Illegal Tactics and DTCC/Prime Broker Complicity In Naked Shorting & Retail Shutdown of GME (DTCC/Prime Brokers decision makers need to be questioned at the 2/18 GameStop Congress hearing)
TLDR: GameStop’s Congress hearing is on Feb 18th, they need to investigate the Prime Brokers and DTCC for their complicity in enabling naked shorting within GME and by extension, potential collusion to shut down trading on Jan 28th, the day the short squeeze was going to kick off. (stick to the end for an analysis of some illegal tactics short side hedge funds have been using) Thesis: On the day the retail market for GME shut down on 1/28 (the day the short squeeze would’ve happened had there been no market intervention), DTCC (clearing house monopoly) shut down retail buying in order to protect itself and Prime Brokers (which privately own the DTCC) from being exposed to the consequences of being party to illegal activity. I believe Prime Brokers and DTCC need to be called to the GameStop hearing on February 18th to be questioned for their complicity in enabling illegal naked shorting of the GME stock, as well as potential collusion to shut out retail buyers on 1/28. In my previous post (which I recommend reading for some context) I explored the subject of rampant illegal naked shorting in GME, and how Prime Brokers (consisting of banks like Goldman, Morgan, etc) and DTCC would be complicit in the naked shorting. This in turn raises the thought experiment that they would be incentivized to do anything possible to prevent the short squeeze from happening on 1/28 because had the short squeeze happened, the shorts would go bankrupt and their Prime Brokers who lent them their naked shorted shares would need to cover the shares. This would not only represent a humongous capital expense for Prime Brokers, the culpability of Prime Brokers (and that of the DTCC) in this situation would also have likely been exposed as well. A quick primer on what a Prime Broker is: Prime Brokers are essentially the service side of the short- selling business. They lend out securities and cash, you can think of them as the “house” in a casino: They provide a gambler with markers to play and to manage his winnings. According to Matt Taibi, “Under the original concept, if a hedge fund that wanted to short a stock they would first need to “locate” the stock with his Prime Broker but as time passed, Prime Brokers increasingly allowed their hedge-fund customers to use automated systems and “locate” the stock themselves, and what this does is enable short-sellers to sell stock without delivering and thereby perform naked shorts with counterfeit shares. (source: https://web.archive.org/web/20210213125246/https://www.rollingstone.com/feature/wall-streets-naked-swindle-194908/). (I highly recommend you read Matt Taibi’s article on naked shorting and how it was used to take down Bear Stearns and Lehman Brothers. There are so many parallels with GME it’s hard to miss. It’s amazing to consider that 12 years after this article was published and brought to public awareness, the problem of naked shorting still exists as a systemic issue.) Prime Brokers have a long history of being associated with naked shorting. To highlight a few examples, Prime Brokers like Merill Lynch and Goldman have long been implicated for naked shorting Overstock.com (https://www.rollingstone.com/politics/politics-news/accidentally-released-and-incredibly-embarrassing-documents-show-how-goldman-et-al-engaged-in-naked-short-selling-244035/, https://www.forbes.com/2007/02/02/naked-short-suit-overstock-biz-cx_lm_0202naked.html?sh=271400d1763f). Another example is when Goldman’s Prime Brokerage was implicated by the SEC in 2016 and got away with a small fine of 16 million (Source: https://www.sec.gov/news/pressrelease/2016-9.html). An example that very recently came in the news is a story where CIBC, BOA, UBS and TD Bank Prime Brokerages are accused of facilitating naked short selling and using counterfeit stock to attack and bring the stock price of a company from $34.77 to $1.83 (Source: https://www.securitiesfinancetimes.com/securitieslendingnews/industryarticle.php?article_id=224548). The DTCC also has a very long history of being associated with naked shorting. The Wall Street Journal noted that 1% of the DTCC’s volume end in failure to deliver which “have put DTCC in the middle of a long-running fight over whether unscrupulous investors are driving down hundreds of small companies' share prices… DTCC has turned a blind eye to the naked-shorting problem. ” (Source: https://www.wsj.com/articles/SB118359867562957720). The DTCC has also had numerous complaints submitted to the SEC for enabling naked shorting (source: https://www.sec.gov/rules/proposed/s72303/decosta122203.htm) and have been sued tens or hundreds of times for assisting naked shorts (source: https://smithonstocks.com/part-3-in-series-on-illegal-naked-shortings-role-in-stock-manipulation-prime-brokers-and-the-dtcc-have-a-troubling-monopoly-on-clearing-and-settling-stock-trades/ and http://counterfeitingstock.com/CS2.0/CounterfeitingStock.html and https://www.wsj.com/articles/SB118359867562957720) On 1/28 Robinhood received a letter from the DTCC at 4 am requiring them to halt trading or come up with 3 billion dollars, which Robinhood did not have, and therefore with one swoop of the pen the DTCC shut down buy side momentum but strangely allowed selling. Retail investors were shut out of the market and as any student of microeconomics would know, by shutting buy but only allowing sell, the price is bound to fall. Meanwhile while hedge funds were able to keep trading not only in the market but also crosstrade in the dark pools (“private” stock markets that retail is shut out of, more on this later), and use this crucial lifeline given to them by the DTCC to prevent the squeeze from happening that day. With retail abruptly being shut out from buy (even cash accounts were shut out, which didn’t make sense) and only allowed to sell, almost everyone could smell manipulation was afoot (which triggered the Congress hearing) and the most of the blame was pointed at Robinhood. Personally and in hindsight, I believe Robinhood was just a willing scapegoat. When we think about who had the most to lose if a short squeeze occurred, I’ll narrow it down to three entities, Shorts and their stakeholders (ie Citadel), Prime Brokers and the DTCC. It’s important to remember that the actual impetus that triggered the shutdown of the market for retail investors came from the DTCC. Working backwards, if you consider that GME was rampantly naked shorted and DTCC and Prime Brokers would have to be complicit in it, I believe the DTCC, Primer Brokers and possibly Citadel (who provides 40% of Robinhood’s revenue) brazenly manipulated the market on 1/28 by shutting down purchasing for retail buyers to prevent the squeeze from being squoze on that day as doing so would be catastrophic for all aforementioned parties involved. I believe that on the upcoming Gamestop Congress hearings the Financial Services Committee needs to call on decision makers of DTCC and Prime Brokers explore their role and complicity in the shut out of retail buyers that day as well as being enablers of naked shorting in GME. An interesting thought experiment: On 1/28 when the price was 450+ and shorts were likely under 100, if we assume prime brokers allowed naked shorting in GME, then when the squeeze was about to happen (or happening), if Prime Brokers had margin had called the shorts, they would presumably also also gone down because shorts would not be able to pay in that event and the brokers would be holding the bag. By that logic, they have every incentive in this case to NOT to margin call and instead the most logical option would probably would have been to make a backroom deal, which is what I personally think most likely happened. If you’ve read up to this point, you might be thinking what can I do about this? I am aware that there a lot of cynicism that we can’t do anything, that there will be no justice for retail investors who were harmed this situation, and that institutions and people in power will prevent anything from being done. I feel this sometimes too, but remember: A single voice can be drowned out, but if we all speak together then we will make our voice heard. Ape Strong Together. With the hearing coming up on February 18th, I highly recommend you email and tweet the representatives involved in the hearing, as well as your own district representatives, and urge them to read into the factors presented in this post and call the DTCC and Prime Brokers to the hearingl. They need to be questioned on why GME has so many counterfeit shares, failed to deliver, their complicity in naked shorting, and investigated for their role in the retail shut down of 1/28. Below are 4 members of congress I recommend both tweeting and emailing Alexandria Ocasio-Cortez https://twitter.com/AOC, email: [[email protected]](mailto:[email protected]) Al Green https://twitter.com/repalgreen, email: [[email protected]](mailto:[email protected]) Maxine Waters https://twitter.com/maxinewaters, email: [[email protected]](mailto:[email protected]) Nancy Pelosi Email: https://twitter.com/SpeakerPelosi email: [[email protected]](mailto:[email protected]). And you can find other members of Financial Services Committee here to reach out to: https://financialservices.house.gov/about/committee-membership.htm What follows should probably be a separate post, but I will take the opportunity to summarize some of the illegal tactics that shorts have been identified to be using in their war with retail investors. Note that this may not be an exhaustive list and there may be newer tactics deployed in the future. Retail investors might not have the same tricks, resources and willingness to break the law for profit as hedgies do, but my hope and belief is that if we pool our knowledge and analysis, we will figure out their game and effectively adapt. Feel free to forward the list below to any representatives and lawmakers if you concur that these tactics were used: Rampant Naked Shorting - With the extremely high number of Fail to Delivers (FTID) , short interest being as high as 226% recently, and institutions alone holding a staggering 177% of the total float (likely due in large part to counterfeit shares), signs strongly point to GME being rampant with naked shorts and counterfeit shares. I believe the original goal of shorts was to drive GME to bankruptcy with