They didn't purchase any stock. What happened was, they borrowed stock and then sold it. Then the funds they sold those shares to in turn loaned that stock out. So shares were getting loaned out and shorted multiple times. There also may have been (this is still just alleged AFAIK) naked shorting, which is basically taking money for shares without even borrowing them, then buying and delivering the shares later, hopefully at a lower price.
They didn't, they issued contracts to sell stock today at a lower price than the market price on day of issue.
Something interesting I saw. Tl;dr according to this, Melvin Capital's liabilities are guaranteed by multiple investment banks _and_ there are a bunch of other hedge funds that do nothing but copy what Melvin does, and those funds are also guaranteed by multiple investment banks. If the funds go under, the banks are left holding the bag. The losses from a short squeeze are potentially unlimited so this could end up taking down multiple investment banks, perhaps most of the i-bank industry.
That's like a tenant selling their individual apartment. It's not theirs to sell. And yet, somehow Wall Street can do this and not get put in shackles or guillotines.
While your boner is confused my boner is being hacked off with a broken windshield wiper and it feels so fine!!
what's great is so many people are buying a small amount with the intent to never sell. they don't care if they lose a small amount to be a part of this once in a lifetime event
So Jewish people ARE Wall Street? That's what I'm getting at from this headline. Racist.
Literally half the airline pilots licensed are active right now, and the pilot's union is calling for federal funds. There's a damn good reason why the hedges are shorting all airlines, but it looks like the squeeze is already on.
The "progressive" has the worst take, in further news, water is wet.
I was late but im itching to buy 1 GME just to be part of it
Well yeah, they never learned to stop making insane bets on the stock market just because they are hedge funds and eventually such bets put the entire market at risk. It's like using the economy to do thick lines of coke--every single time you're one SNIFF away from a brain hemorrhage.
Oh no, won't someone think of the poor bankers?
From what I've read, being no expert, they can still hold it down throughout the rest of today if they have the means and help to do so, which would push it further into the future hoping that people are uninformed and sell today. Like I said, no expert, but that does seem to be the case so far this morning.
It isn't that much stranger than financial multipliers in general. Use assets as security for an investment, expect returns, use that as a security, etc. Same as fractional reserve banking. As long as it's all covered and the books are balanced there's nothing wrong with this in theory, but depending on the risk (which is very high in this case) that the investment carries, there are regulations in a lot of cases specifying what fraction of securities must be solid assets. This could be considered what's messed up in this case, that there's isn't enough of an incentive to cover your ass in case it goes belly up, and maybe it won't be legal to short stocks beyond a certain percentage in the future.
