Founder and Chairman of Interactive Brokers Thomas Peterffy joins ‘Closing Bell’ on CNBC to discuss what would have happened to GameStop’s share price had brokerages not stepped in.

We have come dangerously close to the collapse of the entire system and the public seems to be completely unaware of that including Congress and the regulators.

On January 26th GME closed at $77/share, the following day it closed at $148, the following morning on January 28th the stock opened at $355 and traded up to $480.

At the same time, GME had 50M shares outstanding, and the short interest of 70M shares. In addition, there were about 1.5M calls, which would call for 150M shares.

When the longs repay their margin loans, and exercise the calls, their brokers would have been obligated by the rules as they are today to deliver to them 270M shares while only 50M shares existed.

When the shorts cannot deliver the shares, the broker representing the longs, must, by the rules of the system, go into the market and buy the shares at any price, pushing the price into the thousands.

Source: CNBC

 

CNBC’s Kate Rooney takes a look at the hearing over GameStop’s recent price action and Robinhood’s trading limits set for Thursday.

Among those advising him [Vlad Tenev, Robinhood CEO] ahead of his hearing is former SEC Commissioner Dan Gallagher, who joined Robinhood about a year ago, and two of Robinhood’s top communications team members joined from one of its regulators, FINRA. One was also on President Obama’s Treasury Communications Team. Robinhood has also reportedly hired Reginald Brown, a veteran Congressional Investigation lawyer.

Robinhood seems to have no issue paying for every advisor possible, while it claims to have halted buying of GameStop due to their inability to pay clearing houses. It is evident that Vlad Tenev and the team at Robinhood is more concerned with protecting their anticipated IPO, than letting the people trade.

No, not like that!

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Gabe Plotkin of Melvin Capital’s testimony for the “Game Stopped? Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide,” taking place Feb. 18 at 12 p.m. ET. has been released. 

Plotkin begins his testimony by stating that has been “humbled” by the unprecedented events, as many investors “on all sides” have experienced losses.

I am humbled by these unprecedented events. Many investors on all sides have experienced losses. I am here today to share my personal experience and to be helpful in this conversation.

Plotkin then goes on to deny the claims that Citadel bailed them out, instead insisting that their cash injection was simply a proactive investment.

Melvin Capital was not “bailed out” in the midst of these events. Citadel proactively reached out to become a new investor, similar to the investments others make in our fund.

The cherry on top here is Gabe admitting that the extent of their fundamentals on shorting GameStop is that selling video games in physical stores is being overtaken. I’m surprised he didn’t just say it’s the next Blockbuster.

In fact, we had been short GameStop since Melvin’s inception six years earlier because we believed and still believe that its business model – selling new and used video games in physical stores – is being overtaken.

If your short position was based upon physical stores being an outdated business model, why would you not close your position upon Ryan Cohen, the man who beat Amazon at e-commerce with Chewy, purchasing 9% of the company? What about when RC Ventures sent a letter to the board urging a digital transition, and hired an attorney specializing in hostile takeovers?  What about when Cohen increased his stake? When the news released that Cohen and his Chewy team had been awarded 3 seats on the board, why not close the position then Gabe?

Greed. That’s why.

Read the full testimony here on house.gov

Keith “Roaring Kitty” Gill’s Testimony before the U.S. House Committee on Financial Services is out. In the statement, Gill touches on his initial investment thesis and how it has adapted to the developments over the years.

The investment I made was risky, but I was confident in my analysis, and I was willing to accept the loss if I was proven wrong. My timing was far from perfect, and many of the options contracts I purchased expired worthless because GameStop’s stock price remained depressed longer than I expected.

Gill also uses the testimony to touch on more personal matters, stating that after the unexpected loss of his sister Sara, it brought tremendous joy to share good news with his family for a change.

Ultimately my GameStop investment was a success. But the thing is, I felt that way in December far before the peak, when the stock was at $20 a share. I was so happy to visit my family in Brockton for the holidays and give them the great news – we were millionaires. That money will go such a long way for my family. We had an incredibly difficult 2020. In addition to dealing with COVID, we lost my sister Sara unexpectedly in June. It brought me tremendous joy to share good news with my family for a change. I am grateful to be able to give back to my community and to support my family, most of all my wife Caroline who has stuck with me through very tough times.