these naked shorts, using the laddering of naked shorts (aka short ladder attack), executed with the help of counterfeit stock which is a classic and reliable method of driving down the stock price. I believe the GME stock has seen relentlessly aggressive short attacks, especially on the week of Monday February 1st, which drove the stock price down and triggered panic selling. Ladder Attacks with the help of Dark Pools - Another identified method of ladder attacks was identified to come from crosstrading with darkpools (the stock market has its own private stock exchange where institutions can trade…). Essentially darkpools are private stock markets retail investors do not have access to, where short side funds can purchase securities “off market” and then sell “on-market”, with the effect of creating a lot more downward pressure on the market without the upward pressure from buying. Illegally masking shorts with synthetic longs. Another tactic shorts are suspected of using in GME is the use of illegally using options to evade short positions in violation of Reg SHO which SEC describes in this risk alert and which I elaborate in this post. Essentially it’s the use of using options to create synthetic longs to illegally and artificially cover and prolong short positions and at same time obscuring the true short interest %. If you consider that it would be far more profitable for shorts to not cover at high prices but instead ladder attack the price and wait for retail investors to lose interest and close their shorts at as low of a price as possible, then you can see why this strategy would be very effective. Using way out-of-money call options to obscure true short interest. You may have heard about the 43 million worth of 800 dollar calls purchased when the price was 100 and found it odd. Later it was identified as a tactic to cheaply purchase synthetic call options (since at 800 its way out of money) to obscure their short positions (with the added benefit of hedging at 800 if a squeeze does happen) One thing I want to note, particularly to legislators at the GameStop hearing: Retail investors were not incited to pump GME. Retail investors spotted a unique Short Squeeze opportunity created by the greed of short side hedge funds, whereby GameStop was being abusively naked shorted with the goal of bringing it to bankruptcy, and hedge funds were so greedy about it that they shorted the company with a short interest of 226% of float, meaning A LOT of counterfeit shares were being used to short the company. Retail investors saw this as an opportunity to short squeeze the hedge fund shorters, which is a legal and legitimate investment strategy. The short squeeze would have happened had everyone played fair, but instead, financial institutions who were culpable to the naked shorting intervened and shut down retail buying, hurting the retail investors and successfully manipulating the market. The investment itself was in my opinion a sound decision based on the short squeeze, but in hindsight retail investors did not seriously consider the risk of the market would be blatantly and publicly manipulated and that the market would be rigged against them. If this post was useful (and I hope it was! Gave up my Friday night to write this for you Apes), please upvote for visibility and share it far and wide. The GameStop hearings could be a first step and hope towards legislative change, and it’s extremely important that the right story is told at those hearings (and by the right story I mean the real truth of what happened.) I hope the truly culpable parties are investigated and brought to justice. Again, I know many of us feel cynical that anything meaning will be done towards finding justice against the lawbreakers in this case, but if you feel even an ounce of injustice or empathy at how retail investors were unfairly harmed in the course of investing in GME, I strongly urge you to contact a legislator associated with the GameStop hearings and bring this to their attention so they can review this case with more complete information. In addition I recommend you to contact the SEC and any journalist you know or via journalist tip lines. It’s not going to be easy but the more awareness we raise the higher the likelihood our voices will be heard and positive change will be made. As we navigate the rocky waters ahead, I’ll gift you with a favorite quote of mine: The only difference between a nightmare and a dream is how big your balls are. 🚀🚀🚀 Disclaimer: I am not an investment advisor, I just like the stock. Ps. If you’ve read to the end, I’ll leave you with a few more thoughts and reminders: - If I were to distill life into one thing, it would be to never lose hope. - Remember that if you’ve lost money in any way shape or form, don’t be depressed, money can always be made back and the important thing is to maintain a good attitude. - Only invest what you can afford to lose. - Perhaps the most important factor in good investing is patience. If you’d like to read more about counterfeiting stocks this is a good place to start http://counterfeitingstock.com/CS2.0/CounterfeitingStock.html
Illegal Tactics and DTCC/Prime Broker Complicity In Naked Shorting & Retail Shutdown of GME (DTCC/Prime Brokers decision makers need to be questioned at the 2/18 GameStop Congress hearing)
TLDR: GameStop’s Congress hearing is on Feb 18th, they need to investigate the Prime Brokers and DTCC for their complicity in enabling naked shorting within GME and by extension, potential collusion to shut down trading on Jan 28th, the day the short squeeze was going to kick off. (stick to the end for an analysis of some illegal tactics short side hedge funds have been using) Thesis: On the day the retail market for GME shut down on 1/28 (the day the short squeeze would’ve happened had there been no market intervention), DTCC (clearing house monopoly) shut down retail buying in order to protect itself and Prime Brokers (which privately own the DTCC) from being exposed to the consequences of being party to illegal activity. I believe Prime Brokers and DTCC need to be called to the GameStop hearing on February 18th to be questioned for their complicity in enabling illegal naked shorting of the GME stock, as well as potential collusion to shut out retail buyers on 1/28. In my previous post (which I recommend reading for some context) I explored the subject of rampant illegal naked shorting in GME, and how Prime Brokers (consisting of banks like Goldman, Morgan, etc) and DTCC would be complicit in the naked shorting. This in turn raises the thought experiment that they would be incentivized to do anything possible to prevent the short squeeze from happening on 1/28 because had the short squeeze happened, the shorts would go bankrupt and their Prime Brokers who lent them their naked shorted shares would need to cover the shares. This would not only represent a humongous capital expense for Prime Brokers, the culpability of Prime Brokers (and that of the DTCC) in this situation would also have likely been exposed as well. A quick primer on what a Prime Broker is: Prime Brokers are essentially the service side of the short- selling business. They lend out securities and cash, you can think of them as the “house” in a casino: They provide a gambler with markers to play and to manage his winnings. According to Matt Taibi, “Under the original concept, if a hedge fund that wanted to short a stock they would first need to “locate” the stock with his Prime Broker but as time passed, Prime Brokers increasingly allowed their hedge-fund customers to use automated systems and “locate” the stock themselves, and what this does is enable short-sellers to sell stock without delivering and thereby perform naked shorts with counterfeit shares. (source: https://web.archive.org/web/20210213125246/https://www.rollingstone.com/feature/wall-streets-naked-swindle-194908/). (I highly recommend you read Matt Taibi’s article on naked shorting and how it was used to take down Bear Stearns and Lehman Brothers. There are so many parallels with GME it’s hard to miss. It’s amazing to consider that 12 years after this article was published and brought to public awareness, the problem of naked shorting still exists as a systemic issue.) Prime Brokers have a long history of being associated with naked shorting. To highlight a few examples, Prime Brokers like Merill Lynch and Goldman have long been implicated for naked shorting Overstock.com (https://www.rollingstone.com/politics/politics-news/accidentally-released-and-incredibly-embarrassing-documents-show-how-goldman-et-al-engaged-in-naked-short-selling-244035/, https://www.forbes.com/2007/02/02/naked-short-suit-overstock-biz-cx_lm_0202naked.html?sh=271400d1763f). Another example is when Goldman’s Prime Brokerage was implicated by the SEC in 2016 and got away with a small fine of 16 million (Source: https://www.sec.gov/news/pressrelease/2016-9.html). An example that very recently came in the news is a story where CIBC, BOA, UBS and TD Bank Prime Brokerages are accused of facilitating naked short selling and using counterfeit stock to attack and bring the stock price of a company from $34.77 to $1.83 (Source: https://www.securitiesfinancetimes.com/securitieslendingnews/industryarticle.php?article_id=224548). The DTCC also has a very long history of being associated with naked shorting. The Wall Street Journal noted that 1% of the DTCC’s volume end in failure to deliver which “have put DTCC in the middle of a long-running fight over whether unscrupulous investors are driving down hundreds of small companies' share prices… DTCC has turned a blind eye to the naked-shorting problem. ” (Source: https://www.wsj.com/articles/SB118359867562957720). The DTCC has also had numerous complaints submitted to the SEC for enabling naked shorting (source: https://www.sec.gov/rules/proposed/s72303/decosta122203.htm) and have been sued tens or hundreds of times for assisting naked shorts (source: https://smithonstocks.com/part-3-in-series-on-illegal-naked-shortings-role-in-stock-manipulation-prime-brokers-and-the-dtcc-have-a-troubling-monopoly-on-clearing-and-settling-stock-trades/ and http://counterfeitingstock.com/CS2.0/CounterfeitingStock.html and https://www.wsj.com/articles/SB118359867562957720) On 1/28 Robinhood received a letter from the DTCC at 4 am requiring them to halt trading or come up with 3 billion dollars, which Robinhood did not have, and therefore with one swoop of the pen the DTCC shut down buy side