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GameStop, AMC Experienced Their Worst Weeks Ever. Robinhood Lifts Purchasing Limits (yahoo.com) 72

Posted by EditorDavid from the bears-beating-bulls dept.
"Even with Friday's bounce, GameStop Corp. wrapped up its worst week on record as a stunning reversal of fortune wiped out $18 billion from the video-game retailer's stock-market value," reports Bloomberg: The stock fell 80% in the last five days, its worst weekly performance on record, to $63.77 in New York. The 19% gain on Friday after Robinhood Markets removed buying limits still left it far below last week's high of $483 as retail trader demand and excitement across platforms like Reddit simmered. GameStop's market value slipped to $4.4 billion, a far cry from the $33.7 billion value it hit on on January 28 when it briefly became the largest company in the Russell 2000 Index.

AMC Entertainment Holdings Inc., which also had limits removed on trading, edged lower in Friday's session and capped off its worst week on record with a 48% drop...

While GameStop has shed $29.2 billion in value since its peak, the stock is still up more than 200% this year.
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GameStop, AMC Experienced Their Worst Weeks Ever. Robinhood Lifts Purchasing Limits More

GameStop, AMC Experienced Their Worst Weeks Ever. Robinhood Lifts Purchasing Limits

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  • If you bought a year ago (Score:5, Insightful)

    by OrangeTide ( 124937 ) on Saturday February 06, 2021 @10:42AM (#61034156) Homepage Journal

    That $68 is looking mighty high. You still have a ways to go before long term investors worry about breaking even and habitual shorters are in the black.

    • Re:If you bought a year ago (Score:4, Insightful)

      by Revek ( 133289 ) on Saturday February 06, 2021 @11:00AM (#61034218)
      Meh I'm out very little and its probably going to be up and down a bit before it settles somewhere. All in all though its been fun to see rich people lose the only thing they care about. Must be how they feel about us when we lose our health and homes.

      • All in all though its been fun to see rich people lose the only thing they care about. Must be how they feel about us when we lose our health and homes.

        Unfortunately there's a fuckton of Millennials and Zoomers who've lost a load of money too. It appears from WSB that quite a few weer putting in money they'd saved for college and were taking out loans to buy GME.

      • The house always wins... Surely there's a better method of sticking it to the man than betting more money at his table? How about a capital gains tax, and you never have to pay for health insurance again?

        • Re: (Score:2)

          by djinn6 ( 1868030 )

          The house always wins...

          Actually they don't. Casinos set up the game so they're likely to win on average. That does not mean they always win against any particular individual. There's a reason they keep blacklists.

          Same goes with the stock market, except hedge funds aren't the house, that's the Fed. They aren't even the biggest players. Pension funds are. And neither of those care enough about an individual investor like you to bet against you.

        • Re: (Score:2)

          by teg ( 97890 )

          The house always wins... Surely there's a better method of sticking it to the man than betting more money at his table? How about a capital gains tax, and you never have to pay for health insurance again?

          The US does have a capital gains tax? Adjusting the rate would obviously be possible, but what the actual rate is is hard for a European to understand as you have both Federal and State taxes on the same income (here, it's all national taxes).

          Also, you would obviously have to pay healthcare through taxes. "Tax the rich" is more of a slogan than reality when it comes to raising a lot of money - while it can be raised a bit, there just isn't that much money in it because there aren't that many of them.

          In t

          • My state (Texas, the second most populous) has no income tax. As it is, my health insurance takes nearly as much out of my check as income tax. That's without covering any family, on the cheapest plan my employer offers. Paying an extra $150/mo in taxes sounds great if it means I can skip $350/mo on insurance.

            The tax code is so full of holes, primarily for businesses and the rich, that none of them pay the nominal rates. That's how, for example, the previous president pays an order of magnitude less taxes t

            • Re: (Score:2)

              by teg ( 97890 )

              My state (Texas, the second most populous) has no income tax. As it is, my health insurance takes nearly as much out of my check as income tax. That's without covering any family, on the cheapest plan my employer offers. Paying an extra $150/mo in taxes sounds great if it means I can skip $350/mo on insurance.

