Apeshit: Why Wall Street is sweating bullets over GameStop – and why it’s far from over

Here’s the here’s the mainstream media’s GameStop narrative:

A bunch of unruly ‘retail investors’ (the slop of the investing world) banned together and ‘manipulated the market.’ Some people lost some money, but the market is moving on.

But that, like most of what the media says, it straight up horse shit. Not only is the media, notably CNBC, not fact checking their information and likely willfully spreading misinformation, they are neglecting to even address critical pieces of the GameStop story that bring the narrative they are pushing into question.

It’s important to calibrate your expectations here: This whole is complicated by design. The financial industry has created a byzantine, money making machine, creating foxholes in complexity which they hide in when someone catches them with their pants down. That way, they can get away with mass fraud because the way it was committed was too complicated for people to understand.

So bear with me.

GameStop story in a nutshell

The long and short of it was this: Wall Street hedge funds were profiting off the death of a struggling American business. In Wall Street’s eyes, it was as good as deadand it was worth more dead than alive.

But things went haywire when an “unsophisticated” investor came along. Keith Gill, (AKA Roaring Kitty + u/DeepFuckingValue) had done extensive research on GameStop and believed the stock – then only $5 – was undervalued. He bought a stake and began writing about the business’s prospect on Wall Street Bets.

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Fast forward a bit: GameStop had a few promising catalysts.  Other Redditor’s grew interested. They bought some shares which made the price of thee stock go up. But, as you may remember, Wall Street wanted this business dead. Not only was a turnaround not going to bring them maximum profits, but its survival might draw attention to the illegal tactics they were using to profit off of Main St’s failure.

So they used every trick in the book to manipulate the market to force the business into bankruptcy, which of course, how they would make the most money.

Here’s what really happened – and why it’s only getting started.

CBNC and the so-called ‘financial media’

It’s important to understand that GameStop the retail game store is really only part of the picture. The “professionals” (the ones who know supposedly much more than the ‘unsophisticated’ investors) point to fundamentals, but they don’t give a rat’s ass about fundamentals 99% of the time.

If there’s anything this GameStop saga has made abundantly clear, it’s that Wall Street has the mainstream media in their back pockets. The worst of these offenders is CNBC.

It’s hard to understand how Jim Cramer sleeps at night. He gets up every morning, looks into the camera, lies to the American people about the market. The goal is to persuade them to put their savings up, knowing damn well that his buddies on Wall Street (he used to be a hedge fund manager, which will come into play later) are betting against them.

If there’s any doubt as to Jim Cramer’s credibility in giving good investment advice on TV, consider this: On March 11, 2008, Jim Cramer told investors on his show Mad Money to hold their Bear Sterns stock. He wanted to give his buddies on Wall Street time to bail on their investments and leave the American people (and their pensions and 401ks) holding the proverbial bag.

It worked.

Less than one week later, the stock plummeted more than 98%.

Trillions of dollars evaporated out of the 401ks and pension funds of every day Americans.

u/DeepFuckingValue makes his move

Back to GameStop.

The sanguination of GameStop was going according to plan for the better part of three years. GameStop continued to decline, and Wall Street continued to profit off its misfortunes.

That was until a Redditor known as u/DeepFuckingValue began analyzing the business and its potential long term prospects.

After deep and extensive research and analysis, he determined that the stock, which was only trading  at around $4 at the time, was worth more – at least $8/share. When DFV made his investment, it was on the belief that it was genuinely undervalued.

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Sure, the retailer had been struggling. Its fate was up in the air. It lacked solid leadership and direction.

But it wasn’t dead.

u/DeepFuckingValue could have been wrong. In fact, when he first made the investment into GameStop, other Redditors ridiculed him.

When questioned, u/DeepFuckingValue would point out the company had considerable free cash flow and upcoming catalysts.

For months, he diligently updated on this investment and stuck to his guns.

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GameStop was struggling, but it wasn’t dead

The second half of 2020

For one, Ryan Cohen, founder of pet ecommerce company Chewy.com, bought a stake in GameStop.