Gill concludes his statement with his thoughts on GameStop’s unique opportunity within the gaming industry moving forward.

As for what I expect moving forward: GameStop’s stock price may have gotten a bit ahead of itself last month, but I’m as bullish as I’ve ever been on a potential turnaround. In short, I like the stock. And what’s stunning is that, as far as I can tell, the market remains oblivious to GameStop’s unique opportunity within the gaming industry

Read the full testimony here on house.gov

On Thursday, a House committee will hear testimony from Robinhood CEO Vlad Tenev, Melvin Capital CEO Gabriel Plotkin, and Citadel CEO Kenneth Griffin.

Given that the nuances of the situation are only understood by those with a deep grasp on naked short interest, retail brokerages, hedge funds, and market makers, we at GMEdd decided it would be best to lay out some of the questions that need to be answered by the men that rarely allow themselves to be questioned in the public eye.

Read the full statement here

The latest development in our series of tracking  Ryan Cohen’s Twitter following is a wildcard. Ryan Cohen just followed the man, the myth, the legend, Elon Musk.

We have confirmed Elon Musk has not followed him back at this time. Cohen, in trying to keep the stylish “10 following,” has unfollowed SEGA to accommodate for the spot for Musk.

Is it a temporary follow to acknowledge the famous “Gamestonk!!” tweet  that collapsed the $150/share wall? Or is there a deeper meaning here? Who knows.

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CNBC Mad Money’s Jim Cramer still can’t get GameStop out of his mind. Cramer has spent the last few hours ranting  on Twitter about how “Ryan” can’t change a “crummy mall-based company.” Cramer goes on to say that “He may not even have a plan!”

At this point,  I can’t help but think Cramer is just looking for attention. 

Back in December, Cramer first started showing interest in $GME. On TheStreet Live, he encouraged his viewers to not be snobs, and to do their own due diligence . 

What’s changed since December, Jim?  At this point, it’s comedic. Your ridiculing only adds fuel to the fire and makes us want to buy more.

Published today, this profile by Business Insider sheds light on Ryan Cohen’s story, explaining how he thinks about business. I would recommend anyone who is just getting started on their GameStop fundamentals research to read it and take from it what you will.

“I’m lucky. I’m talking to a lot of different entrepreneurs and business[es] and looking at corporate board opportunities,” he said. “I’m going through that exploratory process. I have no plans to sit in retirement, that’s for sure. I’m 33 and I’m competitive and I like consumer businesses and I like to win.” Ryan Cohen told TechCrunch in 2019.

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Set your calendars and grab your popcorn, the virtual hearing, titled “Game Stopped? Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide,” will take place Feb. 18 at 12 p.m. ET.

House Representative Maxine Waters has announced that the committee will hear  testimony from Robinhood CEO Vlad Tenev, Reddit CEO Steve Huffman , Melvin Capital CEO Gabriel Plotkin, Citadel CEO Kenneth Griffin, and Keith “Roaring Kitty” Gill.

Given that the hearing is virtual, Roaring Kitty and Vlad Tenev will not finally be in the same place. This does not alleviate the lasting conspiracy that Kitty and Tenev are the same person, pulling off the most elaborate marketing stunt of all time. /sarcasm

We can expect the questioning to come from politicians with less thorough comprehension of the markets than a Wallstreetbets Redditor who joined two weeks ago shouting, “Diamond hands 💎🤲🏼.”

Here’s where to watch it 

Looks like the cats out of the bag on this one. Undisclosed sources have shared with Reuters exclusively that GameStop was unable to capitalize on the recent price action by deploying the $100M shelf offering that was unveiled at Q3 earnings. Given that the offering was capped at $100 million, it would be beneficial to offer it when the market cap was so uniquely high, as it would result in less shares being released to the market, therefore diluting existing shareholders by immensely less.

While the possibility for the board to add 10% more shares to the market had frightened investors at Q3 earnings, there was a general consensus among us long investors that raising a practically free $100M to fund growth at $300 to $500/share would have been a bullish move.

Unfortunately, the SEC requires that earnings be published at the time the offering is deployed, so it is possible that this offering will not be exercised until Q4 earnings expected in March, if at all. Despite Sherman stating that utilizing the offering is unlikely, it could be used to raise money for the omnichannel transition, where a roadmap could be laid out as well. 

To be clear, the source is unknown so this news is not fact, but it is still worth discussing.

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