GameStop & AMC Stock Explained
Running Time: 11 minutes
What happens when Hedge Funds plan to sell Stock Options at $2/ea, but then a massive army of continually growing Internet morons’ band together and drive the price up to $483? Well, the answer is quite obvious. Illegal market manipulation on a scale never seen before. Get yourself strapped in; we’re going to the moon.
When Hedge funds stand to lose billions overnight, there is no end to the number of underhanded tricks they will pull to dig out of the mess they created for themselves. With the spotlight on GameStop and AMC stocks, a new type of stock investor has emerged, the Retards, as they call themselves. Everyone has heard something about this on the news. But what you may not understand is how these, and other stocks, have been manipulated to the nth degree.
In this video, I will be explaining what companies like Melvin Capital and Citadel were doing to make money, how Keith Gill and WallStreetBets managed to bankrupt Melvin Capital, only to later be bailed out by Citadel and Point72 at a tune of 2.75 billion dollars. Yes, that’s with a “B”.
We even know that the Short Squeeze hasn’t happened yet, because every day they are making the most desperate moves, continually forcing the prices lower even as I write this. By driving the stock prices up, and down, they are desperately trying to make enough money to cover the bloodbath that is coming. Eventually, they will need to buy these stocks back, and they are trying desperately not to go out of business in the process.
The Hedge Funds
Melvin Capital is at the center of this trading frenzy. They are now defendants in at least 9 lawsuits by retail investors alleging a conspiracy to limit trading that caused them to lose money.
Citadel is another hedge fund that is also front and center with 11 class action lawsuits against them for the exact same reason.
These Hedge funds are companies that use money from high-net-worth investors, corporations, foundations, and pension funds. They apply this “borrowed money” to various strategies of generate more money. In this very specific situation, they were deal with Puts, or betting these companies stock prices would fall. This type of strategy has always confused me, because I could immediately see that they could lose everything if the stock prices continued to rise. The risk of losing massive amounts of money made no sense to me. Apparently, that reason is why these companies are standing to lose everything because of their greed.
The biggest issue for the way they have been trading, is they have over leveraged themselves by more than 100%. The numbers have been very sketchy, because they lie all the time, and no one can trust them. So, we don’t know how much over 100% they need to buy back, but it’s significant.
What Did WallStreetBets Do?
WallStreetBets are a group of internet investors (Apes) who are buying up all the GameStop and AMC stock they can get their hands on. By buying and owning as much as they can, at some point the Hege Funds are going to have to buy it back from them. This is where the madness starts to kick in.
By themselves, they started with like 3 Million readers in their Sub-Reddit forum, all looking to cash in. Once the news of what was happening became National Attention, their numbers rose to 10 million and beyond. Now, this idea REALLY had legs, and the motto for months has been “Apes Strong”, “Hodl the Line” and “Diamond Hands”. Not to omit my own person favorite, “Rocket Ships, Pew Pew Pew”. Ok fine, they don’t actually say that, but I say it all the time.
What Did Keith Gill Do?
Keith Gill is being hailed as a hero. He is a Financial Analyst who felt that GameStop’ stock was horribly undervalued at $2-3/share. So he started buying it. A LOT of it. Keith and the WallStreetBets guys realized everything I just said, so everyone started jumping on the bandwagon. After slowly investing for years, at one point being down over $40,000, he became an overnight millionaire when he started selling off some of his stock on its way up to $483.
What Happened on January 28th?
This was the day the stocks rose to crazy numbers. As it went higher, the back-end of the market went crazy with Robin Hood halting trades, investors were not able to buy shares, instead only sell them. This is why Robin Hood now has a whopping 90(!) Lawsuits against them. Investors across the board were furious, but Robin Hood took the cake.
But in general, trades across all systems were being suspended, everything tripped and stumbled over itself until the market shut down for the night. Soon after, the Hedge Funds did ladder attacks to bring the price back down, ultimately to around $50-$60/ea. The basic idea behind a ladder attack, is they flood the market with stocks based on constantly lower price points, usually by the penny. They used a secondary account to buy the shares right back at the now lower rate of one penny less. This generally happens SO FAST, it’s over within minutes. It could also be dragged on for over an hour. This means they can easily drop the price by $20 within 10 minutes.
