The NEW GameStop Infinite Money Glitch

What's up, Graham? It's guys here. So, you know the saying that lightning never strikes the same place twice? Well, the lie detector test determined that was a lie. And in the last week, GameStop did it again! The infinite money printer is back on, stronger than ever. But what's really weird about it is that this time, throughout the last week, almost nobody in the media was talking about it.

Well, GameStop silently rallied from forty dollars a share all the way to three hundred dollars, with some people saying it could then hit a thousand dollars. I know it's wild enough if this happens once, but a second time is unheard of to this magnitude. And with all eyes now back on GameStop, it could be another infinite money glitch, as the price goes up, causing short sellers to exit their positions, which causes the price of the stock to go up even higher, causing more short sellers to exit their positions, causing the price to go even higher.

But this time, there's one fundamental difference that could change the entire outcome in terms of what this does. And that's with a lot of attention on brokerages right now, not to disable trading and let whatever happens happens. So, let's talk about exactly what's going on that's causing the price of the stock to skyrocket for a second time—how this company could now be positioned for a very strong rebound or a flash crash—and what this means for you, whether you just want to hear about some good old-fashioned investing drama or if you want to buy in, potentially riding this even higher.

But before I go into that, I just want to ask a quick favor of you: to game smash that like button for the YouTube algorithm by making it turn blue. And remember, it's not like button manipulation if we all just happen to like the video. In doing so, it helps out the channel tremendously, and it's totally free and very fun to do.

Alright, it's not that fun, but it does help pass the time. Oh, and also just remember this is not investing advice; this is for entertainment purposes only. I don't know what I'm talking about, and I am totally clueless, so do not listen to me. Alright, so with that out of the way, thank you so much, and now let's begin.

First, let me bring you up to speed with what's happened, because it's been a wild ride and probably some of the juiciest drama that we've seen in the investing space in the last year. Oh, and by the way, if you already know all the background information and you just want to skip ahead to the point where I last covered this, just go to this time stamp right here.

But otherwise, this is where we should really start. Basically, for those not aware, GameStop was a brick-and-mortar gaming store that sold video games, consoles, controllers, and collectibles. But throughout the last few years, GameStop was losing revenue to other online businesses, and every day that went by was another day that GameStop was getting left behind.

That was at the point where large Wall Street institutional investors began shorting the price of the stock, basically betting that the price would continue going down. And really, a lot of people felt like GameStop would eventually be destined to a gravestone right next to Toys “R” Us in Circuit City. But not too long ago, things began turning around. Microsoft and Sony were releasing their next generation game consoles, which would still have discs for people who wanted to buy a physical copy, and GameStop would provide that.

From there, GameStop announced that they saw a 519% jump in online sales when they were forced to shut down their physical locations. The billionaire co-founder of Chewy.com also announced that he bought a nine percent stake in the company. It was at that point that users on Reddit's WallStreetBets discovered an interesting little secret about the stock that would cause it to skyrocket to the moon under the right conditions.

And that was just this—GameStop was one of the most shorted stocks on the stock market. In fact, it was so shorted that more shares were shorted than actually exist in the market for sale. That would cause the stock to turn into a rocket ship if enough good news came out, and that would cause short sellers to have to buy the underlying shares of the stock in order to exit their position.

Well, as GameStop actually started doing pretty well, that caused more people to buy in, causing the price of the stock to go up, which caused short sellers to have to exit their position, which caused the stock to rise even higher, which caused other short sellers to have to exit their position, which caused it to go even higher and higher and higher—to the moon! It was really just a stampede all the way to the top while some people were making tens of millions of dollars in the process.

But then all of a sudden, several brokerages disabled their users from buying any more GameStop shares, causing the price to fall substantially. Now, of course, with this, there are theories floating around that this was secretly caused by large Wall Street institutional investors who didn't want to lose billions of dollars to retail traders. There was also thinking that Robinhood was in on it because they route their order flow to Citadel, who lent money to Melvin Capital, who was losing billions of dollars as GameStop went up in price.

Realistically, though, the most plausible scenario when it comes to this is that there was simply not enough shares available on the market to buy, and when clearing houses weren't able to guarantee those stocks to their users, it falls back on the brokerage. And if they try to collect shares from a seller who no longer has them, the brokerage is going to be out a lot of money.

But really, regardless of the reason behind this, the halting of GameStop shares for sale was a huge controversy. Vlad from Robinhood tried to do some damage control across the internet. YouTube and everyone involved was questioned by Congress about the situation to prevent it from happening again. But the one person we gotta talk about here, who is almost at the center of all of it, was a user of Reddit's WallStreetBets known none other than Deep F’ing Value.

And just for the record, he is not a cat. Throughout the last year, he's been investing hundreds of thousands of dollars into GameStop call options, which were later worth over 44 million dollars at the peak. And it became evident that after prices peaked and trading halted, he sold off the majority of his holdings, and then prices fell even further. But when Congress questioned him about whether or not he actually felt GameStop was worth the price it was currently trading at—almost implying that he didn't feel like it was worth forty dollars a share—he answered back with yes.

And then when pressed even further about whether or not he would buy GameStop at the current level at forty dollars, he said again, yes. And sure enough, he actually didn't. He doubled down on GameStop at forty dollars a share, and now for a second time, he rode that all the way up to three hundred dollars a share—and now even potentially higher, depending on what happens.

So now that brings us to today, where the price of GameStop is trading between 250 and 300 a share. And now, of course, people are wondering how much higher can it go. Well, in terms of what caused the price of the stock to skyrocket again seemingly out of nowhere, it's probably not what you would expect. First, you would assume that short sellers had learned their lesson from the first time. But nope! 30 percent of the outstanding GameStop shares are still being shorted.

