Random musings on whatever subject strikes my fancy, published every other day.

Game On

Have you been following the GameStop saga? It’s faster than ticker tape.

If this is all like, “whaaat???” to you, here’s a short (heh) version:

Around the second week of January, the Reddit group r/wallstreetbets noticed GameStop stock trading around $15-18. They saw it as undervalued, and also being shorted by hedge funds to a significant degree. They started buying. And buying. A feeding frenzy has ensued, running this stock up now to $325 as of this morning, though I have also seen it well over $400 in the past week or so.

As a result, the hedge funds have been socked with some huge losses. They are trying to make up for it by shorting even more. This is known among people who are not Gods of Big Finance as, “throwing good money after bad.”

And now it turns out that they may have been, um, overenthusiastic in their execution of their short-sales, because the amount of GameStop stock now sold short is greater than the amount of GameStop stock that exists in the world.

Oops.

There may be a handful of folks from the SEC stopping by to see some of these Gods of Big Finance later this morning.

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2 Comments

  1. John Douglas Porter

    Of course, it’s ok for the number of shares sold short to exceed the total number of shares; it just means some shares will have to be sold multiple times. The short sales will have to be executed at differen times.

    • That makes no sense to me, how the short sales can net to a greater number of shares than exist

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