Episode 11 - Can't Stop, Won't Stop, Game Stop

Greg and Anto bring in their pal Terry, a seasoned retail investor, to talk about what the heck is happening with GME Gamestop in the stock market right now. He brings us up to speed with the history of Gamestop, what happened with the hedge fund Melvin Capital, and how certain Redditors played a part in this all to form a global movement that puts the stock market on its heels.

Brief description of what's happened so far as of Jan 31, 2021:

  • Summer 2019 u/DeepFuckingValue (DFV) posts on r/WallStreetBets some due diligence around investing in GameStop ($GME) he invests ~$50k split between stock and long dated call options
  • Summer 2019 Michael Burry discloses he has a 3% position in $GME
  • From Summer 2019 to August 2020 DFV posts monthly 'YOLO' updates of his gains/losses in this bet
  • August 2020 Ryan Cohen, founder of Chewy.com discloses he has bought a 9.9% stake in $GME
  • Fall 2020 u/jeffamazon posts more due dilligence around $GME noticing the 120% short interest
  • November 2020 Ryan Cohen urges the board of $GME to focus more on e-commerce and provide a sound plan going forward.
  • Dec 2020 $GME is placed on the SEC Threshhold Securities Lists for Failures to Deliver

  • January 2021 Ryan Cohen files with with SEC he now has a 12.9% stake in $GME.

    • Later in January he also works out an agreement with the board securing a board seat for himself, as well as his former CFO and COO for a total of 3 board seats
  • Stock price jumps in response
  • Jan 22, the gamma squeeze starts to happen, the stock closes at $65
  • Gamma squeeze continues into Jan 27, stock closing at $347
  • Melvin Capital (Hedgefund) gets bailed out by Citadel and Point72 to the tune of $2.8 Billion

  • Jan 28 stock opens at $265

    • Stock reaches a high of $485
    • Robinhood restricts buying of shares 5, then to 2, then to 1.
    • Some reports of Robinhood selling shares without user auth (unconfirmed)
    • Stock price tumbles due to lack of buying pressure due to restrictions in place by Robinhood and other trading platforms (Interactive Brokers, FreeTrade, et al)
  • Jan 29 stock closes at $325

Some further reading:

u/deepfuckingvalue youtube analysis

u/jeffamazon DD

Letter from Ryan Cohen to GME Board