added to the board; and
he’s not going to settle for 13% ownership. Also, remember that
Alan and Jim have 💲 to buy in as well. I haven't seen their holdings yet. Their time is worth more than their money and they've already decided to put their time in.
Cohen is not an exec - he’s a founder with an all-in mentality
Go read this
bloomberg Cohen interview to understand his mindset.
- Cohen himself is an all-in person. Key quote:
- “When I find things I have a lot of conviction in, I go all-in*.”*
- Cohen is a founder that has gone through the successful creation of a startup. When you are startup founder, most of your NW is tied to equity in your company. You are trained to have skin in the game. You’re not allowed to think you have a safety net. You give up years of your life and bet everything because you have to believe in what you’re doing. Founders typically have 30-50% ownership of their company.
- “Cohen uses the word “conviction” a lot. He says it’s something he learned from his father, who ran a glassware importing business in Montreal where Cohen grew up. “He taught me how to block the noise from the masses,” says Cohen. “To have a point of view and have conviction and not waver.”
- He only sold Chewy rather taking it to IPO because of his Dad’s health. He cut his entrepreneurial career short and he’s itching to get back in.
- Cohen sold Chewy for $3.35B, with estimates stating he personally walked away with about $600M after taxes.
- Cohen has a lot of capital to buy more. After selling Chewy, he went all-in on Apple & WFC, which as of June was up 40%.
- “ Cohen says his portfolio, when including dividends and a few other stock holdings, has returned more than 40% over the past 3 years, beating the market.”
- Aapl was his largest holding, and is up another 50% since June 5 when the Bloomberg article was published.
- Cohen lives in FL - with no income or capital gains for individuals, unlike other founders who live in CA which taxes all cap gains as ordinary income.
- I’m going to estimate his net worth (minus his GME holdings) is around $800M-$1B.
- Cohen’s 9,001,000 (it’s over 9000! 🐲🏐) shares have thus far been purchased at something like an average of $12/share, for a total investment of around $110M.
So Cohen has put in $110M out of his $1B into GME.
Does that sound like he’s all-in? Absolutely fucking not. Cohen’s
going to buy up to the max he can this year (20%), likely by selling some other holdings prior to
cap gains tax law changes. He can
add more next year after the standstill period is done.
What will lead to Cohen’s next purchase of GME
Thus far, every RC purchase has been
about sending a message.
- Prior to Q3 earnings, his purchases were signaling an intent to the board that he was serious about wanting to get involved. He also rubbed it in their faces that the stock price was largely appreciating because of him. From the activist letter:
- “We recognize that the Board may feel it is insulated from stockholder scrutiny after adding new directors this past spring and seeing a recent stock price uptick (which only came on the heels of RC Ventures filing its 13D)” (what a fucking burn).
- If there was any doubt about RC’s impact on the stock price, it was put to rest after Q3’s earnings, where the current leadership’s hubris and threat of diluting RC led to a drop of almost 30%. RC then bought the dip, shoved it in their faces, and the market GME again rocketing GME to 20 in a massive post-earnings recovery. Message sent again - “The market wants me. Let me the fuck in.”
- Now that Cohen and the Chewy folks are on the board, he’s going to angle for CEO. He’s not looking to advise GME. He wants to go all-in, to run GME. He’s holding the optionality of buying more based on the success of his attempt to take over GME through non-hostile means.
If you see Cohen buy more GME, he’s sending another message. This time it’s because it’s clear to him he’s going to be CEO and wants to max his skin in the game.
If you see Cohen buy, it’s “CEO talks going well” - you fucking buy. GME’s market cap potential
- Cohen sees a $200BN+ total addressable market cap for gaming by 2023. For contrast, Chewy was playing in the pet food/supplies market, which has a total addressable market (TAM) of under $50BN annually. GME’s potential is at base 4x that of Chewy. This does not even account for the pc gaming hardware market, which is another $35BN+.
- Chewy’s market cap is $44BN on $6BN of annual revenue.
- Chewy’s Q3 quarterly income was up 45% YoY. While GME’s quarterly income was down YoY, its e-commerce revenue was up 257% trouncing Chewy’s growth rate.
- GME’s Q4 early sales preview reported 300% E-commerce growth and annual run-rate of $5BN
In other words,
even if you give GME’s physical locations no value, GME’s ecommerce business is
growing 5x faster than Chewy and already has 75% of online revenue.