In a September 2020 filing, it was revealed that Cohen wanted to become more involved in GameStop’s operation.

It was big news. A successful pivot to ecommerce could change the direction of the struggling company, and Ryan is just the man for the job. After all, he had grown Chewy.com to a multi-billion dollar ecommerce company in less than 4 years.

September 2020 brought more good news for investors: E-commerce sales were up a whooping 800%.

The stock popped 23%.

Melvin and their group of thugs naked short

But not everyone was celebrating. As there usually is, someone lurked in the woodwork.

Despite doing nothing for the business and making millions on GameStop’s demise, Melvin was banking on GME’s bankruptcy.

The stocks breakout move didn’t just reflect hope for GameStop’s turnaround, it cost Melvin millions on their short positions.

If GameStop wasn’t going to go bankrupt on its own, they would have to snuff it out themselves.

How would they do this, given the good news about Ryan Cohen and the promising e-commerce sales? Through an illegal and extremely risky practice called naked shorting.

Long story short, they created shares ‘on the books’ that were never actually issued by GameStop.

Naked Shorting 101

Let’s say you have a company. You, as the owner, issue $100 shares at $100 each. The overall value of your company is $10,000 ($100 x 100 shares).

But Wall Street wants you to fail. Every dollar the stock falls, falls right into their pockets.

So through a series of financial gymnastics, they create 50 ‘phantom’ shares behind your back by cooking the books. Now, in effect, there are 150 shares ‘on the books’ – an increase in supply.

Now, that $10,000 company valuation is divided across 150 shares. That bring the share value down from $100/share to $66/share ($10,000/150 shares).

Investors that bought the shares at $100 won’t be happy. They might just sell out of their positions, reducing demand.

But how do they get these phantom shares on the books? Through put options and shorting.

Shorting adds a layer of complexity, because it’s a trade based on a borrowed share.

The shorter isn’t buying the stock – they borrow them and put an I.O.U. on the books.

A shorter sells the borrowed stock and hopes it will go down. If it does, they can buy the share back, return the share to the lender, and pocket the difference.

When a stock is highly shorted, it can be vulnerable to a squeeze if the stock goes up. If there are a lot of shorter seeing the those I.O.U.s getting more and more expensive, they will want to end the trade, clear the I.O.U., and be done with it.

If a lot of shorter come to this realization, they may all try to ditch the trade at once. Now, all the shorter are buying the stock – creating demand. The more shorter there are, the greater that demand will be.

A naked short is an I.O.U. that has been put on the books without ensuring a corresponding borrowed stock.

Done enough times, the amount of shorted shares can exceed the amount of shares that exist.

Going into 2020, every share of GameStop available in the market had an I.O.U. on it. Forty percent of the total available shares had two I.O.U.s.

If the stock continues to go down, the more shorts, naked or not, the more money for the shorter. If the company goes bankrupt, the naked shorts get swept under the rug.

But if the price goes up due to increased demand, things can go sour – and fast.

Failure to Deliver Data

As you may remember from kindergarten, when you borrow something, you have to give it back.

But if the stock is rising, there is already existing demand. Now, shorter may want to cut their losses and get out of the trade, dumping kerosene on the demand side of the equation.

But in GameStop’s case, there are more I.O.U.s available shares – yikes.

With so much demand and so limited supply, shorter begin to default on their I.O.U.s.

The default is known as a failure to deliver, or FTD.

While a nominal failure to deliver rate can be explained by intricacies of the financial industry’s machine, high FTD rates signal naked shorts and/or phantom shares. (Makes sense – hard to return something that never existed.)

According to the FTD report released semi-monthly by the SEC, GameStop shorters failed to deliver almost 16 million shares by the settlement dates in the month of January alone. That’s pretty considerable – over 30% of the total GME shares in the market.

The SEC

And once again, the complexity big Wall Street players have built into the system. It’s hard to tell exactly who created all the naked shorts.

SEC turns a blind eye

Naked shorting is illegal.

The SEC knows about this illegal practice. They wrote a report about it in 2013.

