Chaos broke out this week when a group of retail investors took to a reddit message board to play a massive short squeeze on Wall St hedge funds using options on highly shorted companies GameStop, AMC, Blackberry, and others.
Everyone chimed in from Elizabeth Warren to Elon Musk.
We've seen this kind of short action before in sports business at the 2015 Super Bowl. A summary of what happened with a number of links can be found here:
That squeeze got so out of control sellers who had sold Super Bowl tickets for $5k each were breaking their orders, paying the marketplaces the money back, then reselling to the speculators who had to cover their losses for $15k+. It left the original buyers stranded in Arizona without tickets and a flimsy "money back guarantee."
The marketplaces found themselves where Robinhood is today - having to decide between ethics, survival and what was best for their customers.
The three things we learned from the infamous speculator squeeze of 2015 and how it forecasts the future for Robinhood, Wall St Bets and Gamestop.
Much, much more in the video this week with many citations.
The consumer forgets quickly. There are a lot of pundits and competitors out there piling on Robinhood saying they cannot recover trust. Maybe. Maybe not. Robinhood sold out their customers so they could survive. It is that simple. The stakes are much higher than back then, but SeatGeek, TicketNetwork and Vivid Seats did the same- choosing to refund buyers instead of honor their obligations. StubHub and Ticketmaster famously took the losses. Six years later, nobody remembers and the StubHub CEO who did the right thing was out just 24 months later. http://www.espn.com/nfl/playoffs/2014/story/_/id/12255886/hundreds-super-bowl-tickets-fall-through
"Money distorts the truth like a fat hippo in a thong." Robinhood is doing everything they can not to tell the real truth - they couldn't cover the upcoming action and had a liquidity problem. They had little choice. They either went down with the ship or lived to fight another day. Outlier events tank companies like the 2010 World Cup tanked Razor Gator. They did what they had to do. Just know that's what many people do in hard times and plan accordingly. https://www.cnbc.com/id/38428197"
Behold I send you out as sheep amidst the wolves." In every market there are many who believe the ends justify the means. Their word means nothing. " We all like to believe we'd run into the burning building, but until we feel that heat, we can never know" - Tenet. Every market has a majority who do what they do for money and power at all costs - morality and ethics be damned. Know they're out there. Hedge Funds. Bad guy brokers. Don’t budge. "Better is a little righteousness, than vast revenues without justice." - Proverbs 16:8. The sheep will win in the end. Stick together.
Three Things: GameStop, Wall St Bets & Super Bowl Tickets- We've Seen This Short Game Before...So What Next?