Summary: Chewy is priced > 7X times its annual
total revenue. GME is priced at .45
its annual ecommerce revenue, despite GME having
5-6 greater TAM and growing its ecommerce business
5X as fast Chewy. What. The. Fuck.
I’ve never seen a stock more mispriced.
People talking about $100 price targets are suffering from a
fucking lack of imagination. Even if you
completely discount
- GME’s physical business
- its rev sharing partnership with MSFT
- its 5x faster growth and 5x TAM
and give GME the same P/S multiple that Chewy has on its ecommerce business,
that puts GME currently at a fair market cap above $35BN. That means GME should be
at least $500/share. In pictures:
Comparing Ecommerce Revenue vs Market cap on Chewy vs GME today
Showing what the fair market value Market Cap of GME would be with Chewy's P/S
Fair Market Value (using comps) of GME is at least $500/share. $35/share is a fucking steal. Who cares about the short-term dips as shorts try to weasel themselves out of their positions. The market will eventually wake up to this sleeping beast. In a year you’re not going to care if you got in at 4, 12, 20, 35, or 50. You’re going to only care if you’re in or not.
Potential Investors
An asset is only worth what someone else is willing to pay for it, right? So are the potential buyers of this growing company?
Here’s a list in decreasing order of likelihood.
- Elon (Least likely, completely improbable, but cataclysmic event). Elon hates shorts. Elon, with TSLA, went through the pain that GME is going through. TSLA almost went bankrupt because shorts were pushing the price down so it was difficult to raise the cash they needed to survive. Sound familiar? Elon’s wealth swings more in a day than GME is worth in entirety. Elon could buy all the fucking float of GME with what he makes in 8 hours. One call from fellow entrepreneur and aspiring twitter-meme-god would absolutely wreck the game.
- If you are short gamestop, you are one meme purchase by the richest man in the world away from a fucking cataclysmic event. "Hey son, I heard you like games. So I bought you gamestop. All of it." 🚀
- Buffett (More likely, still improbable). I’m actually amazed that while Buffett & co were lamenting that there are no interesting stocks to invest in and moving to cash, that they absolutely missed the boat on GME while it was at its lows. It’s a complete value play right up his alley (in a business he can understand). My only hypothesis here is that the market cap is too small and he could not make a meaningful investment. Once GME grows to a more respectable market cap ($10b+) I can see Buffett stepping in and making an investment.
- Cohen’s connections. (Highly likely if Cohen is CEO). This is the big one. And I mean absolutely nail in the coffin re-pricing of GME for the foreseeable future. Go read this Harvard Business Review piece on Cohen specifically on how Cohen puts importance on raising money and the people that backed him.
- Look, I’ve started a startup before in the valley (unsuccessfully unfortunately). However, you don’t start a company without making a shit-ton of venture capitalist & angel investor connections. Cohen has stated that when pitching Chewy he was rejected by over 100 investors. I can absolutely-fucking-guarantee you that every single one of them remembers their mistake and would not miss the opportunity to invest in Cohen again. And don’t forget all of the investors who DID invest with Cohen and reaped the benefits with Chewy. While venture capitalists don’t generally make investments in public equities, this is a truly unique situation. Cohen is treating this like a rebirth, a new venture bootstrapped from GME’s bones. If VCs as a firm will not invest, you can bet your ass that those individuals will throw their personal money at Cohen. However this only happens if he’s CEO. As soon as he’s CEO, a single long weekend trip to the valley might mean 100+ investor meetings with the strategic pitch.
- My biggest fear here is that VCs/PE band to take the company private at some small multiple (2-3x) and then reap the benefits while Cohen turns the company around only to re-list it to us 5 years down the road at 30X the valuation.
- Thus far, it’s been us retail retards vs the wall street shorts. HFs shorting this thing have the advantage in both tactics and capital. However, if Silicon Valley money starts pouring money into this the game is over. You cannot believe the amount of money that gets thrown into startups with 90% of it burning up into thin air. $3B market cap? That’s nothing. Folks with Silicon Valley money & risk tolerance would have no problem betting on a serial entrepreneur making something amazing out of a company that already has a customer base, revenue, distribution - all in the same business (e-commerce) the entrepreneur already proved themselves in.
- You, and every other retard that believes. Look, this was my point at the beginning. You need to think like a VC here. VCs are the ultimate YOLO autists making million dollar bets and not seeing a penny of it for years. They are the ultimate 💎✋🤚. You need to decide if you have conviction for the long term and then buy in. 💎✋🤚 doesn’t mean selling at $100. It doesn’t means selling at $200. It means not selling at all this year no matter the price, and at least until you learn for sure whether Cohen is the new CEO. It means believing so hard that you 20-100X your investment in 2 years when the market wakes up to the ridiculous mispricing.
