You live by the sword, you die by the sword.
Within the course of a week, GameStop (GME) stock has moved from about $90 to $468 and back down to $90. Just a couple days ago I heard stories about people becoming multi-millionaires overnight. One person turned $50k into $48 million.
Those who cashed out did well. But there are thousands of people left holding the bag. Many people were drawn in AFTER the short squeeze already drove the price through $200, $300, $400 per share. Now the price is $90. Where will it be tomorrow?
With GME hitting $90 today, the war stories are just emerging. People are losing huge amounts of money that they only gambled a few days ago.
While blood flows in the streets, GME bagholders are rationalizing holding the stock. I’m not here to say they’re right or wrong. I am just telling you that this is a very dangerous financial game people are playing.
For many this goes beyond money. They are squeezing GameStock shorts to flip the bird to Wall Street. So they continue to hold and continue to average down. Still, money isn’t infinite and at some point people simply can’t afford to trade their futures away for a cause.
On the other hand, maybe these people are right to hold on. Maybe they all get super-rich. I have no idea, and neither do they. I only hope most people didn’t bet more than they can afford to lose. Unfortunately, it doesn’t seem that way.
Here are some examples of the damage people are experiencing and sharing on Reddit’s ‘Wall Street Bets’:
This person is down $38k in total (down $151k from peak).
Down $1.1 million over the past week.
This person says they are down $400k (although the pic shows something different).
This one speaks for itself.
Dave Portney has lost $700k. (I assume he’s talking about Vlad Tenev, Robinhood CEO.)
The person at one point owned $8+million in GameStock. Now he holds $1.3 million.