They question is if they care, or if they’re in the pocket of Wall Street and will cover for them.

Despite the exceptionally high FTD rates, the SEC didn’t intervene earlier. In December, there were just as many FTDs that should have been flagged.

It’s important to know that these financial gymnastics are by design. By making things complicated, financial institutions create foxholes for them to hide in when their bloodsucking activity becomes apparent to the few who make it far enough down the rabbit hole to see it.

Even when they do see and understand it, it’s so intentionally complicated that it’s difficult to rely to other people. This is to the financial institutions advantage.

It’s also how these “sophisticated” “professional” investors earn trust they don’t deserve.

But if the 2008 Financial Crisis taught us anything, it’s that they may understand their increasingly byzantine world better than most folks, it’s so that they can screw them over.

“Financial media” willing accomplices

Meanwhile, back on the Death Star, Melvin called called in members of the Suicide Squad in for back up.

They needed to control the narrative.

First on speed dial was Jim Cramer.

“Hey, Jimmy, how’re you?”

“Great, thanks for asking. That you for the Fabergé egg! It’s the forth biggest in my collection!”

“Sure thing Jimmy. Hey uhh…listen, I’m in a bit of a pickle. I am in a short position that I need to get out of. The proletariats have been cornering me in and making is extremely expensive to get out. Run a smear campaign on them. Make it sound like they’re a bunch of morons that have no idea wtf they’re doing. Suggest its an act of foreign interference. Make sure it seems like it was them who caused all this even though we were there first, you know what I mean?”

“Of course I do! I am your ass puppet. Foreign interference, rowdy simpletons….should I layer in Communist? Blame the technology?”

“Yeah, yeah, run the whole gambit.”

“You got it boss! I’ll call up my friends at The Wall Street Journal, MarketWatch, and the New York Times.”

“Thanks, Jim! Oh, and Kevin Griffin and I are about to sell a bunch of Tesla. Tell your viewers it’s a buy right now.”

“Absofuckinglutely Gabe, anything for you.”

“Thanks Jimmy.”

The financial media went on a tirade denouncing Reddit investors who had simply bought a stock. They blamed the tech, foreign interference, called for regulation (of the retail investors, not themselves – after all, they were balls deep in fraud).

But perhaps worst of all was the deplorable “We’re protecting the little guy from himself” narrative.

Soon, every major ‘financial media’ outlet was referring to Wall Street as the “sophisticated, professional” investors, who intervened to help the “unsophisticated, amateur investors.”

Just how professional and sophisticated are they?

Let’s take a look.

We must attack the mothership: r/WallStreetBets

Despite Jimmy and friends putting in their best effort to villify Redditors and make them feel like they missed the boat, they weren’t selling the shares that Wall Street needed to cover their risky short positions.

If they started buying them to cover the loaned out shares, they would in effect be creating the buying pressure that would drive the stock up.

They needed Redditors to sell, and sell low.

For week, they artificially tanked the price of GameStop’s stock, selling a couple thousand shares back and forth at progressively lower and lower prices. This is illegal practice #2 known as ‘short laddering.’

Through this method, they steadily chipped GameStop stock down from it’s $300+ price point, little by little. The goal was to shake out the paper hands, so they could buy their shares and cover their shorts.

GME and AMC are following the same pattern multiple days in a row. There really are short ladder attacks happening. from r/wallstreetbets

The “sophisticated investors” had a lot of shares to cover. And because of all the fraudulent shares they had shorted, they would have to buy back more shares than actually existed.

Financial media tried to play it off like Redditors were conspiracy theorists. One writer from the Institutional Investor claimed it was a made-up tactic that no one had ever heard of before.

That’s strange, given it is specifically outlined in an SEC presentation about market manipulation tactics.

Market manipulations typically involve thinly traded shares of little known or start up companies. With small volume of trading, it is easier to effect the price of the stock – SEC presentation outlining market manipulation tactics.