- Remember that if Cohen is elected CEO he can (and likely will) buy more than a 20% stake in 2022.
- Remember Buffett’s actual quote: "The stock market is a device for transferring money from the impatient to the patient."
I’ve put every dollar I can into shares in IBKR, minus some April calls. I hold no covered calls except for some call spreads I had in RH prior to recent bump. I have April calls because I will put more cash into GME after taxes are done, and I know much cash I have to use. Calls let me cap the price I would have to pay now.
This is personal research.
Do your own DD. A wiser investor than me gave the advice of
“Don’t aim to maximise profit, minimize regret.” If you’re not in GME yet, ask yourself how you would truly feel if what everyone here is saying panned out to be true, and you weren’t participating.
Oh, and of course: 🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀
Update 1: I'm still holding today, but I realized I made a pretty big mistake on the ecommerce revenue analysis. GME's 2019 e-commerce revenue was 1.35B (not 1.35B for the quarter), so divide my price target by 4 - $125/share or $8B market cap.
[ CryptoCurrency ] For the newcomers: the top 50 Cryptocurrencies, each explained with one sentence.
Topic originally posted in CryptoCurrency by Layneeeee [link]
I tried summing up the top 50 altcoins in 1 or 2 sentences. It is not perfect and you obviously shouldn't make any decision based on this list, but hopefully it will help newcomers find some projects they're interested in and understanding a little bit better this technology.
If something is wrong or misleading, feel free to comment and I'll edit the post. Obviously in 2 sentences is hard to describe the whole project idea, but I tried my best.
- Bitcoin (BTC): the original. According to the creator (or creators?) Satoshi Nakamoto, it was created to allow “online payments to be sent directly from one party to another without going through a financial institution.”
- Ethereum (ETH): Ethereum is the wonder child of crypto, acts as an infrastructure for most decentralized applications. Introduces smart contracts, which are like programs with specific procedures that, once deployed, no one can change.
- Tether (USDT): a stablecoin tied to the dollar (so Elon, please don’t try to pump it)
- Polkadot (DOT): open-source protocol aimed at connecting all different blockchains and allowing them to work together, allowing transfers of any data.
- Cardano (ADA): Another blockchain, trying to improve scalability, interoperability and sustainability of cryptocurrencies. Those who hold the cryptocurrency have the right to vote on any proposed changes in the software.
- Ripple (XRP): centralized coin, most people don’t see a future for it after SEC went after it.
- Binance Coin (BNB): coin associated with the Binance exchange, so valuable since it is the most popular centralized exchange.
- Litecoin (LTC): Bitcoin’s cousin, with faster transactions and lower fees.
- Chainlink (LINK): the main idea is to LINK smart contracts with real-world data, verifying that this data is correct.
- Dogecoin (DOGE): Wow, such high ranking! (Okay, now please let’s get Stellar back in the top 10).
- Bitcoin Cash (BCH): fork of Bitcoin (so a copy with some differences), which tries to lower transaction fees and increase scalability but has been surpassed technology-wise by many other coins aiming to do just the same.
- Stellar (XLM): talking about currencies, XLM is one of the coins aiming to do just that, with fast processing times and low fees. It has also already become a stablecoin! (I’m kidding).
- USD Coin (USDC): another actual stablecoin tied to the dollar, like USDT.
- Aave (AAVE): take a bank and make it decentralized, where the liquidity comes from the users and they earn fees from borrows. This is Aave.
- Uniswap (UNI): Another DeFi like Aave, but this time it’s an exchange like Binance, just decentralized.
- Wrapped Bitcoin (WBTC): It’s just bitcoin wrapped in ethereum to be used in DeFi applications.
- Bitcoin SV (BSV): Bitcoin Scam Variant
- EOS (EOS): another blockchain, aimed at being highly scalable for commercial use. It aims to make it as straightforward as possible for programmers to embrace the blockchain technology.
- Elrond (EGLD): Blockchain architecture focused on scalability and high throughput, achieving this by partitioning the chain state and an improved Proof of Stake mechanism
- TRON (TRX): have you seen Silicon Valley, when they try to create a decentralized internet? Yeah, Tron’s founder is Richard Hendricks. It is also one of the most popular blockchain to build decentralized applications on.
