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Hmmm. I question the notion that what has happened here is that the masses made real money while sticking it to the hedge funds. Gamestop has negative earnings and is trading at 5x revenues and 97x EBITDA. I worry about the people who are buying equity now thinking that they are going to make real money. Will the rug can get pulled out f…
Hmmm. I question the notion that what has happened here is that the masses made real money while sticking it to the hedge funds. Gamestop has negative earnings and is trading at 5x revenues and 97x EBITDA. I worry about the people who are buying equity now thinking that they are going to make real money. Will the rug can get pulled out from under them when fundamental value comes back to hit everyone on the head? Momentum traders have made money on the way up but it remains to be seen how deep the bid for stock will remain to allow people to continue making profits at a level that doesn’t appear warranted by fundamental value.
yes but it is nice to see the HFs suffer humiliation once in a while even if it is only in the short term. Such "highlighting" attracts political attention and will double calls for a very close regulatory look at their industry. and that's a good thing.
I don't know much about the hedge funds involved in shorting Gamestop. As in any industry there are some top professionals and some bad apples in the Hedge Fund community. Hedge funds are still subject to laws on market manipulation. They have also been the focus of regulatory action and scrutiny on how they obtain information on investment opportunities which has led to strict oversight of expert networks etc. I think there is a real potential debate around the question of market manipulation where a well know short seller takes a position in a security and publishes the fact or publishes research to that effect. I have always found Muddy Waters a curious animal for example. They publish research on overpriced companies and take positions in those names.
Much prefer the musician
Absolutely on the same page with you!!!!!!!!!!!!
I absolutely agree with you, Eric. Fundamental stock valuations have no effect during a short squeeze, so they become insane. GameStop lost like 400 million dollars last year so there is no positive P/E ratio. When it gets down to it, a short squeeze is legalized stock manipulation. The trading of the stock is now a game of hot potato. At some points the longs will be tumbling over one another for the exits and just as buyers made a lot of money on the way up, some people will lose everything on the way down. The only solution is to restrict shorting the stock to a much lower percentage of the float.