Everything You Need To Know About How A Reddit Group Blew Up GameStop’s Stock

The GameStop frenzy on Wall Street has investors, and much of the internet, enraptured — not unlike a good horror movie. Everyone knows doom is just around the corner for some key players; a lucky few will emerge stronger; and the monster might be subdued but will ultimately come back for a sequel.

The popular Reddit page WallStreetBets is fond of targeting short-sellers. If you’ve ever played craps, these are the guys betting against the table, and their tactics, while often lucrative, have burnished their reputation as bloodsuckers and other, unpublishable, names. (More on that later.)

It’s not hard to understand why someone would short GameStop, however. The company is expected to lose money this year and next. Sales growth is sluggish because gamers no longer need to go to the mall to buy games or consoles. That said, some investors have argued that GameStop was seriously undervalued, especially when video games have become staples of the stay-at-home pandemic era.

The GameStop stock surge began for a legitimate reason: The company announced on January 11 it had added three new directors to its board, including Chewy co-founder Ryan Cohen. Investors liked that Cohen brought digital experience to the table, something the largely brick-and-mortar GameStop desperately needs, as video games go digital and malls continue their unending slump into irrelevance.

GameStop’s stock rose a little less than 13% that day. But this wasn’t a normal, momentary stock surge. Two days later, it rose 57%. Then 27%. The next week, it surged 10% twice and 51% another day. This week, it rose another 18% then 93% and more than doubled today.

The reason is two-fold, both of which are far removed from anything related to the company’s fundamental strength: Investors following the Reddit group bought a ton of GameStop options, and short-sellers had to buy shares to cover their losing bids.

On Wednesday, while all three major stock indexes tumbled, GameStop finished up a mind-boggling 134%.

For perspective: One year ago, a single share cost about $4. It’s now $200.

Options are bets investors place on a stock, allowing them to buy (a “call” option) or sell (a “put” option) at a particular price. That allows people to wager on whether a stock will rise or fall.

Investors can place relatively inexpensive options bets and sell those options as they rise in value when the stock price gets closer to their wager. Although buying and selling options isn’t the same as buying and selling stocks, big options volumes can drive a stock up or down, typically because options traders buy or sell the stock itself as a hedge.

In the case of GameStop and other stocks targeted by WSB, traders keep buying options, forcing the investors selling those options to hedge their bets by buying up GameStop stock.

WallStreetBets, which has more than 2 million followers, is littered with posts cheering the stock gains and no small amount of righteous indignation.

“What I think is happening is that you guys are making such an impact that these fat cats are worried that they have to get up and put in work to earn a living,” a moderator in the group posted this week.”That fuzzy sensation you are feeling is called RESPECT and it is well earned. Wall Street no longer dismisses your presence anymore.”

Elon Musk appeared to join the pile-on Tuesday with a single-word tweet — “Gamestonk!!” — that linked to WallStreetBets. Tech investor Chamath Palihapitiya dipped his toe in the frenzy, buying call options on Tuesday but closing his position Wednesday, he told CNBC. Palihapitiya said he would donate his profits to charity and defended the retail-investing phenomenon playing out on Reddit.

“Instead of having ‘idea dinners’ or quiet whispered conversations amongst hedge funds in the Hamptons, these kids have the courage to do it transparently in a forum,” he said. “What it proves is this retail [investor] phenomenon is here to stay.”

The GameStop saga is a battle of new school vs. old school, amateur vs. professional, rebels vs. the establishment. At the moment, the kids are winning. But, like all bubbles, this one’s going to burst at some point.

Source: CNN Business

JOB FINISHED | A look back at the media’s disrespect of the 2020 Lakers

They said LeBron came to Los Angeles just to make movies and that he had a better chance of winning an Emmy than a championship.

They said that even with Anthony Davis, the Lakers’ roster sucked & was clearly worse than the Clippers.

They said they were an overrated 1-seed who needed wishes of good luck to beat the Portland Trail Blazers & Houston Rockets.

Instead, the Los Angeles Lakers are your 2020 NBA Champions. And in case you forgot how dead wrong they’ve been since day one? Just sit back and watch.