But in case the SEC’s outline of this methodology isn’t clear, here is Wall Street’s mouth piece Jim Cramer explaining how they would run this exact technique from his days as a hedge fund manager:

<blockquote class=”reddit-card” data-card-created=”1613526085″><a href=”https://www.reddit.com/r/videos/comments/lg0ial/jim_cramer_explains_how_he_manipulated_the_market/”>Jim Cramer explains how he manipulated the market as a hedge fund – ” I would never say this on TV”… Well, you just did</a> from <a href=”http://www.reddit.com/r/videos”>r/videos</a></blockquote&gt;
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Note: Atfter this footage, which has been online for years, began generating attention on Reddit, many websites were forced to remove this video.

The same writer has an article called “The Triumph of Dumb Money.” Ironically, the article outlines that Reddit investors, presumably the “Dumb Money” outperformed institutions as percent returns. She must have not realized that Smart Money and Dumb Money aren’t a matter of opinion, they are determined by the numbers.

To the shorter dismay, the ‘unsophisticated, amateur’ investors saw right through it. Wall Street Bets lit up with posts about the low the volume was. The price was being artificially depressed – diamond hands.

That was a problem. It wasn’t going to work on its own.

Look over there

Wall Street’s next move was pretty smart.

They needed to distract and confuse.

Next thing you know, r/wallstreetbets experiences a tidal wave of posts and new users promoting highly shorted stocks. All of a sudden, everyone was talking about AMC, NOK, BBY, and others.

The idea was to dilute the attention – and investment – from the real problem Wall Street had: Backed into a corner in their greedy short positions.

The thread was somewhat chaotic in those weeks. But Redditors noticed that many of the accounts promoting these other stocks were new and seemed to only become active to promote that stock at that moment in time.

Despite the media’s condescending depiction of Redditors as “unsophisticated, amateur investors” quality analysis was upvoted and got the reach it needed. Apes held their shares.

Somewhere in their luxurious lairs, a hedge fund manager chucks a bottle at the wall that explodes with a loud crash.

The siege of r/wallstreetbets

The hedgies were probably pretty surprised that the “amateur, average dumbfuck” investors were able to see through the short laddering that the good folks at Institutional Investor claim they’ve never heard of.

The truth is, it probably would have worked were it not for the super quality analysis being posted by Redditors pointing out that the volume wasn’t nearly high enough for them to have covered their exposed asses.

The hedge funds fumed in their lairs. These dumb money, average joe investors are actually pretty fucking smart! They’re blowing right through our usual bag of tricks! That damn Reddit forum!

That’s when the hedgies realized – r/wallstreetbets must be destroyed.

They finally caught a lucky break other than being born into lifelong wealth and privilege: The founder of the Reddit thread had actually been run out of the community several years back. The thread had been run by other, beloved moderators after his departure. One in particular was u/zjz, who had put the work in to build r/wallstreetbets. His banishment was shocking to everyone who had followed r/wallstreetbets for six months or more.

u/jzj was the lifeblood of r/wallstreetbets. His departure marked the beginning of the end of r/wallstreetbets.

Meanwhile, someone found the original founder. They needed him to take back control of the thread – and fast.

Lucky for them, the founder of the thread was as greedy and parasitic as they were.

He signed a movie deal, a move that puzzled everyone, because literally no one cares about his life story. Every time the Wall Street Journal promotes a story they have about him, they lose credibility in Redditor’s eyes.

All the pillars of r/wallstreetbets were exiled, and a flurry of new mods were added.

A slew of new mods added on 2/5/21

From then on, GME investors were ridiculed, downvoted, ‘comforted’ for their losses, and silenced.

Users noted that Redditors who expressed a little too much interest in them selling their GME shares were often brand new accounts or “zombie” accounts that had remained dormat for years before popping back to life solely for the purpose of persuading GME holders to sell their shares.

Pro GME posts as well as all the due diligence analysis on GME (the exact piece of the puzzle the media routinely said Redditor’s did none of and were only making YOLO moves) are routinely removed and remain so to this day.

To make matters worse, any GME Reddit posts became spammed with trolls.

Many Reddit users were privately messaged with an offer: They would be paid for every anti-GME comment they made. The more engagement the negative GME posts/comments got, the more they would be paid.