- Cosmos (ATOM): several independent blockchains trying to create an “internet of blockchains”.
- NEM (XEM): instead of controlling just money, you can control stock ownership, contracts, medical records, and stuff like that
- Monero (XMR): if you need drugs
- THETA (THETA): decentralized video delivery network (peer-to-peer streaming). The token performs various governance tasks within the network.
- Tezos (XTZ): another blockchain for smart contracts, but more eco-friendly and overall trying to encompass different advancements introduced by different blockchains in a single protocol.
- Terra (LUNA): aiming to support a global payment network, it tries to create a decentralized stablecoin with an elastic money supply, enabled by stable mining incentives. Its related stablecoin is TerraUSD
- Maker (MKR): MakerDAO is the company behind DAI, one of the most famous stablecoins. MKR is a token that allows you to receive dividends and vote in governing the system.
- Synthetix (SNX): protocol on the ethereum blockchain aiming to allow trading of derivatives (shorting or going long on a certain asset).
- Avalanche (AVAX): open-source platform aiming to become a global asset exchange, where anyone can launch any form of asset and control it in a decentralized way with smart contracts. It claims to be lightweight, with high throughput and scalable.
- VeChain (VET): a blockchain focusing on business use-cases more than on technology, bringing this technology to the masses without them even knowing they’re using it.
- Compound (COMP): It’s the Bitcoin of DeFi. It was the first-mover and without him many other projects wouldn’t be around today.
- IOTA (MIOTA): open-source decentralized cryptocurrency engineered for the Internet of Things, with zero transaction fees and high scalability since it uses a blockless blockchain where users and verifiers of transactions are the same (it may sound wrong but it’s actually a genius concept, impossible to sum up in a single sentence).
- Neo (NEO): Blockchain application platform and cryptocurrency for digitized identities and assets, aiming to create a smart economy. It was one of the coins that suffered most after the 2018 bull run.
- Solana (SOL): another blockchain aimed at providing super-high-speed transactions. It claims to be able to process 50k transactions per second and be perfect to deploy scalable crypto applications.
- Dai (DAI): the stablecoin of MakerDAO, tied to the dollar.
- Huobi Token (HT): it’s the official token of Huobi (a centralized exchange), providing advantages similar to BNB (Binance’s), for example fees discounts.
- SushiSwap (SUSHI): a clone of UniSwap (so a decentralized exchange), where there’s a token (SUSHI) given as an additional reward for liquidity providers and farmers.
- Binance USD (BUSD): Stablecoin issued by Binance, tied to USD.
- FTX Token (FTT): It’s a token related to FTX, a platform allowing you to trade leveraged tokens based on the Ethereum blockchain. The token allows for lower fees and socialized gains.
- Crypto.com Coin (CRO): the token of Crypto.com public blockchain, that tries to enable transaction worldwide between people and businesses.
- Filecoin (FIL): a decentralized storage system, trying to decentralize cloud storage services.
- UMA (UMA): it builds open-source infrastructure in order to create synthetic tokens on the Ethereum blockchain
- UNUS SED LEO (LEO): another token, this time related to the iFinex ecosystem which allows you to save money on trading fees in Bitfinex.
- BitTorrent (BTT): BitTorrent is a famous peer-to-peer file sharing platform. It is trying to get more decentralized by introducing its token, which grants you some benefits such as increased download speeds.
- Celsius (CEL): Celsius is one of the first banking platforms for cryptocurrency users, where you can earn interest, borrow cash and make payments/transfers. The CEL token grants you some benefits such as increased payouts.
- Algorand (ALGO): Algorand is a blockchain network aiming to improve scalability and security. ALGO is the native cryptocurrency of the network, used for a borderless economy and to secure stability in the blockchain.
- Dash (DASH): It is a fork of Litecoin launched in 2014, focused on improving the transaction times of the blockchain and become a cheap, decentralized payments network.
- Decred (DCR): it is a blockchain-based cryptocurrency aimed at facilitating open governance and community interaction. It achieves this by avoiding monopoly over voting status in the project itself, giving to all DCR holders the same amount of decision-making power.
- The Graph (GRT): Trying to become the decentralized Google, it is an indexing protocol for querying networks like Ethereum. It allows everyone to publish open APIs that applications can query to retrieve blockchain data.
- yearn.finance (YFI): part of the DeFi ecosystem, it is an aggregator that tries to simplify the DeFi space for investors, automatic the process of maximizing the profits from yield farming.
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