              The tax code is so full of holes, primarily for businesses and the rich, that none of them pay the nominal rates. That's how, for example, the previous president pays an order of magnitude less taxes than I do, despite living a rich and lavish lifestyle since before I was born. And it's apparently all legal, or at a minimum, possible to get away with for a lifetime.

              That's one of the more garish examples, but you don't need to get anywhere close to the 1% to find individuals and businesses who are under-taxed. It's more like the 20%. There are plenty whose taxes can be raised. On the expense side, the military is an unaccountable money pit - they literally can't account for where the money is spent. None of it. It's a slush fund, the published DoD budgets are meaningless numbers. The actual cash gets shipped around wherever the Pentagon wants it. Congress has been pushing since the late 80s to try to complete an audit, and finally a couple years ago the accounting firms they hired gave up and declared it "inauditable." Not sure which of these two problems will be easier to fix. Even the "fiscal responsibility" party manages to make the expenditures and revenues worse.

              Just to make sure I'm not misunderstood, I'd like to clarify a couple of things I've said:

              • Public health care will save money in total. However, taxes will need to rise to pay for it. On the plus side, that should eliminate most of the health insurance costs. Maybe a payroll tax since businesses no longer have to pay health insurance?
              • You should obviously close tax holes. - I'm just saying "tax the rich" can't finance everything, like some seem to believe. There just isn't enough of them. People with strong

    • Re:If you bought a year ago (Score:5, Insightful)

      by Anubis IV ( 1279820 ) on Saturday February 06, 2021 @11:07AM (#61034244)

      I was going to say. It was under $4 a share about a year ago, and still under $20 per share last month, so we’re still talking about people being able to triple their money in less than a month or 15x their money in a year, even if they sold now after this “worst week” in the company’s history.

  • Well, it was fun while it lasted. Just wish it didn't cost so much. Might have been more fun to blow it on Vegas. Speaking of which, what's Vegas like these days? Anyon been?

    • I don't think the shorts won. The big shorts lost big in the early days and closed out their positions. The ones who won were those early purchasers. The ones who lost were the ones who purchased at or near the peak. No surprise there... when you buy into a bubble, the last ones in usually lose big.
      • Depends on how the class action goes. If the class action goes through they could sue robinhood for what stock was at its peak to recoup a lot of their money. They do it seems have legit case as that company had no right to do what they did in blocking purchases of the stock. Its up to probably a liberal judge to decide most likely.
        • Those people are going to be shocked when their lawyers actually read the TOS. While a shitty thing to happen, RH's terms are going to make it clear those people are SOL. They were risk limiting actions taken because their partners enforced them - which was explicitly predicted somewhere in the fine print.
          To say nothing of there are no losses/damages. What are you going to claim? Not letting you buy kept you from losing money? That the whole thing was a coordinated action that would have gone higher?
          • Not sure Robinhood's TOS can supersede the legal obligations of broker dealers. What Robinhood did likely falls under "Unauthorized use of discretion" by refusing to even take orders from customers. It's a major breach of their fiduciary obligations: https://www.formanlawfirm.com/... [formanlawfirm.com]
            • RH is going to claim those stocks suddenly required cash up front, and they could not afford it and therefore the parts of the TOS relating to risk management, etc. took effect. They're probably correct, because they were smart enough to ensure that several parties made legal decisions that just so happened to lock out retail. In much the same way that almost every action by Enron was legal by itself, but the way they combined turned into a Ponzi scheme.
      • All the firms who shorted at $5 lost billions. All the firms that shorted at $400 made billions. Some retail investors made millions, many more lost thousands. The biggest retail player we know of walked away with 20 million (which is HUGE for a person). The early shorts lost 20 billion. How much do you think went to retail - 1 or 2 %?
  • All-time hell. Or all-time clusterfuck.

  • Stunning? (Score:3)

    by charlesbakerharris ( 623282 ) on Saturday February 06, 2021 @10:47AM (#61034172)
    s/stunning/predictable/g

  • When shorting, borrow only from those willing to lend me stock without the right to call back the loan. Also walk away if I'll have to put up more margin if the price goes up.

    I might still lose my shirt if the note comes due before the bubble bursts, but at least I will get to choose whether to bail out early or not.