momentum but strangely allowed selling. Retail investors were shut out of the market and as any student of microeconomics would know, by shutting buy but only allowing sell, the price is bound to fall. Meanwhile while hedge funds were able to keep trading not only in the market but also crosstrade in the dark pools (“private” stock markets that retail is shut out of, more on this later), and use this crucial lifeline given to them by the DTCC to prevent the squeeze from happening that day. With retail abruptly being shut out from buy (even cash accounts were shut out, which didn’t make sense) and only allowed to sell, almost everyone could smell manipulation was afoot (which triggered the Congress hearing) and the most of the blame was pointed at Robinhood. Personally and in hindsight, I believe Robinhood was just a willing scapegoat. When we think about who had the most to lose if a short squeeze occurred, I’ll narrow it down to three entities, Shorts and their stakeholders (ie Citadel), Prime Brokers and the DTCC. It’s important to remember that the actual impetus that triggered the shutdown of the market for retail investors came from the DTCC. Working backwards, if you consider that GME was rampantly naked shorted and DTCC and Prime Brokers would have to be complicit in it, I believe the DTCC, Primer Brokers and possibly Citadel (who provides 40% of Robinhood’s revenue) brazenly manipulated the market on 1/28 by shutting down purchasing for retail buyers to prevent the squeeze from being squoze on that day as doing so would be catastrophic for all aforementioned parties involved. I believe that on the upcoming Gamestop Congress hearings the Financial Services Committee needs to call on decision makers of DTCC and Prime Brokers explore their role and complicity in the shut out of retail buyers that day as well as being enablers of naked shorting in GME. An interesting thought experiment: On 1/28 when the price was 450+ and shorts were likely under 100, if we assume prime brokers allowed naked shorting in GME, then when the squeeze was about to happen (or happening), if Prime Brokers had margin had called the shorts, they would presumably also also gone down because shorts would not be able to pay in that event and the brokers would be holding the bag. By that logic, they have every incentive in this case to NOT to margin call and instead the most logical option would probably would have been to make a backroom deal, which is what I personally think most likely happened. If you’ve read up to this point, you might be thinking what can I do about this? I am aware that there a lot of cynicism that we can’t do anything, that there will be no justice for retail investors who were harmed this situation, and that institutions and people in power will prevent anything from being done. I feel this sometimes too, but remember: A single voice can be drowned out, but if we all speak together then we will make our voice heard. Ape Strong Together. With the hearing coming up on February 18th, I highly recommend you email and tweet the representatives involved in the hearing, as well as your own district representatives, and urge them to read into the factors presented in this post and call the DTCC and Prime Brokers to the hearingl. They need to be questioned on why GME has so many counterfeit shares, failed to deliver, their complicity in naked shorting, and investigated for their role in the retail shut down of 1/28. Below are 4 members of congress I recommend both tweeting and emailing Alexandria Ocasio-Cortez https://twitter.com/AOC, email: [[email protected]](mailto:[email protected]) Al Green https://twitter.com/repalgreen, email: [[email protected]](mailto:[email protected]) Maxine Waters https://twitter.com/maxinewaters, email: [[email protected]](mailto:[email protected]) Nancy Pelosi Email: https://twitter.com/SpeakerPelosi email: [[email protected]](mailto:[email protected]). And you can find other members of Financial Services Committee here to reach out to: https://financialservices.house.gov/about/committee-membership.htm If there's one thing I took away from this its that we can't wait for other people to do the right thing, we each need to individually step up to ensure it happens What follows should probably be a separate post, but I will take the opportunity to summarize some of the illegal tactics that shorts have been identified to be using in their war with retail investors. Note that this may not be an exhaustive list and there may be newer tactics deployed in the future. Retail investors might not have the same tricks, resources and willingness to break the law for profit as hedgies do, but my hope and belief is that if we pool our knowledge and analysis, we will figure out their game and effectively adapt. Feel free to forward the list below to any representatives and lawmakers if you concur that these tactics were used: Rampant Naked Shorting - With the extremely high number of Fail to Delivers (FTID) , short interest being as high as 226% recently, and institutions alone holding a staggering 177% of the total float (likely due in large part to counterfeit shares), signs strongly point to GME being rampant with naked shorts and counterfeit shares. I believe the original goal of shorts was to drive GME to bankruptcy with these naked shorts, using the laddering of naked shorts (aka short ladder attack), executed with the help of counterfeit stock which is a classic and reliable method of driving down the stock price. I believe the GME stock has seen relentlessly aggressive short attacks, especially on the week of Monday February 1st, which drove the stock price down and triggered panic selling. Ladder Attacks with the help of Dark Pools - Another identified method of ladder attacks was identified to come from crosstrading with darkpools (the stock market has its own private stock exchange where institutions can trade…). Essentially darkpools are private stock markets retail investors do not have access to, where short side funds can purchase securities “off market” and then sell “on-market”, with the effect of creating a lot more downward pressure on the market without the upward pressure from buying. Illegally masking shorts with synthetic longs. Another tactic shorts are suspected of using in GME is the use of illegally using options to evade short positions in violation of Reg SHO which SEC describes in this risk alert and which I elaborate in this post. Essentially it’s the use of using options to create synthetic longs to illegally and artificially cover and prolong short positions and at same time obscuring the true short interest %. If you consider that it would be far more profitable for shorts to not cover at high prices but instead ladder attack the price and wait for retail investors to lose interest and close their shorts at as low of a price as possible, then you can see why this strategy would be very effective. Using way out-of-money call options to obscure true short interest. You may have heard about the 43 million worth of 800 dollar calls purchased when the price was 100 and found it odd. Later it was identified as a tactic to cheaply purchase synthetic call options (since at 800 its way out of money) to obscure their short positions (with the added benefit of hedging at 800 if a squeeze does happen) One thing I want to note, particularly to legislators at the GameStop hearing: Retail investors were not incited to pump GME. Retail investors spotted a unique Short Squeeze opportunity created by the greed of short side hedge funds, whereby GameStop was being abusively naked shorted with the goal of bringing it to bankruptcy, and hedge funds were so greedy about it that they shorted the company with a short interest of 226% of float, meaning A LOT of counterfeit shares were being used to short the company. Retail investors saw this as an opportunity to short squeeze the hedge fund shorters, which is a legal and legitimate investment strategy. The short squeeze would have happened had everyone played fair, but instead, financial institutions who were culpable to the naked shorting intervened and shut down retail buying, hurting the retail investors and successfully manipulating the market. The investment itself was in my opinion a sound decision based on the short squeeze, but in hindsight retail investors did not seriously consider the risk of the market would be blatantly and publicly manipulated and that the market would be rigged against them. If this post was useful (and I hope it was! Gave up my Friday night to write this for you Apes), please upvote for visibility and share it far and wide. The GameStop hearings could be a first step and hope towards legislative change, and it’s extremely important that the right story is told at those hearings (and by the right story I mean the real truth of what happened.) I hope the truly culpable parties are investigated and brought to justice. Again, I know many of us feel cynical that anything meaning will be done towards finding justice against the lawbreakers in this case, but if you feel even an ounce of injustice or empathy at how retail investors were unfairly harmed in the course of investing in GME, I strongly urge you to contact a legislator associated with the GameStop hearings and bring this to their attention so they can review this case with more complete information. In addition I recommend you to contact the SEC and any journalist you know or via journalist tip lines. It’s not going to be easy but the more awareness we raise the higher the likelihood our voices will be heard and positive change will be made. As we navigate the rocky waters ahead, I’ll gift you with a favorite quote of mine: The only difference between a nightmare and a dream is how big your balls are. 🚀🚀🚀 Disclaimer: I am not an investment advisor, I just like the stock. Ps. If you’ve read to the end, I’ll leave you with a few more thoughts and reminders: - If I were to distill life into one thing, it would be to never lose hope. - Remember that if you’ve lost money in any way shape or form, don’t be depressed, money can always be made back and the important thing is to maintain a good attitude. - Only invest what you can afford to lose. - Perhaps the most important factor in good investing is patience. If you’d like to read more about counterfeiting stocks this is a good place to start http://counterfeitingstock.com/CS2.0/CounterfeitingStock.html
$FUBO DD - Connecting the dots, this thing is going to be a MONSTER.