Around this time, the financial media was proclaiming that the squeeze was squoze and it was all over.

IT was a low point. GME fans had to disperse – WSB wasn’t safe anymore. They had to decentralize to various smaller threads. In time, the paid misinformation campaign would find these threads and pollute them too.

But Redditors had one pressing question: If it was all over, why all the (paid) effort to turn the sentiment toward GME?

The Cannapump-n-dump

Now if you’ll turn to slide 9 of the SEC’s presentation on market manipulation techniques, you’ll get an outline of the hedge funds’ next move.

Weed stocks are among the most popular stocks held by Robinhooders. Hedgies thought that if they ran up the prices of cannabis stocks, Redditors would feel the FOMO, sell out of their GME positions, and chase the run up.

To sweeten the squeeze-hungry Redditor deal, Wall Street’s mouthpiece CNBC even ran a segment called “Analyst on which cannabis stock are most vulnerable to a short squeeze.” This was a perfect case study to demonstrate a real-life example of “The Pump” as defined on slide 16 on the SEC’s presentation on market manipulation techniques.

Redditors saw their cannabis investments swell. But it must have not illicted the response the hedge funds were looking for. GME investors weren’t selling their shares.

So they dumped the cannabis stocks.

 

 

 

 

 

 

 

 

From then on, the so-called “financial media” lobbied behind Wall Street every step of the way.

The bald misinformation campaign will long be remembered by the up-and-coming generation of investors. CNBC, Wall Street Journal, New York Times, MarketWatch, Motely Fool, Bloomberg – your clock is in countdown mode.

 

 

 

 

 

 

 

In the feisty r/wallstreetbets culture, the culture, though mostly rooted in boisterous mockery, often predicates insightful analysis.

But u/DeepFuckingValue stood behind his $53,000 investment, which he made in April 2019 – a full 18 months before the January price spike.

He regularly posted updates on his investment, and OGs from Wall Street Bets followed along with his updates.

It came to the attention to the group that the short interest on the stock was exceptionally high.

Shorting is an exceptionally risky practice. Let’s say you buy a stock in a company at $50/share. The company goes bankrupt. You lose your entire investment.

That would suck, but at the very least, your loses are capped at your investment.

With shorts, the risk profile is different. In shorts, the absolutely most you can make is the value of the stock at the time you shorted it. Your loss potential, however, is much higher. Because there is not cap to how high stocks can go. When betting against the stock, if the price skyrockets, losses can be potentially infinite.

The short interest on the stock (publicly available information) was so high, mathematically, a good portion of the shares would have to be borrowed. That means that when the time came that the shorts had to return borrowed stock, they would be forced to buy it back at higher prices. The hsorts themsevles would create the buying pressure that would send prices soaring.

That got other Reddit users interested. The more they bought, the more pressure that would put on the shorter to buy their way out of their positions.

We saw this starting to happen on January 28th, when the stock climbed to $483 in a matter of an hour before Robinhood intervened.

CBNC anchors, running around like chickens with their head cut off, jumped into action to vilify the retail investor. They called them unsophisticated, amateur, “average Joe” investors even though they are cornered in a trade with, theoretically, infinite losses.

They called for regulation. They cried market manipulation. They called GameStop a Ponzi scheme. They acted like the reeson they intervened was because they were concerned for retail investors. A concern that had only manifested when retail investors began making real gains.

But beads of sweat formed on their brow. They know they are in deep shit.

GameStop

Retail investors jumped in.

Robinhood pulled the plug.

Users were furious.

On Reddit, r/wallstreetbets was absorbing millions of users a day. People all across the world bought GameStop after they too were able to see that the market dynamics cornered the hedge funds into potentially infinite losses.

MarketWatch, Wall Street’s second-favorite buttplug, told investors “Don’t be a pig,” as though the retail investor had created these market dynamics.  To them, a gentle reminder: It was the hedge funds eating on GameStop alive.