    Remember folks, selling short the "normal" way is like living in Soviet Russia: In capitalist America, shorted stock own YOU!

    • Re: (Score:3, Insightful)

      by irreverentdiscourse ( 1922968 )
      Shorting stock should be made illegal. There is no purpose for it other than scamming money out of the system. The intetion of the stock market is for the public to be able to INVEST in companies, not gambling on futures like a drunk at a craps table.

      • Re:Note to self... (Score:4, Interesting)

        by Rei ( 128717 ) on Saturday February 06, 2021 @11:46AM (#61034318) Homepage

        The entire premise of an investment is that you're making a bet on a change in its value. There are different levels of risk, some investments are more "sure thing" / lower return than others,which are riskier but with higher payoff potential. But there always is a component of a gamble in it. The difference is that unlike a casino, the odds can often be in your favour.

        There's nothing fundamentally wrong with shorting as a principle. Stock undervalued? Go long. Stock overvalued? Go short. Fine. The problem comes when short interests become overconcentrated; then it starts to become not a passive investment, but rather, an organized attempt to kill a company by cutting off its access to capital markets, scaring off partnerships and customers, causing suppliers to require more strict payment terms, and so forth. Non-insider investors are supposed to be passive - they're supposed to react to the news, not to make it.

        IMHO: max short ownership should be capped, and there should be increased transparency on short positions. But it should not be prohibited. In small amounts, it acts like a hedge against market or sector downturns encourages research on negatives as a counterpoint to research on positives, and so forth. It's only a problem when it gets too concentrated.

        • Re:Note to self... (Score:4, Interesting)

          by Tom ( 822 ) on Saturday February 06, 2021 @12:39PM (#61034458) Homepage Journal

          Stock undervalued? Go long. Stock overvalued? Go short. Fine.

          Not fine. That is not how markets are supposed to work.

          If you think the stock is undervalued, you should buy it at that undervalued price. If you think it is overvalued, you should put out buy orders at the price you think fair and wait for the price to come down. That's how a market is supposed to work.

          But short sellers don't want to buy something at a fair price and then wait for the price to rise. They don't want to invest or contribute something to society. They want immediate profit from what they perceive to be a wrong price. Essentially a "finder's fee" for discovering that the stock is overvalued.

          • Re: (Score:2)

            by Wolfier ( 94144 )

            > If you think the stock is undervalued, you should buy it at that undervalued price. If you think it is overvalued, you should put out buy orders at the price you think fair and wait for the price to come down. That's how a market is supposed to work.

            I'd say, if the stock is undervalued, buy at the undervalued price, if that price is too high, buy call options.
            if the stock is overvalued, buy put options, especially if you think that would be helpful to derisk your portfolio.

          • That is not how markets are supposed to work.

            Shorting is not a stock market mechanic. In fact it shares a lot in common with any futures trading, which shares a lot in common with purchasing mechanics of pay now to receive later or pay on receipt.

            That very much is how markets work. The mechanic of shorting stocks is something that *every* market has and one that is important for distribution of risk when dealing with volatile goods over longer time spans.

            • Re: (Score:2)

              by djinn6 ( 1868030 )

              You're confusing shorting with options, which are indeed similar to futures trading. With options, you don't get shares to sell in the market right now. The same way you can't conjure up a billion barrels of oil without depriving the original owners of their property.

              Shorting allows you to sell immediately, tank the price, earn a profit, then repeat the cycle. It is self-sustaining and only limited by the high premiums currently being paid to short. If that premium ever comes down, a short trader can create

            • Re: (Score:2)

              by Tom ( 822 )

              Like the other answer says: You are confusing options and futures with shorts.

              Options HAVE a real-world equivalent. They were originally invented for farmers who needed to pay their workers NOW, but would sell the harvest and make money in autumn. So they needed a way to sell something they didn't yet have - and the futures market appeared, where I can buy your harvest today, pay you today, and accept delivery of it when it comes in.

              Options appeared from that, for people who didn't want to buy the harvest t

          • Markets haven't worked how the average non-broker thinks they should work for well over a century or two.