From u/heardme Pretty sure most of you know $FUBO has been shorted like crazy since the news of their Victory acquisition. It shot up 33% with the news and has since lost most of those gains. I'm here to tell you why the shorts are wrong and why this is a MASSIVE opportunity for us. First, I'd like to address the issue of profitability. It was founded in 2015and being a young, growing company and isn't profitable yet. To put things into perspective, even Netflix which was founded in 1997 wasn't profitable until 2003. Fubo has more competition today than Netflix did back then, but it's still growing rapidly. Q3 Results: https://www.yahoo.com/now/fubotv-announces-q3-2020-results-210500756.html
Revenues were $61.2 million, a 47% increase year-over-year on a pro forma basis, or +71% excluding 2019 licensing revenue from the FaceBank AG business, sold in July 2020. This growth was driven by continued subscriber expansion, an increase in subscription Average Revenue Per User (ARPU) and growth of advertising sales:
Subscription revenue increased 64% year-over-year to $53.4 million.
Advertising revenue increased 153% year-over-year to $7.5 million.
Paid subscribers at quarter end totaled 455,000, an increase of 58% year-over-year.
Average Revenue Per User (ARPU) per month was $67.70, up 14% year-over-year.
Total content hours streamed by fuboTV users (paid and free trial) in the quarter increased 83% year-over-year to 133.3 million hours.
Monthly active users (MAUs) watched 121 hours per month on average in the quarter, an increase of 20% year-over-year.
Q4 total revenue is expected to be between $94-$98 million, a 77% to 84% increase year-over-year.* Prior guidance was $80-$85 million.
Paid subscribers at year-end are expected to exceed 545,000, an increase of more than 72% year-over-year. Prior guidance was 500,000-510,000 subscribers.
It smashed its previous guidance because sports and normality are returning. Also note that Fubo was still growing rapidly during the pandemic despite the lack of sports which is its primary focus. This is huge and it will continue to grow faster as sports start to return to normal. FUBO is estimated to announce earnings between Jan 25, 2021 and Feb 03, 2021 Most of us know that Fubo was opportunistically hit by short sellers (Kerrisdale/Rich Greendfield) as their lock up period expired. This made the stock tank considerably from it's high of $60. The short argument is that integrated sports betting is a pipe dream, and that its not profitable yet. As mentioned earlier, it took Netflix a while to scale up and become profitable. At the rate Fubo is growing, they are going to be profitable sooner than later. This isn't even an argument to me, as they scale up a few things will happen: - Customer acquisition costs will become a lower and lower percentage of revenue. - Since they license their content, they need scale to turn those licensing costs to profit (just like Netflix did) - More customers mean they can charge more for advertising. (More on this later) Fubo very clearly addressed the issue of integrated sports betting with the acquisition of Vigtory. The bear thesis is weakening significantly. Almost nonexistent. Now, on to the NBA: https://www.forbes.com/sites/bethkindig/2021/12/31/fubotv-solid-positioning-for-sports-betting/?sh=5fadb7c69cb5 "Over the past few years, Sky Media led investment rounds in FuboTV along with Fox for a 39% stake. This investment round was increased in late 2017/early 2018 with Sky Media holding Board positions. The former NBA commissioner was also part of the last $15 million round. Media has gone through some very big M&A shifts at the top-level with Comcast acquiring Sky and Disney acquiring 21st Century Fox. However, for FuboTV’s formative years, the company was influenced by arguably the top sports betting company in the world – Sky Media from the UK. The Comcast-owned Sky Media is still a backer for FuboTV along with Disney." David Stern, the late former NBA commissioner was involved in funding of Fubo. The current NBA commissioner Adam Silver worked extremely closely with his mentor. I've been a lifelong NBA fan and I had doubts in Adam Silver but I think he's done a fantastic job with the NBA. Why am I bringing up the NBA? https://www.casino.org/news/nba-considering-betting-broadcasts-could-help-draftkings/ (check the date of this and check the date of the Fubo Vigtory announcement) People are missing some key elements to the NBA announcement: this announcement was made literally the DAY after the Fubo Victory acquisition. People are missing the link between the NBA and Fubo, let alone the timing. Fact check me, they were announced a day apart and Fubo is the ONLY company with plans of an integrated sports betting broadcast platform. The NBA wants to get into this because they know viewers watch games for longer with sports betting and fantasy leagues (which is why I think they threw in DraftKings) Now, lets look into two key acquisitions: - Vigtory - Fubo acquired them and put their co-founder in charge of integrated sports betting along with their licenses and tech. Balto - This one is another thing bears are missing. They claim this acquisition was to get into sports betting, it wasn't this was for their fantasy sports platform which Fubo is also planning on integrating. Fubo is going to be an absolute monster going forward. It is trading at a discount thanks to shorts https://www.marketwatch.com/investing/stock/fubo 34m shares short, 62.5% of float shorted. This thing is PRIMED for an epic squeeze AND it's valued at a discount right now. Since the Vigtory acquisition, new price targets came out ranging from $47 to $60. Short term, I'm confident this thing will pop soon. It was hammered down after the Vigtory announcement by shorts, followed by a low volume selloff Friday. It's trading at imo, a massive discount right now. Long term, this thing is shaping up to be a unique competitor in streaming/sports betting. TL;DR - get in long, one way or another. Commons, LEAPS, anything... this thing is going to explode as we inch towards earnings (expected late January to mid-February). We got massive revenue growth, we have strong tailwinds with the return of sports, we have the NBA basically saying they're in as long as Fubo can execute.