Despite a change in direction and growth in it’s ecommerce segment, hedge funds shorting GameStop were  trying to snuff the life out. of this struggling American business. If there’s any question as to why there’s “such a disconnect between Wall St. and Main St.,” here you go. Wall St is profiting off the death of Main Street, and use a handful of stocks as distractions.

As hedge funds realized they were staring down the barrel of imminent bankruptcy, they mobilized their cuckolds in thee mainstream media to do damage control and above all, buy time.

CBNC took the Lead with the Wall Street Journal, Market Watch, the Motley Fool, and the New York Times, in tow. Never has the relationship between Wall Street firms and mainstream media been so bald.

They colluded together to come up with a plan.

First,t hey sought to distract and dilute retail investments. They threw out AMC, NOK, and BBY as stocks with high short squeezes, hoping to divert Reddit’s attention away from GME and into other investments so they would sell their shares cheaply and the shorts could get out of their positions.

It worked – for a while.

But they blew it.

One day out of nowhere, mass media began claiming that Reddit was fueling a rally in silver. This was simply not true. Bewildered by the reporting, Reddit users ran scans and found that no one had mentioned silver in r/wallstreetbets in the weeks leading up to the media’s claim they were behind the price rise.

Redditors saw right through this. Many had been glued to the site in the days following the stock’s meteoric rise, so they knew first-hand there was no hype around silver.

Next they tried weed stocks. By pumping the prices of cannabis stocks, the Wall Street institutions hoped to attract retail investors our of their GME positions and into weed stocks. When they saw it wasn’t working, they abandoned ship.

Redditors had already seen  the media’s distraction tactics, so most were able to see through the tactic and held their positions.

Meanwhile, the shorters used an illegal tactic to drive down the price of the stock, using the runway Robinhood had provided eliminating the “demand” side of the fundamental “supply-demand” dynamics of the market. Slowly, GME holders watched thee price fall.

But Redditors know their shit, as much as the media denies it. They didn’t sell.

Around this time, the Wall Streer hedge funds realized that in order to get people to sell the shares they desperately needed to cover their dangerous shorts, they had to crush morale. Theey would have to go to the MotherShip: Wall Street Bets itself.

Wall Street Bets infiltration

The hedgies caught a break.

They staged a coup.

Hedgies found that the original creator of Wall Street Bets, who had long abandoned the thread, smelled opportunity.

He swooped back in, banning all the community moderator’s who had made the community what it was prior to the GameStop saga.

Screenshots of the moderator dashboard showed that beloved moderators had been banned and many new users had been added as moderators.

Then, an avalanche of negative sentiment.

Suddenly the thread that had generated all the momentum around GME had a drastic and sharp turn against the stock.

Those posting pro-GME comments were ridiculed and downvoted. Many users expressed “concern” for GME investor losses – counter to the WSB culture.

New stocks were pushed to create confusion. Mainstream media backed up the new stocks.

But Redditors were able to see through the smoke and mirrors. New subreddits were formed that gained thousands of users overnight.

Every day, new users joined, noting how they had been downvoted, accosted, and many times, outright banned from WSB for posting positive GME sentiment.

 

Solid GME analysis

As the stock’s share price plummeted thanks to demand suppressions and short laddering, Reddit users, now dispersed in smaller subreddits outside of WSB. Short laddering is. a price manipulation technique that’s fairly complicated, but CNBC explained it in an interview here

The video began circulating on Reddit as a demonstration of the blatant hypocrisy of Cramer who was spouting off that it was the Redditors that were manipulating markets. It’s worth noting that as that video gained popularity on Reddit, CNBC had it removed pretty much everywhere citing copyright claims.

Despite GME’s plummeting price, Redditors weren’t deterred. for one, they truly liked the stock. After all, GameStop brings up the nostalgia of very formative times in their lived.

But secondly, they closely monitored volume and saw that in the days the price plummeted after the $483 peak, the volume was minimal. They held their ground as their portfolios bled.  The volume, as it turned out, would come into play in a major way.

Meanwhile, Wall Street hedgers worked to crush sentiment around GME on Reddit. Many users posted private messages they received offering payment in exchange for comments and posts with poor sentiment toward GME. Users could earn up to $650/day writing bearish comments and analysis on GME to sour the sentiment.

