The short sellers are paying (a lot of) interest on their positions and they need those shares. The higher the price goes, the higher the interest rates get.
People long $GME can maintain their positions indefinitely while the short sellers bleed.
This situation could have been prevented if the short sellers acquired enough calls to cover their position in the event of a price spike. One would think that a rich-ass hedge fund manager would do something basic like that.
Rational from the POV of investors looking to extract some short-term returns. Completely irrational in that nobody seems to give a shit about Gamestop and they're actual performance as a business.
A stock price is never just about the fundamentals of the company. It's not rational to think of stock prices only from that limited perspective. You _must_ consider the supply and demand for the stock and the people that are currently trading it. They are a part of the equation.
An argument could actually be made that Gamestop should be worth about $250 a share, assuming they capitalize on this short squeeze by issuing new shares and turn things around/pivot well.
One buys a stock on the premise that someone else will pay more for it in the future.
Most of the time the future is years down the road, because you made a good bet on what business would be profitable. Sometimes the future is the following Tuesday because someone got out over their skis and _needs_ your stock now.
TBH what looks like what is happening right now is more of a game of chicken between the short sellers. We'll find out friday when some options contracts expire. Seems like some shorts are just seeing if they can wait it out.
But there is no one "bleeding" as they won't realize the losses until they sell the contract or it expires.
The short sellers are paying (a lot of) interest on their positions and they need those shares. The higher the price goes, the higher the interest rates get.
People long $GME can maintain their positions indefinitely while the short sellers bleed.
This situation could have been prevented if the short sellers acquired enough calls to cover their position in the event of a price spike. One would think that a rich-ass hedge fund manager would do something basic like that.