The #1 online casino company $RSI is primed for autism
Positions: $RSI 30 03/19 30C Proof: https://imgur.com/a/swCCMjz *This post is for informational purposes only, you should not construe any such information or other material as investment, financial, or other advice.* TLDR: Rush Street Interactive ($RSI) is the #1 nationwide online casino company and the #3 or #4 sports book depending on the state. Short selling, unwarranted institutional wariness of share dilution and the general market focus on sports book instead of online casino has left $RSI grossly undervalued. A massive blow out at Q4 earnings will result in analyst upgrades and a rapid repricing by market makers and institutions seeking exposure to the emerging sector. **Overview** "Sports book is really just kind of a warm up in a lot of ways for an online casino where the real money is made" - Niccolo De Masi, CEO dMY technologies Rush Street Interactive ($RSI) operates the BetRivers.com online casino and sports book. They are now fully licensed and operating in New Jersey, Pennsylvania, Michigan, Illinois, Indiana, Colorado, Iowa, and Virginia. They own and operate a casino in New York and already have a New York license making them well positioned for liberalization there. They merged with a dMY Technology Group SPAC on Dec. 31st 2020 with 240 million on the balance sheet to spend on growth. The online casino business is fundamentally more profitable than sports betting because the average value of a casino player is estimated at $600 while a sports book player could be as little as $20. Estimates put the online casino market at DOUBLE the size of the online sports book market and the online casino industry is really just getting started as more states liberalize. $RSI is expert at new market entry; they have been first to market in Pennsylvania, Illinois, Indiana, and Colorado and even when they aren't first they are capable of capturing market share in competitive markets such as New Jersey. They also have products which women play which accounts for at least half of the market in online casino. The female market is one that the pure sports book plays miss out on. Also for some fucking reason they operate a casino and sports book in Colombia (rushbet.co) and may make large expansions into other parts of south America as legalization continues. This means they have the expertise necessary for global expansion in the future although the states remains their primary focus and growth driver. **The Financials and Strategy** Unlike other companies in the space Rush Street is already profitable in 2020 and has a strong focus on Return On Invested Capital (ROIC). Q3 gross revenue was $71.9 Million. Q4 revenue is going to be a blow out. Combing through state gambling revenue data and breaking that down by market share my estimate is that Q4 revenue could be as high as $120 Million. Paired with this blow out will be a **guidance raise to $500 Million for 2021**, which is 2/3 of DraftKings 2021 guidance of $750M. https://imgur.com/a/xkfcayC What is striking when compared to $DKNG is that their advertising spend was only a quarter of revenue in Q3 while $DKNG spent 155% of their revenue. This will change as they begin to focus on growth, but it shows they are very good at getting return on ad spend. This company should actually be valued close to $DKNG based on growth potential once guidance is raised. https://imgur.com/a/RQQXtGg Their focus on attracting **female gamers** is also important to their long term growth potential. The sports book plays with cross sells to casino such as $DKNG will not be able to grow through the female demographic in the same way. **This cannot be understated** as one of the major strategic advantages of $RSI. https://imgur.com/a/xzJj26n As I said before I expect their trend of rapid growth to continue for Q4 earnings, certainly going to be a blow out based on looking at state gambling revenue numbers. My estimate is that their revenue will be around 110M for Q4. I also expect guidance to be raised to 500M for 2021 due to strong performance in existing markets and the recently opened Michigan market as well as their sports book launch in Virginia. https://imgur.com/a/ckTqHhh **Short sellers have entered the chat** The short interest on $RSI sits at 5.08 M shares as of 01/14/21 representing a 30% increase. Now why would a company already valued at 2.8 Billion and with a comparative valuation of 8-10 Billion compared with $DKNG and $PENN be so heavily shorted at such a low market cap? My conclusion is that an institution with 10s of millions to throw at shorting this stock wants to take advantage of fear of share dilution from warrant calling or to establish a better entry prior to earnings. **Commander in GILF Cathie Wood is Bullish on the sector** On Feb. 2nd ARK disclosed that they had purchased 620,300 shares of $DKNG. This is extremely bullish for the sector. I am highly confident that after Q4 earnings ARK will be purchasing shares in $RSI as well due its strategic advantages relative to $DKNG and exposure to the female demographic. For such a small market cap company this will be a major catalyst. **Institutions are bullish** Fidelity has increased their holdings to 14% as of today: https://d18rn0p25nwr6d.cloudfront.net/CIK-0001793659/8f10b0d8-a3d2-447c-bc75-87587d0a4670.pdf Alliance Bernstein holds a 6% position reported today: http://d18rn0p25nwr6d.cloudfront.net/CIK-0001793659/e883778d-e759-4a85-91c1-3242ed110720.pdf **Final notes** Jerome "The Bus" Bettis, Steelers legend and hall of fame running back, is their brand ambassador... This company knows their target audience and how to appeal to them, likely more 'classic' ambassadors to come to attract even more boomer and Gen X degenerates. Keep in mind these are the gamblers with big money to spend, the average age of an online casino gambler is 42. This stock has been grossly underpriced due to short selling. The terms of the SPAC deal were not unfavorable and all the insiders held their shares through the merger banking on growth in the market - **management owns 77% of the company**. This is a true value play on a well managed company in an emerging industry with a market size in the hundreds of billions. I plan to hold shares long term. I will post a part 2 breaking down their latest S-1 filing and Q4 revenue by state when they release their Q4 earnings date. Do your own research. References: https://www.legalsportsreport.com/sports-betting/revenue/ https://fintel.io/doc/sec-rush-street-interactive-inc-ex991-2021-january-05-18632-947 https://s26.q4cdn.com/794539746/files/doc_presentations/2020/RSI-Investor-Presentation-15-Oct-2020.pdf https://ir.rushstreetinteractive.com/news/news-details/2020/RUSH-STREET-INTERACTIVE-ANNOUNCES-THIRD-QUARTER-2020-RESULTS-AND-RAISES-FULL-YEAR-GUIDANCE/default.aspx https://www.youtube.com/watch?v=SQWEhWuPmzU https://www.thestreet.com/investing/draftkings-surges-as-stake-bought-by-ark-next-generation Positions: $RSI 30 03/19 30C I will be adding 04/16 25cs each week until earnings. Exit strategy: "What's an exit strategy?" - u/deepfuckingvalue Update 021321: IMPORTANT after a commenter pointed out that technically they could report as late as April 2nd I AM RECOMMENDING THAT EVERYONE ROLL OUT TO APRIL 16TH 35Cs
The #1 online casino company $RSI is primed for ingress.