Now this is certainly a lot less than the 150 percent it used to be, but still, thirty percent of all shares outstanding is a high number, especially when that was reported back at a stock price of a hundred and one dollars a share. That just means there's potentially room for a short squeeze should any good news come up. And that, of course, brings us to round two. On February 23rd, GameStop announced its CEO would be resigning and they would find someone else to better lead the team. That caused the stock price to go up by a hundred percent.

Then after that, on Monday, March 8th, GameStop announced that the billionaire Ryan Cohen is chairing a new committee geared towards transforming GameStop into a technology business. And on that news, the stock price doubles again. But once it surpassed 300 a share, something interesting happened. Within minutes, there was a massive sell-off and the stock price dropped 40 percent.

And in a 30-minute time span, trading was halted six times for five minutes due to volatility. See, for those not aware, an exchange has the right to temporarily halt the stock from trading due to too much volatility. So if a stock goes up too much or down too much in a very short period of time, trading temporarily stops. People could take a breather and do some research, and then from there after five minutes, trading is resumed again.

Well, the good news for GameStop is that after the sudden drop, the price almost immediately recovered. And while prices are currently still hovering around 260 dollars a share, the ultimate question is: is it a good idea to buy in? My honest, unbiased advice from someone who has absolutely no skin in the game is that the current price of GameStop makes absolutely no sense, and it's driven entirely by irrational investor excitement about the stock.

Now that's not to say it can't keep going even higher, but it's really important to realize that at these levels, the price it's trading at has entirely detached from the company itself, and it's really taken on more of a life of its own as a meme stock turned money printer that soars on any amount of good news about the stock. Like, there's no reasonable rationalization as to why GameStop should be worth nine billion dollars more just within 24 hours of an announcement that Ryan Cohen is leading an e-commerce committee.

Really, someone has to question why that is now worth nine billion dollars. Like, if that has so much value, I would gladly start my own committee! But my committee, I would be giving you two free stocks by using the link down below in the description because Webull is going to be giving you two free stocks, and those stocks could be worth all the way up to 1,850 dollars. Enjoy! Link down below in the description.

But fundamentals aside—because I realize it's not like a boomer thing to talk about in this day and age of fundamentals—it's certainly possible for the price of GameStop to continue going higher. It's still a stock with high short interest, and when a group of retail traders all just really like the stock, it's possible for that momentum to continue pushing the stock higher than normal.

However, at some points, the game has to stop because it's just unsustainable. Whether that price is 200, 400, or 500 is anyone's guess. And really, once it peaks, it's going to be a sudden race to the bottom as people begin selling out and taking their profits.

Although you also have to consider that when you hear that 50% of traders say they're going to be using a portion of their stimulus check to invest, it's not out of the ordinary for certain stocks to ride on that momentum and make its investors a lot of money. Personally, I would probably recommend just sitting this one out unless you're treating it like a casino where you're buying in for the experience, for fun, and without the expectation of making any money back in return.

If you could separate this type of trading from an investment and you don't mind potentially losing a lot of money, then have fun and buy in. But as a long-term investment for me, it just doesn't make any sense at these current numbers, and this type of momentum can't last forever.

But maybe that's exactly why this stock did so well from the very beginning. GameStop is not about the numbers; it's not about logical valuations or the intrinsic value. Instead, I believe it's about sticking it to the hedge funds and institutional investors by buying the stocks that they don't believe in. It's about banding together and being a part of a community, and all either making a lot of money at the same time or losing a lot of money.

And if that's the case and you have fun watching the price of the stock, then fine. Although it's important to still acknowledge this for what it is: it's not investing. Instead, you're paying for an experience just like you would going to a casino for fun with your friends.

And plus, who knows? Maybe at one point, GameStop is actually going to be worth the price it's trading at today. Some analysts say they're really worth about 2 billion dollars, which would put them around the 30 per share range. And again, I say all of this as someone who is completely neutral. I am not buying GameStop; I'm not selling it; I'm not shorting it; I'm not investing in it.

But as somebody who follows all aspects of the stock market extremely closely and as someone who also really likes the Reddit community WallStreetBets, it's important to understand exactly what it is, the risks involved, why it's trading so high, and what that means for you as an investor. If you buy it expecting it to go up, it may very well continue going even higher, but it's driven right now by a lot of market momentum, high short interest, and a lot of good news that's just recently come out.

Not to mention also the expectation that there's going to be someone else willing to buy those stocks at a higher price than what you paid. In terms of how high it might go or if we've already peaked, it's yet to be seen. Now, objectively today, the amount of shares shorted on the market is substantially less than what it was a month ago, suggesting that we might not see quite as big of a run-up.

But just like the last time showed us, anything could happen. And the best thing that you could do today is really just to expect the unexpected. And also get your two free stocks down below in the description.

So with that said, you guys, thank you so much for watching! I really appreciate it. As always, make sure to destroy the like button, subscribe button, and notification bell. Also, feel free to add me on Instagram; I post pretty much daily. So if you want to be a part of it there, feel free to add me there as my second channel, The Graham Stephan Show. I post there every single day. I'm not posting here, so if you want to see a brand new video from me every single day, make sure to add yourself to that.

And then lastly, if you guys want those two free stocks, use the link down below in the description, and Webull is going to be giving you two free stocks when you deposit a hundred dollars on the platform. Those stocks could be worth all the way up to one thousand to eight hundred and fifty dollars, so it's pretty much like free money! If you want free money, use that link down below. Let me know which stocks you get. Thank you so much for watching, and until next time!