            • Re: (Score:2)

              by Tom ( 822 )

              financial markets. And that's the actual problem. That the rules for the purely abstract world of the financial industry are different than they are for the real world.

              In the real world, about the only thing you can most definitely NOT do with something you've borrowed is selling it.

        • Re: (Score:2)

          by ljw1004 ( 764174 )

          The entire premise of an investment is that you're making a bet on a change in its value. There are different levels of risk, some investments are more "sure thing" / lower return than others,which are riskier but with higher payoff potential. But there always is a component of a gamble in it. The difference is that unlike a casino, the odds can often be in your favour. There's nothing fundamentally wrong with shorting as a principle. Stock undervalued? Go long. Stock overvalued? Go short. Fine. The problem comes when short interests become overconcentrated.

          Some contracts are unenforceable. If you contract a hitman to murder someone, and that takes your money without murdering the person, you can't sue them for breach of contract. Our legal system decides which kinds of contracts are enforceable and which aren't. It makes this decision based on the net good to society and other woolly ideas. Usually, gambling/gaming contracts are illegal, though that has varied in the past. Gaming/gambling contracts have varied in enforceability through time.

          What you described

      • Does it? If I'm thinking about it right .. when the shares drop in price, the shorters will buy it (by a certain date). That could actually prevent a freefall and allow some investors to gain money on their investment. Although shorters may reduce the chance of a stock growing, they also prevent its crazy freefall because they have to buy those shares at some point. Overall I am against shorting though, because I am not sure if that effect makes up for the fact that shorters are incentivized to bad talk a c

      • Shorting stock should be made illegal. There is no purpose for it other than scamming money out of the system.

        Shorting has been a feature of stock exchanges since they were invented. It's the direct inverse of holding long, and a way that traders can damp down speculative bubbles. This year's action in GME and AMC is a perfect example.

      • Re: (Score:2)

        by idji ( 984038 )
        Shorting stock is an important part of providing insurance to businesses that need to protect their supply prices. What should be illegal is if the volume of shorts is more than the actual number of stocks that exist - which is the issue here.

      • There is a purpose and a reason. It is about hedging your bets. Shorting a stock is not the same as insulting the stock's company or the like, yet so many people treat it that way. If you're a good guy for betting that a stock goes up then you should also be allowed to be a good guy who bets that the stock goes down. It's like the commodities futures market, and short selling is like a futures market but for stocks instead of commodities.

        Of all the evil things done in the stock markets, why is shorting th

    • I doubt you'll be able to borrow stock without putting up more margin and them being able to call back.

      Maybe from some drunk hobo millionaire?

  • Even now, after all of the public discussion about what went on.... the talking heads still refer to this as if this valuation was going to stay inflated forever. Gamestop didn't lose $18billion in value, they never had it. The market is a complete scam and none of the valuations mean anything.

  • While different players go back on forth on GME & AMC, these are real businesses with real workers who are really suffering the consequences of all this. Both these businesses are part of our economy, and actual people depend on these businesses to make a living. And all the while, hedge funds and private investors are playing with their stocks with ambivalence; they care about their portfolios, but not their investments. Everyone keeps pouring gasoline on the fire, but nobody seems to care about wha

    • What consequences are you talking about? I work for a publicly traded company and stock price does not come into play on a day to day basis. I think worst case is that these companies (and employees) are no worse of now than before this all happened, and best case, GME or AMC had some shares to sell and maybe their employees had options and everyone is better off...

    • And how are GameStop affected by it?

      They could had emitted new stock and raised capital.

    • AMC and GME benefited greatly from this fury of activity as companies. Their employees may not have liked being at the center of the media circus, but both companies took advantage of the hype to set up well for success

  • AMC comes out of it with $600M less debt (Score:5, Informative)

    by MDMurphy ( 208495 ) on Saturday February 06, 2021 @11:36AM (#61034288)
    https://www.marketwatch.com/st... [marketwatch.com]

    AMC issued new shares and wiped out its $600 million in debt that was due in 2026.

    • I saw claims they had 5-6 billion in debt though. Don't know if true but if anyone are interested better check first.

    • https://www.marketwatch.com/st... [marketwatch.com] AMC issued new shares and wiped out its $600 million in debt that was due in 2026.