Currently, pro-GME posts are removed from Wall Street Bets, and the moderators that made the community what it is were removed. They went on a campaign to inform people of the hostile takeover.

While it might have decentralized the conversation a bit, it did not crush it. While the community was growing by millions of users a day after the $483 peak, growth has slowed substantially since the takeover.

Reddit users, though disheartened asked themselves the critical question: If the squeeze was already squoze, why the effort to crush GME sentiment? Why the vilification of the little guys in the media when it was the hedge funds that put themselves in this position, trying to bankrupt a struggling business? Why was Robinhood doing middle of the night fundraising calls? Why was buying of GME halted, but not selling, across multiple platforms?

Why so much….effort? Answer: The squeeze was not squoze.

It was only beginning when Robinhood took the bullet for its hedge fund partners when it shut off trading, and they knew it.

Now that people knew they were cornered, it was going to be a slow and tricky maneuver to back out of their exceptionally greedy position.

An exceptionally greedy position

Wall Street likes to point the fingers at Reddit investors for this. They have even gone so far as to suggest “foreign influence.”

No foreign influence. Just everyday Americans participating in the market and winning, which they don’t like. It’s supposed to be a one-way money street. Money flows into Wall Street from <ain Street, not the other way around.

Wall Street had aggressively been shorting GameStop for over a year. They were actually unsatisfied with how long GameStop’s death was taking, so to speed things up, they decided to commit mass fraud.

Its quite complicated how they do it (they make everything complicated by design so that they can get away with this shit) but the jist of it is: They created fake shares that the company had never issued to further dilute the share price and help them drag it down to zero faster.

Had they succeeded in bankrupting the company through these fraudulent practices known as naked shorting, they would get away scott free. No one would know they committed fraud, they’d take the profits and move onto the next wounded American business to siphon the life out of.

There was a problem though: GameStop kept showing meager, but viable signs of life.

The addition of Ryan Cohen, founder of Chewy.com joined the board. Cohen’s incredible success in ecommerce made GME investors hopeful for a turnaround.

Last quarter, GsmeStop ecommerce sales were better than expected. In September of 2020, the company reported an 800% increase in their online sales.

Of course, the mainstream media never mention these early signs of a turnaround in GameStop, because it goes against the narrative that GameStop was as good as dead. They needed to back the narrative that the “sophisticated” investors of Wall Street did what was only practical.

This was problematic for Wall Street hedges who would make more money if the company was bankrupt. It would also mean their fraud would evaporate into this air, and non one would be none the wiser.

After that news, GameStop’s stock rose to about $7. Shorter could have taken a sustainable loss and moved on.

But they didn’t.

There were still some dollars to siphon out of the dying retailer. It was worth more to them dead than alive.

Instead, the shorters doubled down – a fateful mistake.

While the mainstream media points at the Reddit investors as the wreck-less ones, consider this: The so-caled “professional”investors were so greedy and so full of hubris, they double down on their bet that they could snuff out this struggling American business despite it showing faint signs of life.

It is actually the hedge funds that are in a dangerous and precarious position. While retail investors who bought GameStop shares may lose their entire investment, the depth of their losses ends there.

The hedge fund on the other hand took a highly risky position – on that could theoretically have infinite losses (hardly ‘sophisticated’ investing strategy in my book) in order to squeeze out the last few dollars they could from bankrupting their business.

As Reddit users began piling in and buying GameStop – they’re right as participates in the global economy and their risk to take, the stock prize rose. With every dollar of rise, the shorters were losing millions.

They tattle told on the Redditors: “THEY aren’t playing FAIR!” they cried like a bunch of tempestuous toddlers. Now that their greedy, risky posiotion had backfired, they called for regulation on the bully Redditors.

 

 

 

Jack Tazman is a Baltimore, Maryland native. He attended Washington University where he studied political science.

Since then, he worked as a writer for various national news organizations specializing in politics and policy.

He now resides in New York City as a freelance writer and political consultant.

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