EDIT: Since I didn't explain my reasoning of the risk, here it is from a comment below. The issue is that the risk for investment firms goes beyond immediate financial losses. Given the pin that normal people buying GME have Melvin/Citron etc. in and the flurry of conversation about both the delegitimisation of markets and potential regulation of them, there’s a nonzero chance that one or more of the firms sitting on positions which could massively reduce the shorts decide to sell, both being $200-300 up AND serving to possibly protect the financial industry. As soon as regulation is mentioned or the legitimacy of the industry is questioned you can’t assume anything about how these people will behave, other than they will mobilise to avoid it and that brings risk for a lot of working class people right now. In this outcome they’d also get a tidy narrative about how the peasants should keep out of their business, which will only serve to isolate capital from working people even more.
This is according to people apparently able to access Level 2 ARCA order flow data for the NYSE, take with as big a pinch of salt as you want. It boils down to this: While reddit kickstarted the drive it was big players putting in massive orders, way above what redditors would be able to access or afford, which actually caused the squeeze.
Now my advice from my modest knowledge on markets, again, take with as much salt as you want: Big players will have been all over this before it even hit national news, and it's been international news for a couple of days now. All the talk of Melvin/Citron not being able to close their short positions because there aren't the shares available to buy, and as long as redditors hold then they'll force them to hemorrhage money, is all well and good if reddit holds all the available shares. But they don't. And now fuck knows how many investment firms have their hands in this, and they do not give one shit about coordinating with reddit. As soon as a firm who bought at $50-150, or the original firms like Blackrock who've had them since $10, decide to dump their entire order for $350 the scramble will begin.
Who the fuck do you think will make the money from this? Rooms of traders sat at terminals, possibly with software running to immediately sell once it drops below a threshold, possibly watching the line all day with a finger over the button, possibly coordinating with other firms and giving them the heads up that they'll be dumping at a certain time, or will it be the average person possibly conned into putting their life savings into the hype, possibly refinancing their possessions, with full-time jobs who might only manage to check the index once every hour or so, or possibly even needing to rely on reddit posts to tell them to sell?
Interest free loans are virtually guaranteed for the investment firms that get stung. It will be the working class who suffer. It was a fun meme while it was just a meme, but the house always wins. Now it's just depressing capitalism again. Sorry to shit on your dinner table.
Why is this getting more risky as we approach tomorrow?
It was almost $500 in after hours. There's trading going on around the world while America sleeps. It affects the value. It's $448 right now. And yes, I'm a WSB shill who signed up 6 months ago just to shill stocks right now. So first you get defensive and call me stupid and now you're calling me a shill. Getting pissy and snapping back doesn't hide your own insecurity as much as you think it does. Coming in here to scold everyone and say that rich people manage their risks isn't insightful. It's about as insightful as saying rich people try to get richer. Yes they will pull out when they feel like it's a good move. So will I and everyone else. Now you have to explain why this is going to happen today or tomorrow and relate that to you telling everyone to sell. Which you can't do obviously and why you've chosen insults instead of explanations.
I didn't call you stupid. Are you even reading the words I'm typing? I only said they manage risks because you came in with the ultra insightful "trust capitalists to make money" as an argument for the price to definitely increase. I'm perfectly secure admitting how much I don't know as I made clear in the post - what's hilarious is the number of people on reddit and in this community who fancy themselves as galaxy brain one-man hedge funds.
Okay so you and I both know this is basically gambling. There's no reason to qualify it as such when we talk about this. So when I say the price will go up, I'm obviously speaking within the context of us knowing this is gambling. Therefore reading what I'm saying as "Game stop will 100%, in all certainty in the universe climb to $9001 by tomorrow" is pretty uncharitable. I'm not making an argument for what will definitely happen. If I had a formula for what would definitely happen then I wouldn't be arguing over petty day trades.
My argument is that there are shorts that need to be covered no matter what. There's not much reason for massive firms holding shares to sell off at $350 when, just by holding, they will force the price to get higher. By doing nothing, they will make more money. That's when you said it's about risk. Okay, I agree. They do consider risk as should everyone investing right now. So now the onus is on your to explain how their risk is climbing to an untenable level, causing them to start sell-offs today or tomorrow or next week. Because selling now might gain you a tidy profit, but it's only going to help the people you're betting against. By holding, you make a better profit. Where is this growing risk? Intervention is a possibility. But where else? If you can't explain the risk then claiming they're going to sell because of risk isn't valid. So why are they going to sell when they can just hold five more days and make more?
I'm not claiming to be a genius or know everything. I'm just piecing together the logic of what's going on. And be honest, you already thought this comm was full of galaxy brains. You came here to confirm that one way or another, I just happened to volunteer.
Thanks for calming down a bit, and I completely agree with virtually all of that. The issue is that the risk goes beyond immediate financial losses which isn't being addressed, and I guess it's my fault for not explicitly defining what I meant by risk.
Given the pin that normal people buying GME have Melvin/Citron etc. in and the flurry of conversation about both the delegitimisation of markets and potential regulation of them, there's a nonzero chance that one or more of the firms sitting on positions which could massively reduce the shorts decide to sell, both being $200-300 up AND possibly serving to protect the financial industry. As soon as regulation is mentioned or the legitimacy of the industry is questioned you can't assume anything about how these people will behave, other than they will mobilise to avoid it and that brings risk for a lot of working class people right now. In this outcome they'd also get a tidy narrative about how the peasants should keep out of their business, which will only serve to isolate capital from working people even more.