NBA Came In $1.5 billion Under Revenue Projections In 2020, Targets Dec 22 As Start To Coming Season

The board is targeting a Dec. 22 start to what would be a season of 70 to 72 games, with the NBA Finals ending in June again as has been in the case for many years, according to a person with knowledge of the situation. The person, who spoke to The Associated Press Friday on condition of anonymity because no plan has been finalized, said the possibility of fans being at games would hinge on how a particular market is faring against the coronavirus at that time.

There are other options, such as waiting until later in the season to begin play with the hope that more arenas would be able to have fans. But starting in December instead of mid-January or later could generate a difference of roughly $500 million in revenue, the person said.

Revenue projections for the league this season were missed by about $1.5 billion, the person said. The losses were the result of a combination of factors — the shutdown caused by the pandemic, the cancelation of 171 regular-season games, completing the season in a bubble at Walt Disney World without fans, the nearly $200 million price tag for operating that bubble and a yearlong rift with the Chinese government that saw NBA games not shown on state television there.

Source: The Associated Press

How Chefs In The NBA Bubble Make 4,000 Meals A Week

Alexia Grant, aka Chef Lex, was one of 10 chefs invited to cook for players inside the NBA bubble. From her kitchen at Disney World, she launched the pop-up restaurant Comfort Kitchen, specializing in Caribbean and Southern comfort food. Since, she’s cooked for players from every team in the bubble, including the Miami Heat, the LA Lakers, and the Denver Nuggets. But cooking under strict quarantine isn’t easy. She can’t leave the bubble to do her own shopping and has to rely on runners to deliver her food to the players in the inner bubble.

The U Experience, a startup focused on providing university students a traditional college experience with bubble-style resort campus, moves to Boca Raton Florida (Waterstone Resort & Marina) for fall semester after local outrage from Hawaii bubble hotel plans

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Editor’s Note: On August 17, one day after this story was published, The U Experience announced it would host its program at the Waterstone Resort & Marina in Boca Raton, FL.

Last week, two Princeton alumni garnered national attention for plans to create two ‘bubble’ campuses in Hawaiʻi and Arkansas, just as the University announced that all fall instruction would be remote.

After widespread backlash from local Hawaiʻi residents, the alumni’s business idea, titled ‘The U Experience,’ will no longer come to fruition at either property.

Lane Russell ’18 and Adam Bragg ’16 started The U Experience in response to many colleges’ decisions to conduct fully virtual fall semesters. They planned to house about 150 college students, who would take classes online in a ‘bubble’ hotel, where they could “come to live out the college experience with total peace of mind,” according to the company’s website.

On the same day Russell appeared on CNN, a seven-member team of Hawaiʻi residents published a Change.org petition titled “Stop Bringing Nonresident Students to Hawaiʻi During a Pandemic,” which garnered over 11,000 signatures in just three days.

According to Lexi Figueroa, who helped write the petition, the authors also received an outpouring of support from non-residents, including University alumni, who expressed opposition to The U Experience, citing the “selfish, irresponsible, and disrespectful nature of this project.”

“We only have 340 ICU beds to service the entire population of Oʻahu,” the team behind the petition wrote to the ‘Prince.’ “A single outbreak in a The U Experience ‘bubble’ would deplete nearly half of our health resources.” In total, Oʻahu has a population of nearly one million.

On Aug. 11, the U Experience announced that it had suspended plans with Park Shore Waikīkī and Graduate Fayetteville — just four days after the Business Insider feature.

In their Aug. 11 update, The U Experience team maintained, “our goal is to disrupt education, not local communities.”

Source: Business Insider

NBA fires Houston Rockets’ photographer Bill Baptist who posted offensive meme about Kamala Harris; removed from bubble

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A photographer working in the NBA bubble at Disney World was let go by the league after he posted an offensive meme about Kamala Harris, the newly announced Democratic candidate for vice president.

Bill Baptist is a freelance photographer from Houston who has covered the Houston Rockets for a number of years and was in the bubble as an independent contractor. The meme he posted on Facebook saw a wider audience when it was shared by former Houston Comets superstar Sheryl Swoopes.

The NBA said in a statement to KPRC 2 in Houston that Baptist was no longer in the bubble.

Source: Yahoo Sports