Where did Wall Street go so Wrong?
Hedge funds/Wall Street continued selling counterfeit shares or naked shorting in 2020, and this drove GameStop’s price down to $4 per share. Ryan Cohen, the co-founder and former CEO of Chewy.com was officially introduced as Gamestop's new chairman in January 2021.
Ryan Cohen convinced Wall Street that pets are big business, and went head-to-head against Amazon in this major category beating them handily. Cohen, through his investment company RC Ventures, bought 9,001,000 shares of GME stock at $8.43 per share in September 2020. Due to his substantial investment in GME, his prior expertise in building a successful e-commerce business, and his especially strong opinion about the poor performance of GameStop’s leadership team, it's no surprise that he then wrote the following letter to GameStop’s Board of Directors.
What Really Happened in January 2021
Now retail investors, fully aware of what Ryan Cohen’s expertise brings to the table, went into a worldwide buying frenzy. This sent GME's stock price soaring. As this was happening, a small amount of short sellers started to buy-to-close their short positions. This extra buying demand exerted even further upward momentum on the stock price.
Remember the example from Sears discussed earlier? That is the same catastrophic predicament the hedge funds and brokers were facing on Jan. 28th of 2021. Unlike the example, it wasn’t just one person’s life savings, or even one entire bank’s assets at stake, the entire US financial system was at risk - and still is now!
"We have come dangerously close to the collapse of the entire system"
THOMAS PETERFFY, FOUNDER AND CHAIR OF INTERACTIVE BROKERS
That risk was a good reason to prompt Robinhood (and other brokers) to turn off the buy button. This immediately resulted in its intended purpose of driving GME's (as well as many other heavily short-sold companies still maliciously referred to by MSM as “meme stocks”) stock price from $482.85 on January 28th all the way down to $193.60 on January 31st! There were 3 congressional hearings in the months afterward. It is with conviction, that many retail investors believe Wall Street has been continually manipulating GME stock price since January 2021, which is only digging the hole deeper and deeper to delay the inevitable collapse they are facing. Short sellers are clinging to the desperate hope that Ryan Cohen and GameStop’s turnaround plan is not the raging success GME stockholders expect it to be. They are trying to survive “one more day”.
"Each thing we did bought us one more day...the choice was between painful and more painful"
KEN GRIFFIN, CEO OF CITADEL LLC
Unless GameStop goes bankrupt, Wall Street must inevitably buy-to-close their positions. Bankruptcy is looking extremely unlikely with the Cinderella story of GameStop’s revival by top-notch leadership & a passionate community of well-educated investors who love the stock. Either GameStop’s success will soon force them to close positions, or retail investors direct registering all 304 million shares and “locking the float” will.