      Wow, neat scam. Wonder how students could get in on that debt wiping magic? Seems slightly more corruptly acceptable than Daddy Government coming in to simply dismiss it.

      A lot of parents, students, and workers sacrificed for years to pay for college to avoid debt. How exactly do you make them whole with debt dismissal..

      • Wow, neat scam. Wonder how students could get in on that debt wiping magic? Seems slightly more corruptly acceptable than Daddy Government coming in to simply dismiss it.

        Now that we have a new administration in power, some hotshot is going to suggest securitizing student debt and swapping such debt for life equity in 3..2..1...

        • Wow, neat scam. Wonder how students could get in on that debt wiping magic? Seems slightly more corruptly acceptable than Daddy Government coming in to simply dismiss it.

          Now that we have a new administration in power, some hotshot is going to suggest securitizing student debt and swapping such debt for life equity in 3..2..1...

          (Me) "That's insane. It'll never happen."

          * It happens *

          (Me) "Dammit man! Again?!? I just revised the definition of insanity last week."

        • Re: (Score:2)

          by ghoul ( 157158 )
          Life equity is just debt peonage with multiple owners
      • It wasn't a scam. In fact, they announced the issuing of new debt with that debt-to-equity at the sport valuation provision built in three days before it blew up (Jan 27). I found out about it on the front page of SLASHDOT, FFS. They just didn't wait til 2026 to activate it and give up 1/3 of the company and did it while the price was high, so they did a far smaller percentage. Good for them.

        • It wasn't a scam. In fact, they announced the issuing of new debt with that debt-to-equity at the sport valuation provision built in three days before it blew up (Jan 27). I found out about it on the front page of SLASHDOT, FFS. They just didn't wait til 2026 to activate it and give up 1/3 of the company and did it while the price was high...

          Uh, this would be the questionable part. Let's stop pretending they would be in the same financial position today, had that not happened. In fact, with the overall decline in movie ticket sales even before the pandemic, there's a good chance AMC might not have even survived to 2026.

          "The rally that propelled AMC Entertainment’s share price to new heights also triggered Silver Lake’s ability to convert a $600 million debt note from AMC into stock. That eliminates the principal and all future interest payments from AMC to Silver Lake — and helps the pandemic-battered movie theater company, the nation’s largest, keep the Dakota Square and many of its 595 other locations nationwide running.

          From the article titled "Forget investors: AMC itself may have been bailed out by WallStreetBets"

          Sorry, but I'm not quite ready to start labeling meme stocks and WSB as a completely stable and legitimized form of trading. As

      • Re: (Score:1)

        by aliquis ( 678370 )

        Damn you are stupid and don't understand it.

        But sure. If you study something very useful maybe you can find an investor who are fine wiping out your debt for a percentage of any earnings you have in life.

        What happened wasn't that the debt was converted to nothing. What happened was that the debt was converted to shares of the company. Which in this case likely made sense because they could convert money I think was due for 2026 into shares at $13,xx then when the shares traded at $20 possibly giving them th

  • So the hedge-funds have made their money and they got their cut and now they can let creti et pleti in again?

  • How is this a bad week for these companies? (Score:3)

    by godrik ( 1287354 ) on Saturday February 06, 2021 @11:54AM (#61034348)

    Sure their stock plunged. But everyone involved knew that the number was a temporary blip.
    It gave these companies the opportunity to issue new stock and get a quick influx of cash. If gave all long term investors the perfect time to get out and cash in if they wanted.
    The reality of the company on the ground has not changed. Employees of the companies are no better or worse than they were three weeks ago. This is not a bad week for the companies. This is not a bad week for long term stock holder.
    This could only be a bad week for people left holding the bag. So clueless investors who have just learned their lesson but they had to learn it at one point or an other. And hedge funds forced to buy at peak high, but no one will cry on their fate.

    • Both companies even got to clear most of their debt. Looks like a cry-me-a-river story from some noob investor left holding the bag.

      Due diligence. Hell anyone looking at a monthly chart knew what's up, even if you ignore all the news from everywhere talking about it.
  • GME stock has been mostly under $30.00 the past five years (just look at the chart on yahoo finance). Last July it was under $4.00. The stock is still way ahead of where it has been for long time. They also cancelled debt during this circus. How exactly have they had a bad week?