But this isn’t the only strategy. Competing Hedge Funds can also drive up the price in a similar attack, allowing them to cash in on Option Calls, which means they are betting on the price going up in value. But if it goes up or down by too much, too fast, the stock trading becomes suspended. It’s only supposed to be for like 5 minutes, but one afternoon it was suspended for like 20 minutes until the market closed.
This is no longer about the small investor against the big Hedge Funds, but rather, Hedge Fund against Hedge Fund. If they can bankrupt the competition, and make an absolute financial killing along the way, then why not? This simply leaves us small investors to be little more than spectators while they fight it out.
Similarly, there was also a run-up on March 10th. By this point, I was financially invested in both Gamestop and AMC. I have only become more invested as time went on. I am fascinated by what has unfolded, and there is still so much more to go.
Why Do GameStop and AMC stocks Go Up and Down Together
This is an often-asked question. It’s not just GameStop and AMC linked at the hip. Other, similarly shorted stocks like Blackberry, Fubo, Naked, and Sundial Growers that are doing the same thing. But the question is often, why?. The reason is that these stocks are placed into ETF stocks.
Unlike regular stocks, ETF stocks buy other stocks, as part of a portfolio. So, if the Hedge Fund manipulates the ETF, the stocks inside follow the same trends. This used to be beat for beat, but since this all this started, things have changed a bit. These days, while AMC largely follows GameStop, it’s not all the time.
What Did Congress Do?
Congress stepped in and had a hearing. Multiple ones, actually. Even our hero, Keith Gill, also known as Roaring Kitty, was invited to join in. And he absolutely crushed it. At one point they asked him if he would buy more of the stocks at the then price of $50, and he said “Yes. I like this stock”. He went home, and you guessed it, he bought more stock.
Meanwhile, Robin Hood thanked them for every one of their questions, and then proceeded to avoid answering it. Of course, he wasn’t the only one.
Is Any of This Legal?
The manipulation of the market is definitely no, not legal. However, proving the manipulations would be hard, even though obvious. This is the reason for using ETF’s as a pass through entity. So, no, it’s not legal, but doubtful anything will come of it. Same with the lawsuits. Everyone will blame everyone else. It’s a mess.
Can Any of This Profit Really Happen? Or Is it All A Dream?
As strange as it sounds, I feel like we drifted off into a parallel universe. Since November, Biden Won President, and Two Democratic Georgian Senators were Elected. Ultimately, this meant that we finally received the promised large Stimulus Package. I actually managed to get approved for a very generous Paycheck Protection Payment, and I even watched Zack Snyder’s Justice League (that was awesome, BTW). So, yeah, in this universe spin-off, I kind of believe there is something here that will payout generously.
I am a realist though. Since we know that it already hit $483 once, and $348 as well, then $500 is quite possible, if not likely. We know something is up, as these Hedge Funds continue to beat down on these stocks like there’s no tomorrow. And you know what? For them there may not be a tomorrow.
I mean, what happens when the DDTC gets invoked (a new provision to force Hedge Funds to stop lying), and these stocks need to be covered? The DDTC will have full congressional support to sell off any of the other positions they hold, to cover their bets. Any price will be paid, in theory, to make the debt whole again.
So, in a perfect world, if no one sells until $10,000, then that’s the price that must be paid. While we have seen prices like this listed in our “Order Book”, it has to get past everyone who will be happy selling at $500, $800 or $1,000. Personally, if I were to sell GameStop at $500, I would be making some serious bank. If AMC reaches these levels, I get to pay cash for a house, car, and retire early. No, I’m not kidding.
Can AMC Do What GameStop Can Do?
Absolutely. Think of it this way, if GameStop actually reaches $800 and $1,000, you should know full well that all of these WallStreetBetter’s are going to double down on AMC next. While there are other stocks that also qualify, AMC is going to be the next big bet. I already own hundreds of AMC stock. Because it was so cheap, why not? If this stock goes next, I will make a fortune. If it doesn’t, the company is still poised to make huge moves in the next 2 years, gaining back it’s true value in the market.
Nobody said any of this was going to be quick, or easy. We have been watching every positive rise, be shot down by the brute force of these Hedge Funds, every single day. The manipulation of the market is off the hook, and they need to be stopped. Thanks to the army of WallStreetBets, this can actually happen.