Friday, January 29, 2021

"There once was a stock that put to sea..." $GME

Analysis by L0m3z:

"What the institutionalists can never understand about the meme stock bros is their loyalty. When they say Hold The Line, they’re acting on spontaneous, organic fealty not just to their own individual bottom line financial interests but to the spirit of solidarity w/ their bros. No nation to believe in, no church, no community, (in many cases) no family...people are finding something bigger than themselves to belong to, and they are putting the collective energy of that tribe into action against who they identify as robbing them of the above."
One issue I see is that the autist traders have great discipline but they don't appear to have an exit strategy for this scheme. As one of our correspondents puts it,
The funny thing about the song is it essentially admits there's no end game here. I mean maybe the rocket into the sun is just ironic gallows humor, but "One day when the trading is done we'll take our gains and go." Trading is never done. How do you take your gains except by selling? Well, who are they going to sell to? The stock has gone full meta. It's a coin now. I've said stocks have gone full coin, this is what I'm talking about.
They've squeezed a low-value company to an amazingly high price.

Is a retailer that loses money on $5 billion of annual sales really worth $20 billion or more?

The GME squeeze was prefigured by the Tesla squeeze. No, nobody ever thought Tesla was worth this much. It was just a squeeze. You can tell by simple dimensional analysis that the valuation of Tesla is off by more than an order of magnitude.

And is it finally time for that tired Boomer stock to go out to pasture? As @EricBalchunas writes, the rolling 10-day volatility chart for $GME makes $TSLA look like a money market fund.


Stagflationary Mark said...

From the comments of the video:

“I personally think GameStop is worth 20 billion. Prove me wrong.”

I thought about investing in the GME “sure thing” today, but am disheartened by this. It implies that the stock has finally reached fair value and its meteoric rise should therefore be over.

Too bad. If only the sales pitch from a random Internet user would have argued GME is worth $40 billion instead, so I had a better chance of safely doubling my money over the weekend. ;)

Stagflationary Mark said...

Down to $9 billion. Halted.

Gameflop. Power to the people (holding bags).

CP said...

"Well, who are they going to sell to?"

Stagflationary Mark said...

Adapted from a joke seen on the Internet:

An old man is selling GameStop...

His pricelist reads: 1 share for $300, 3 for $1000

A young man stops by and asks to buy one share.
"That'd be 300 dollars", says the old man.

The young man then buys another one, and another one, paying $300 for each.

As the young man is walking away, he turns around, grins, and says, "Hey old man, do you realize I just bought three shares for only $900? Maybe business is not your thing."

The old man smiles and mumbles to himself, "People are funny. Every time they buy three shares instead of one, yet they keep trying to teach me how to do business..."