Positions: $RSI 03/19 30C Proof: https://imgur.com/a/swCCMjz This post is for informational purposes only, you should not construe any such information or other material as investment, financial, or other advice. TLDR: Rush Street Interactive ($RSI) is the #1 nationwide online casino company and the #3 or #4 sports book depending on the state. Short selling, unwarranted institutional wariness of share dilution and the general market focus on sports book instead of online casino has left $RSI grossly undervalued. A massive blow out at Q4 earnings will result in analyst upgrades and a rapid repricing by market makers and institutions seeking exposure to the emerging sector. Overview "Sports book is really just kind of a warm up in a lot of ways for an online casino where the real money is made" - Niccolo De Masi, CEO dMY technologies Rush Street Interactive ($RSI) operates the BetRivers.com online casino and sports book. They are now fully licensed and operating in New Jersey, Pennsylvania, Michigan, Illinois, Indiana, Colorado, Iowa, and Virginia. They own and operate a casino in New York and already have a New York license making them well positioned for liberalization there. They merged with a dMY Technology Group SPAC on Dec. 31st 2020 with 240 million on the balance sheet to spend on growth. The online casino business is fundamentally more profitable than sports betting because the average value of a casino player is estimated at $600 while a sports book player could be as little as $20. Estimates put the online casino market at DOUBLE the size of the online sports book market and the online casino industry is really just getting started as more states liberalize. $RSI is expert at new market entry; they have been first to market in Pennsylvania, Illinois, Indiana, and Colorado and even when they aren't first they are capable of capturing market share in competitive markets such as New Jersey. They also have products which women play which accounts for at least half of the market in online casino. The female market is one that the pure sports book plays miss out on. Also for some fucking reason they operate a casino and sports book in Colombia (rushbet.co) and may make large expansions into other parts of south America as legalization continues. This means they have the expertise necessary for global expansion in the future although the states remains their primary focus and growth driver. The Financials and Strategy Unlike other companies in the space Rush Street is already profitable in 2020 and has a strong focus on Return On Invested Capital (ROIC). Q3 gross revenue was $71.9 Million. Q4 revenue is going to be a blow out. Combing through state gambling revenue data and breaking that down by market share my estimate is that Q4 revenue could be as high as $120 Million. Paired with this blow out will be a **guidance raise to $500 Million for 2021**, which is 2/3 of DraftKings 2021 guidance of $750M. https://imgur.com/a/xkfcayC What is striking when compared to $DKNG is that their advertising spend was only a quarter of revenue in Q3 while $DKNG spent 155% of their revenue. This will change as they begin to focus on growth, but it shows they are very good at getting return on ad spend. This company should actually be valued close to $DKNG based on growth potential once guidance is raised. https://imgur.com/a/RQQXtGg Their focus on attracting **female gamers** is also important to their long term growth potential. The sports book plays with cross sells to casino such as $DKNG will not be able to grow through the female demographic in the same way. **This cannot be understated** as one of the major strategic advantages of $RSI. https://imgur.com/a/xzJj26n As I said before I expect their trend of rapid growth to continue for Q4 earnings, certainly going to be a blow out based on looking at state gambling revenue numbers. My estimate is that their revenue will be around 110M for Q4. I also expect guidance to be raised to 500M for 2021 due to strong performance in existing markets and the recently opened Michigan market as well as their sports book launch in Virginia. https://imgur.com/a/ckTqHhh Short sellers have entered the chat The short interest on $RSI sits at 5.08 M shares as of 01/14/21 representing a 30% increase. Now why would a company already valued at 2.8 Billion and with a comparative valuation of 8-10 Billion compared with $DKNG and $PENN be so heavily shorted at such a low market cap? My conclusion is that an institution with 10s of millions to throw at shorting this stock wants to take advantage of fear of share dilution from warrant calling or to establish a better entry prior to earnings. Cathie Wood is Bullish on the sector On Feb. 2nd ARK disclosed that they had purchased 620,300 shares of $DKNG. This is extremely bullish for the sector. I am highly confident that after Q4 earnings ARK will be purchasing shares in $RSI as well due its strategic advantages relative to $DKNG and exposure to the female demographic. For such a small market cap company this will be a major catalyst. Final notes Jerome "The Bus" Bettis, Steelers legend and hall of fame running back, is their brand ambassador... This company knows their target audience and how to appeal to them, likely more 'classic' ambassadors to come to attract even more boomer and Gen X degenerates. Keep in mind these are the gamblers with big money to spend, the average age of an online casino gambler is 42. This stock has been grossly underpriced due to short selling. The terms of the SPAC deal were not unfavorable and all the insiders held their shares through the merger banking on growth in the market - **management owns 77% of the company**. This is a true value play on a well managed company in an emerging industry with a market size in the hundreds of billions. I plan to hold shares long term. I will post a part 2 breaking down their latest S-1 filing and Q4 revenue by state when they release their Q4 earnings date. Do your own research. References: https://www.legalsportsreport.com/sports-betting/revenue/ https://fintel.io/doc/sec-rush-street-interactive-inc-ex991-2021-january-05-18632-947 https://s26.q4cdn.com/794539746/files/doc_presentations/2020/RSI-Investor-Presentation-15-Oct-2020.pdf https://ir.rushstreetinteractive.com/news/news-details/2020/RUSH-STREET-INTERACTIVE-ANNOUNCES-THIRD-QUARTER-2020-RESULTS-AND-RAISES-FULL-YEAR-GUIDANCE/default.aspx https://www.youtube.com/watch?v=SQWEhWuPmzU https://www.thestreet.com/investing/draftkings-surges-as-stake-bought-by-ark-next-generation Positions: $RSI 03/19 30C I will be adding 04/16 25Cs each week until earnings Exit strategy: "What's an exit strategy?" - u/deepfuckingvalue Forgot to add: http://d18rn0p25nwr6d.cloudfront.net/CIK-0001793659/8f10b0d8-a3d2-447c-bc75-87587d0a4670.pdf Fidelity just doubled their position to almost 15% Update 021221: Everyone that went in on my initial entry is down 40% right now. As I said I plan to continue to buy 03/19 25Cs each week until earnings. If you’re worried about further losses wait until the day before earnings to load up, you may miss a run up though. Update 021321: IMPORTANT after a commenter pointed out that technically they could report as late as April 2nd I AM RECOMMENDING THAT EVERYONE ROLL OUT TO APRIL 16TH 35Cs
Playboy is going public, and CEO says potential ‘is endless’
Playboy is returning to the stock market Thursday after 10 years as a privately held company, but the iconic brand looks far different than it did when it left in 2011. Founder Hugh Hefner died in 2017, the company stopped printing its famous men’s magazine last year and current CEO Ben Kohn has repositioned the firm as a consumer-products company rather than a publishing business. “We’re not trying to be a magazine company. That doesn’t make sense to me,” Kohn, who will be one of the firm’s largest shareholders, told Seeking Alpha in an exclusive interview. “What makes sense to me is being the lifestyle platform that this business originally was.” Playboy recently agreed to merge with special purpose acquisition company Mountain Crest Acquisition Corp. (MCAC) in a SPAC deal that values the company at about $381 million. The stock will begin trading Thursday on the Nasdaq under the ticker “PLBY.” MCAC raised some $50M through an initial public offering in June, and its shares rose more than 30% since the IPO to close Wednesday at $13.34 (see chart below). As for Playboy, the firm still offers articles, adult pictorials and videos via Playboy.com, but Kohn said consumers also buy $3 billion a year of Playboy-branded products that the firm sells on its own or through licensees. He said that even in Playboy’s heyday as a men’s magazine, the company owned or licensed consumer businesses that ran the gamut from casinos to cufflinks that featured its iconic rabbit logo. Kohn, who helped that Playboy private in 2011, said that when he first met the company’s legendary founder, “Hef said to me: ‘I might not be the best editor or the best publisher, but I am goddamn the best marketer.’ I think that’s what we’ve brought back to the company, which is really [to be] an aspirational lifestyle business.” Despite the print magazine’s demise, 68-year-old Playboy remains one of the world’s best-known brands, with 97% of people around the globe recognizing the rabbit logo. Some 90% of customers are under 40, and women make up more than 40% of e-commerce sales. Playboy-branded products sold online range from underwear to calendars to sex toys. Offline, a Chinese company operates more than 2,500 brick-and-mortar Playboy clothing stores in the Asian nation, while a partnership with Caesars Entertainment (NASDAQ:CZR) runs the Playboy Club London casino. The revamped Playboy operates in four verticals: Sexual Wellness. This includes products like Playboy condoms and sex aids. The company also recently signed a $25M deal to buy Lovers, a chain of 41 U.S. brick-and-mortar “sexual-wellness” shops. Style and Apparel. The Playboy name is one of China’s top men’s fashion brands, sold through brick-and-mortar stores and more than 1,000 e-commerce sites. Gaming/Lifestyle. Beyond its London casino, Playboy has partnerships with online-gambling software companies Microgaming and Scientific Games Corp. (NASDAQ:SGMS). The company is also working on online sports gambling, while in the lifestyles arena, Playboy sells furniture via Wayfair (NYSE:W). Beauty and Grooming. Kohn said Playboy “has been an arbiter of beauty for 68 years,” and currently sells or is developing perfumes, skincare products and cosmetics. The CEO said that simply by tapping into the growing direct-to-consumer trend, the company can get a bigger share of the existing $3B revenue pie for Playboy-branded products while growing sales organically. “We can drive the lifetime value of our consumers up because we can offer them multiple different products, whereas a licensee can only offer them one product,” he said. Playboy recently released earnings for 2020’s third quarter and first nine months that showed big year-over-year gains. For instance, the company reported that net revenues rose 86% year on year in the third quarter to $35M, allowing the Playboy to turn a $1.3M profit vs. a $3.4M loss during the same 2019 period. And for 2021, the company is guiding to more than $160M in revenues and $40M of EBITDA. Kohn said that when you add in more than $100M in working capital from the SPAC transaction and $180M of prior years’ carried-forward losses that will cut taxes, he sees big opportunities for growth ahead. “The runway that’s in front of us is really endless,” he said. https://seekingalpha.com/news/3661149-playboy-stock-is-going-public-and-ceo-ben-kohn-says-potential-is-endless
Illegal Tactics and DTCC/Prime Broker Complicity In Naked Shorting & Retail Shutdown of GME (DTCC/Prime Brokers decision makers need to be questioned at the 2/18 GameStop Congress hearing)
TLDR: GameStop’s Congress hearing is on Feb 18th, they need to investigate the Prime Brokers and DTCC for their complicity in enabling naked shorting within GME and by extension, potential collusion to shut down trading on Jan 28th, the day the short squeeze was going to kick off. (stick to the end for an analysis of some illegal tactics short side hedge funds have been using) Thesis: On the day the retail market for GME shut down on 1/28 (the day the short squeeze would’ve happened had there been no market intervention), DTCC (clearing house monopoly) shut down retail buying in order to protect itself and Prime Brokers (which privately own the DTCC) from being exposed to the consequences of being party to illegal activity. I believe Prime Brokers and DTCC need to be called to the GameStop hearing on February 18th to be questioned for their complicity in enabling illegal naked shorting of the GME stock, as well as potential collusion to shut out retail buyers on 1/28. In my previous post (which I recommend reading for some context) I explored the subject of rampant illegal naked shorting in GME, and how Prime Brokers (consisting of banks like Goldman, Morgan, etc) and DTCC would be complicit in the naked shorting. This in turn raises the thought experiment that they would be incentivized to do anything possible to prevent the short squeeze from happening on 1/28 because had the short squeeze happened, the shorts would go bankrupt and their Prime Brokers who lent them their naked shorted shares would need to cover the shares. This would not only represent a humongous capital expense for Prime Brokers, the culpability of Prime Brokers (and that of the DTCC) in this situation would also have likely been exposed as well. A quick primer on what a Prime Broker is: Prime Brokers are essentially the service side of the short- selling business. They lend out securities and cash, you can think of them as the “house” in a casino: They provide a gambler with markers to play and to manage his winnings. According to Matt Taibi, “Under the original concept, if a hedge fund that wanted to short a stock they would first need to “locate” the stock with his Prime Broker but as time passed, Prime Brokers increasingly allowed their hedge-fund customers to use automated systems and “locate” the stock themselves, and what this does is enable short-sellers to sell stock without delivering and thereby perform naked shorts with counterfeit shares. (source: https://web.archive.org/web/20210213125246/https://www.rollingstone.com/feature/wall-streets-naked-swindle-194908/). (I highly recommend you read Matt Taibi’s article on naked shorting and how it was used to take down Bear Stearns and Lehman Brothers. There are so many parallels with GME it’s hard to miss. It’s amazing to consider that 12 years after this article was published and brought to public awareness, the problem of naked shorting still exists as a systemic issue.) Prime Brokers have a long history of being associated with naked shorting. To highlight a few examples, Prime Brokers like Merill Lynch and Goldman have long been implicated for naked shorting Overstock.com (https://www.rollingstone.com/politics/politics-news/accidentally-released-and-incredibly-embarrassing-documents-show-how-goldman-et-al-engaged-in-naked-short-selling-244035/, https://www.forbes.com/2007/02/02/naked-short-suit-overstock-biz-cx_lm_0202naked.html?sh=271400d1763f). Another example is when Goldman’s Prime Brokerage was implicated by the SEC in 2016 and got away with a small fine of 16 million (Source: https://www.sec.gov/news/pressrelease/2016-9.html). An example that very recently came in the news is a story where CIBC, BOA, UBS and TD Bank Prime Brokerages are accused of facilitating naked short selling and using counterfeit stock to attack and bring the stock price of a company from $34.77 to $1.83 (Source: https://www.securitiesfinancetimes.com/securitieslendingnews/industryarticle.php?article_id=224548). The DTCC also has a very long history of being associated with naked shorting. The Wall Street Journal noted that 1% of the DTCC’s volume end in failure to deliver which “have put DTCC in the middle of a long-running fight over whether unscrupulous investors are driving down hundreds of small companies' share prices… DTCC has turned a blind eye to the naked-shorting problem. ” (Source: https://www.wsj.com/articles/SB118359867562957720). The DTCC has also had numerous complaints submitted to the SEC for enabling naked shorting (source: https://www.sec.gov/rules/proposed/s72303/decosta122203.htm) and have been sued tens or hundreds of times for assisting naked shorts (source: https://smithonstocks.com/part-3-in-series-on-illegal-naked-shortings-role-in-stock-manipulation-prime-brokers-and-the-dtcc-have-a-troubling-monopoly-on-clearing-and-settling-stock-trades/ and http://counterfeitingstock.com/CS2.0/CounterfeitingStock.html and https://www.wsj.com/articles/SB118359867562957720) On 1/28 Robinhood received a letter from the DTCC at 4 am requiring them to halt trading or come up with 3 billion dollars, which Robinhood did not have, and therefore with one swoop of the pen the DTCC shut down buy side momentum but strangely allowed selling. Retail investors were shut out of the market and as any student of microeconomics would know, by shutting buy but only allowing sell, the price is bound to fall. Meanwhile while hedge funds were able to keep trading not only in the market but also crosstrade in the dark pools (“private” stock markets that retail is shut out of, more on this later), and use this crucial lifeline given to them by the DTCC to prevent the squeeze from happening that day. With retail abruptly being shut out from buy (even cash accounts were shut out, which didn’t make sense) and only allowed to sell, almost everyone could smell manipulation was afoot (which triggered the Congress hearing) and the most of the blame was pointed at Robinhood. Personally and in hindsight, I believe Robinhood was just a willing scapegoat. When we think about who had the most to lose if a short squeeze occurred, I’ll narrow it down to three entities, Shorts and their stakeholders (ie Citadel), Prime Brokers and the DTCC. It’s important to remember that the actual impetus that triggered the shutdown of the market for retail investors came from the DTCC. Working backwards, if you consider that GME was rampantly naked shorted and DTCC and Prime Brokers would have to be complicit in it, I believe the DTCC, Primer Brokers and possibly Citadel (who provides 40% of Robinhood’s revenue) brazenly manipulated the market on 1/28 by shutting down purchasing for retail buyers to prevent the squeeze from being squoze on that day as doing so would be catastrophic for all aforementioned parties involved. I believe that on the upcoming Gamestop Congress hearings the Financial Services Committee needs to call on decision makers of DTCC and Prime Brokers explore their role and complicity in the shut out of retail buyers that day as well as being enablers of naked shorting in GME. An interesting thought experiment: On 1/28 when the price was 450+ and shorts were likely under 100, if we assume prime brokers allowed naked shorting in GME, then when the squeeze was about to happen (or happening), if Prime Brokers had margin had called the shorts, they would presumably also also gone down because shorts would not be able to pay in that event and the brokers would be holding the bag. By that logic, they have every incentive in this case to NOT to margin call and instead the most logical option would probably would have been to make a backroom deal, which is what I personally think most likely happened. If you’ve read up to this point, you might be thinking what can I do about this? I am aware that there a lot of cynicism that we can’t do anything, that there will be no justice for retail investors who were harmed this situation, and that institutions and people in power will prevent anything from being done. I feel this sometimes too, but remember: A single voice can be drowned out, but if we all speak together then we will make our voice heard. Ape Strong Together. With the hearing coming up on February 18th, I highly recommend you email and tweet the representatives involved in the hearing, as well as your own district representatives, and urge them to read into the factors presented in this post and call the DTCC and Prime