GAMESTOP: The Greatest Short Squeeze and why Wall Street STILL wins in the end...

It's the story of David Vs Goliath, except there are multiple Davids working together to take down Goliath Hedge Funds.

The beginnings of GameStop (GME)’s massive run begin over a year ago in September 2019, when a reddit user named DeepF*******Value.

GameStop slowly trended up and around the anniversary of their first post, DeepF*******Value would report back with nearly a million dollars in gains.

Others wondered just how such gains could be realized from a “meme” stock.

And when DeepF*******Value turned their $53k worth of GME call options into $3.2 million, WallStreetBets, now having nearly 2 million subscribers, and also having seen over a year of monthly – and sometimes weekly – updates from this user, was now very familiar with GME.

There were more short sold shares of GME than there were actual shares of GME. This was caused by a phenomenon known as “naked short selling”, where shares that don’t actually exist are sold on the market.

GME had the highest short interest of any stock in North America, which some of the savvier members of WallStreetBets were quick to point out.

Some began speculating that a “short squeeze” would happen. This is where a rapid price runup would occur due to short sellers trying to cover their short positions.

Members of WallStreetBets pounced.

And the rest is history. Except not quite.

If you recall from our previous article on Robinhood👇, the favored discount trading platform of WallStreetBets and novice investors everywhere, Robinhood doesn’t actually handle their own order flow.

https://katusaresearch.com/robinhood-trading-exposed-steal-from-the-poor-and-give-to-the-ultra-rich/

Instead, Robinhood sends their orders to a number of market maker firms who execute the trades on their behalf.

And the lead recipient of Robinhood’s order flow, who gets over half of all of Robinhood’s trades, is Citadel Securities… part of the Citadel LLC group of companies, the same one that just “bailed out” Melvin Capital in exchange for a revenue share.

For a quick refresher, this order flow from Robinhood allows Citadel to “front-run” client orders by placing their own trades ahead of Robinhood users.

So when Melvin Capital needed a bailout, Citadel Securities (Robinhood) jumped in.

When you think about Citadel being able to swoop in and purchase a revenue share of a historically strong-performing fund like Melvin Capital for bargain bin prices… you have to wonder…

Even when Wall Street loses, Wall Street still manages to win.

This saga will continue.

It’s the establishment vs the rebels. The Davids vs Goliath.

Robinhood is now facing Class Action Lawsuit.

Watch more to learn the lessons and the next phase of this chapter.

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