GameStop lays off 120 corporate staffers as stock continues to tumble

And is HTF fair? I doubt it...

https://en.wikipedia.org/wiki/High-frequency_trading

 

I haven't got enough knowledge about this but probably not really. But I believe what's going on is bad for the credibility of stock markets. For example, Facebook and Apple had a very good 4th quarter in 2020, but they don't get rewarded instead all money goes to freaking GameStop, a company with a not so great future. And BTW, the rise of Tesla's stock was also ridiculous, it made Elon Musk the richest man on the planet, this madness needs to stop.

 

@Rasheed187

Mr Market is always right.

https://www.investopedia.com/terms/m/mr-market.asp

 

What? No. As Benjamin Graham and your Investopedia article point out, the Mr Market construct was to highlight the exact opposite conclusion... that markets and the collective action of emotional Mr Market type buyers can very much be wrong. "Since Mr. Market is so emotional, it will offer up opportunities for diligent investors to enter and exit at favorable times." The problem is, as supposedly pointed out by economist John Maynard Keynes, "The market can remain irrational longer than you can remain solvent."

The issue with the recent GameStonk trading is that it is taking advantage of market mechanisms (i.e., short squeeze, gamma squeeze) that are forms of instability leading to market pricing that increasingly diverges from a "rational" market price. It's not self-stabilizing towards a consensus price. It's just a modern-day form of pump-and-dump via social media. There are no systemic redeeming qualities for the equity markets as a process. No one really believes that Gamestop is a stock worthy of a ~ $23B market cap. Whoever bought in at the tail-end of this thing is going to eventually take a bath... no matter how much they remain committed to "hodl'ing."

High-frequency trading (HFT) can lead to some instabilities too and is often deemed unfair because only those companies with access to the instantaneous pricing and the funds to build the computing infrastructure necessary to play that game can do so. While it can cause markets to crash at an accelerated rate in certain circumstances, it can also have some redeeming qualities as well because HFT leads to greater market liquidity and, in general, a reduction in the bid-ask spread lowering transaction fees for all participants.

 

Great post, I fully agree. Of course I know that Wall Street is basically a casino and I also profit from it, but there have to be at least some basic rules and logic behind stock prices. Plus it shouldn't be possible to gather over 50 billion dollars just because you own let's say 20% of a company. I read that the 1000 richest people in the world now own about 12.000 billion dollar, that's 12 billion per person on average, that's simply insane.

 

Market Summary > GameStop Corp.
NYSE: GME

86.66 USD

- $138.39 (61.49%)

Feb 2, 10:55 AM EST

https://www.google.com/search?client=firefox-b-1-d&q=gme

 

Whatever is done the same rules need to apply to all.

 

Yes I agree, because the big guys on Wall Street can of course also manipulate stock prices and often have more inside knowledge about companies than retail investors.

 

BTW, seems like the party is over, I think GameStop will now retreat to about 20 bucks. But another thing that bugs me is that companies can raise ridiculous amounts of money via IPO's on Wall Street. Why does a dating app like Bumble need to raise 1 billion dollar? This stuff should also be regulated in my opinion.

https://www.bloomberg.com/news/arti...-sets-price-range-for-up-to-1-billion-u-s-ipo

 

The stock market is just a game for rich people. I used to work for a publicly traded company. The only goal was to get the stock price up as the CEO was a large shareholder. This was a priority above product quality or customer service. We were given a few shares as "incentive" but none of us made any money from it.

Why does a dating app need to raise 1 billion dollars? Because that is the purpose it was created for.

 

Well that's not true anymore, you can also make money in the stock market without being super rich, but yes it's still a game. It's a shame that there isn't more regulation. Perhaps short shelling should be banned and stock "buy backs" also doesn't make any sense. Companies can spend that cash better.

Also, Bumble's IPO was a huge success. Because of pure greed they decided to raise not 1 but almost 2 billion dollar, and on the first day it went from 43 dollar to 80 dollar. The founder became an instant billionare, this madness needs to stop LOL. To be fair, in 2020 they did have a revenue of 380 milllion dollar, but can anyone explain how they managed to make a loss of 80 million dollar? I mean it's a freaking app, same goes for Snapchat who has never managed to make a profit.

 

BTW, I don't know if you guys noticed, but the game has once again begun. Apparently hedge funds have started to short shell GameStop again and they probably shouldn't have done that. This whole GameStop sage is the craziest I have ever seen on Wall Street. Besides the ridiculously high stock price of Tesla of course.

 

Wait, GameStop sells GPUs now?
Because we definitely needed another retailer fighting over graphics cards
March 26, 2021
https://www.theverge.com/2021/3/26/...nvidia-gpu-graphics-cards-on-sale-pc-hardware

 

Regulators say GameStop rally ‘raises questions of market efficiency’
A new SEC report takes aim at short sellers and Robinhood’s business model
October 18, 2021
https://www.theverge.com/2021/10/18/22733429/sec-gamestop-robinhood-report-pfof-meme-stock-rally

 

I wonder what the SEC is going to do with the “payment for order flow” system. It could be disastrous to Robin Hood if they would forbid this. I believe in Europe you also have brokers like DeGiro, eToro and BUX who make use of this. I'm guessing that brokers will eventually offer subscription based trading, so you will pay a monthly fee to buy and sell as many shares that you like.

 

LOL, this is a good reminder how greedy management often is in big companies. Many GameStop employees got a whopping $0.50 per hour raise.

https://kotaku.com/gamestop-meme-stock-crypto-nft-scam-splatoon-3-nba-2k23-1849535807

 

GameStop will certainly go the way of Blockbuster Video at some point. I'm surprised they still exist.

 

Yes I'm surprised too, that people actually still buy games on disc, although I also did this when it came to my Nintendo Switch Lite. I remember that Netflix once offered Blockbuster to buy it, but it refused and didn't see video streaming coming, what a blunder. BTW, later this year a new documentary about GameStop's wild ride on Wall Street will appear on Netflix and a movie is also being developed, but next year nobody will care about it any longer I think.

https://www.whats-on-netflix.com/news/netflixs-gamestop-gme-docuseries-arrives-in-september-2022/
https://www.cnbc.com/2022/09/01/gamestop-meme-stock-movie-dumb-money-seth-rogen-pete-davidson.html

 

I don't think Netflix was anticipating others eating their lunch as well. They will also end up losing to others. A movie might be interesting, if done soon enough like you said.

 

The problem started when other companies saw that there was huge money to be made from their own content, and Netflix did know this was coming, because that's why they started producing Netflix Originals. The problem is that most of them are crap. I think Netflix became too big, they should have just stayed low key, offering a smaller collection of movies and series every month. They triggered the competition themselves, in my view.

But anyway, I believe GameStop won't make it, because management is now starting to talk about crypto's and NFT's, without a clear strategy. It seems to me that they are mostly trying to profit from Wall Street trying to keep the stockprice at a high level. That's why they also performed a stock split for no good reason. Management is trying to fill their pockets before it all blows up.