    Lies.

    • GME did not cancel any debt. You are getting AMC and GME confused.

      Gamestop redeemed notes in November, 2020, which was well before "this circus".

      https://news.gamestop.com/news... [gamestop.com]

      AMC did not really do anything either. One of it's bond holders (Silver Lake) decided to redeem the debt as stock that I assume they sold because the meme rally could provide more money than they would get if AMC went bankrupt.

      https://www.washingtonpost.com... [washingtonpost.com]

      • AMC did not really do anything either. One of it's bond holders (Silver Lake) decided to redeem the debt as stock that I assume they sold because the meme rally could provide more money than they would get if AMC went bankrupt.

        https://www.washingtonpost.com... [washingtonpost.com]

        AMC owed $600 million, and now it doesn't. It also raised over $300 million in a stock sale.
        That's a great week for them

  • Anyone? Anyone at all? Let's give them a few moments...

    I'm waiting for the outraged articles about how poor WSB investors are the ones losing all the money (well, the recent buyers are, the ones who bought 12 months ago are doing great). We should have protected them from investing in a bubble!

    • I wouldn't mind protections against investing in a bubble for poorer people. I just do not want to bail out rich fucks who do the same. Kind of an anti-2008

      • I wouldn't mind protections against investing in a bubble for poorer people. I just do not want to bail out rich fucks who do the same. Kind of an anti-2008

        No doubt (although TBH that sounds a tad patronizing). Problem is, how do you know what's a bubble and who is too poor or ill-informed to need protection?

        And just so we're all on the same page, when we hear of "hedge funds got a bailout", that was from their rich fuck buddies, not taxpayers. Scrooge McDuck went to Ebenezer Scrooge and asked for a few billion to tide him over until next Tuesday.

        • I do not mean it to be patronizing, I would count the vast majority of Americans as poorer. If the government will call you so poor you cannot invest in startups (sub one million net worth, excluding your house and sub 250k/year) then they should bail you out of bubbles. That has to be 9x% of the population. As for this example, really it was a sale of part of the fund, not a loan.
  • The entire GME nonsense was a scam. The self-absorbed juveniles at WSB were useful idiots.
    https://en.wikipedia.org/wiki/... [wikipedia.org]
    This was a classic pump-and-dump scam https://www.investopedia.com/t... [investopedia.com]
    The herd mentality who don’t see it are zombies.

  • I haven't seen too much historical data, but the other big squeeze was VW, and this one seems to be paralleling it. The chart for a stock that gets squeezed looks like an approximation of the Dirac delta function. In other words, it's as if an approximation to an ideal pulse were fed in to a circuit. Ideally, one big spike up at an infinitesimal moment in time, followed by a return to baseline. In the real world the result is a broader spike with smoothed edges. It makes sense, since the shorts being o

    • Re: (Score:2)

      by ghoul ( 157158 )
      The share was artificially shorted. It has 2 Billion in sales and is transforming into an eCommerce enterprise. Its sitting on 500 million of cash. Yet it was shorted all the way down to a 450 million market cap. Many eCommerce have 20 to 1 Price to Sales ratios (e.g Peloton). Same multiple for GME would mean 40 Billion marketcap. With 60 milion outstanding shares corresponding stock price would be $650. So 4$ was artificial shorts and the WSB crowd has taught Melvin et al to not get lazy and actually rese

      • IIRC, the $4/sh price was before they announced the new CEO and transition. Driving the price below cash on hand is justified if there's an excessive burn rate and no exit. Agreed that shorts got greedy though. When new management came in with a plan, the reason for shorting was gone. I think they could have covered in the teens easily, and might have to wait a long time to see those prices again. I'm not so sure you can compare it to Peloton yet, but in general I agree that the shorts were greedy, foo

  • This was not the worst week ever for these companies. Their stock crashed from a bubble value everyone knows has nothing to do with market fundamentals. They probably even benefited from all this if they issued any new stock.

    A bad week for these companies is one where their revenue decreases, costs go up, or long term prospects get worse. This recent stock turmoil doesn't affect any of that.

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