Brokers to the hearingl. They need to be questioned on why GME has so many counterfeit shares, failed to deliver, their complicity in naked shorting, and investigated for their role in the retail shut down of 1/28. Below are 4 members of congress I recommend both tweeting and emailing Alexandria Ocasio-Cortez https://twitter.com/AOC, email: [[email protected]](mailto:[email protected]) Al Green https://twitter.com/repalgreen, email: [[email protected]](mailto:[email protected]) Maxine Waters https://twitter.com/maxinewaters, email: [[email protected]](mailto:[email protected]) Nancy Pelosi Email: https://twitter.com/SpeakerPelosi email: [[email protected]](mailto:[email protected]). And you can find other members of Financial Services Committee here to reach out to: https://financialservices.house.gov/about/committee-membership.htm What follows should probably be a separate post, but I will take the opportunity to summarize some of the illegal tactics that shorts have been identified to be using in their war with retail investors. Note that this may not be an exhaustive list and there may be newer tactics deployed in the future. Retail investors might not have the same tricks, resources and willingness to break the law for profit as hedgies do, but my hope and belief is that if we pool our knowledge and analysis, we will figure out their game and effectively adapt. Feel free to forward the list below to any representatives and lawmakers if you concur that these tactics were used: Rampant Naked Shorting - With the extremely high number of Fail to Delivers (FTID) , short interest being as high as 226% recently, and institutions alone holding a staggering 177% of the total float (likely due in large part to counterfeit shares), signs strongly point to GME being rampant with naked shorts and counterfeit shares. I believe the original goal of shorts was to drive GME to bankruptcy with these naked shorts, using the laddering of naked shorts (aka short ladder attack), executed with the help of counterfeit stock which is a classic and reliable method of driving down the stock price. I believe the GME stock has seen relentlessly aggressive short attacks, especially on the week of Monday February 1st, which drove the stock price down and triggered panic selling. Ladder Attacks with the help of Dark Pools - Another identified method of ladder attacks was identified to come from crosstrading with darkpools (the stock market has its own private stock exchange where institutions can trade…). Essentially darkpools are private stock markets retail investors do not have access to, where short side funds can purchase securities “off market” and then sell “on-market”, with the effect of creating a lot more downward pressure on the market without the upward pressure from buying. Illegally masking shorts with synthetic longs. Another tactic shorts are suspected of using in GME is the use of illegally using options to evade short positions in violation of Reg SHO which SEC describes in this risk alert and which I elaborate in this post. Essentially it’s the use of using options to create synthetic longs to illegally and artificially cover and prolong short positions and at same time obscuring the true short interest %. If you consider that it would be far more profitable for shorts to not cover at high prices but instead ladder attack the price and wait for retail investors to lose interest and close their shorts at as low of a price as possible, then you can see why this strategy would be very effective. Using way out-of-money call options to obscure true short interest. You may have heard about the 43 million worth of 800 dollar calls purchased when the price was 100 and found it odd. Later it was identified as a tactic to cheaply purchase synthetic call options (since at 800 its way out of money) to obscure their short positions (with the added benefit of hedging at 800 if a squeeze does happen) One thing I want to note, particularly to legislators at the GameStop hearing: Retail investors were not incited to pump GME. Retail investors spotted a unique Short Squeeze opportunity created by the greed of short side hedge funds, whereby GameStop was being abusively naked shorted with the goal of bringing it to bankruptcy, and hedge funds were so greedy about it that they shorted the company with a short interest of 226% of float, meaning A LOT of counterfeit shares were being used to short the company. Retail investors saw this as an opportunity to short squeeze the hedge fund shorters, which is a legal and legitimate investment strategy. The short squeeze would have happened had everyone played fair, but instead, financial institutions who were culpable to the naked shorting intervened and shut down retail buying, hurting the retail investors and successfully manipulating the market. The investment itself was in my opinion a sound decision based on the short squeeze, but in hindsight retail investors did not seriously consider the risk of the market would be blatantly and publicly manipulated and that the market would be rigged against them. If this post was useful (and I hope it was! Gave up my Friday night to write this for you Apes), please upvote for visibility and share it far and wide. The GameStop hearings could be a first step and hope towards legislative change, and it’s extremely important that the right story is told at those hearings (and by the right story I mean the real truth of what happened.) I hope the truly culpable parties are investigated and brought to justice. Again, I know many of us feel cynical that anything meaning will be done towards finding justice against the lawbreakers in this case, but if you feel even an ounce of injustice or empathy at how retail investors were unfairly harmed in the course of investing in GME, I strongly urge you to contact a legislator associated with the GameStop hearings and bring this to their attention so they can review this case with more complete information. In addition I recommend you to contact the SEC and any journalist you know or via journalist tip lines. It’s not going to be easy but the more awareness we raise the higher the likelihood our voices will be heard and positive change will be made. As we navigate the rocky waters ahead, I’ll gift you with a favorite quote of mine: The only difference between a nightmare and a dream is how big your balls are. 🚀🚀🚀 Disclaimer: I am not an investment advisor, I just like the stock. Ps. If you’ve read to the end, I’ll leave you with a few more thoughts and reminders: - If I were to distill life into one thing, it would be to never lose hope. - Remember that if you’ve lost money in any way shape or form, don’t be depressed, money can always be made back and the important thing is to maintain a good attitude. - Only invest what you can afford to lose. - Perhaps the most important factor in good investing is patience. If you’d like to read more about counterfeiting stocks this is a good place to start http://counterfeitingstock.com/CS2.0/CounterfeitingStock.html
Walt Disney Company Ticker: $DIS Market Cap: 341.8 Billion Assets: 201.5 Billion Subsidiaries: Disney +, Pixar, Hulu, ESPN, FX, ABC, etc First, Disney is a safe as fuck investment. It’s a blue chip and should be a part of your portfolio. But fuck portfolios, this is a casino, so why will Disney moon? Why the fuck does Disney need a DD? Well, I'm Long $DIS, but today will also make for a good earnings play. Disney Plus. Have you heard about it? Well, millennials with kids sure have. As the millenials start pumping out babies after 12 months of social distancing, they’ll quickly learn kids get bored easily, and fast. Disney Plus will be as big as Netflix in a few years, and will probably eclipse it for multiple reasons. They have a huge library that they own themselves, and the ability to have streaming premiers, etc. Not to mention the package with Hulu and ESPN. Netflix has a market cap of around 250 billion with only 40 billion in assets and 1.5 Debt-to-Equity vs Disney 0.7 Don’t get me wrong, I’m long Netflix too, but clearly $DIS is the better deal here when you consider their other revenue streams. The fucking rocketship that Disney Plus is has only just started getting priced in, and is where Netflix was 6-7 years ago, but with an accelerated course to get there since people already adopted streaming. They also own their own content and have been producing since their inception, and have a better moat than Netflix. Even if the revenue from Disney+ doesn't match Netflix, they'll be able to pull a bigger profit and recycle old IP. Oh, let's not get into sports. ESPN, Cricket, etc. Mickey already has his dirty paws in everything. More independent services to charge for. Their earnings have taken a hit from their parks and experiences being limited from COVID. But the vaccine is rolling out, and their peak profit from this is in the Summer, where COVID transmissibility tends to be low, and partying tends to be high. This will have a much less effect on earnings than predicted the parks get busier this year with vaccinated people ready to go HAM from a year of isolation. Their parks are operating at 35% capacity, but they aren't at capacity for the bulk of the year. Even if the parks take a significant hit this year, it won’t even be noticed as $DIS tears through hyperspace. Fuck the moon. We’re talking Star WarsTM type intergalactic travel. 🚀 Revenue Streams Media Networks: 28.4 Billion Parks/Experiences: 16.5 Billion Studio Entertainment: 9.64 Billion Other: 17 Billion Earnings Play As for an earnings play, they report today. This is a casino. They’re still holding low considering the uncertainty with their parks, but park travel is low in the winter, and should have a low effect on earnings. But while kids were home, not in school, and causing a ruckus, Disney + subs increased dramatically over the Fall. Look at Google Trends and notice the clear increase over Q4, probably fueled by the Mandalorian and the holiday classics people go nuts for. TLDR (and for those of you that can't read) $DIS 🚀🚀🚀 Positions: 10c 2/12 $190 10c 3/29 $200 5c 6/17/22 $250 95 shares at $113 AH Edit #1: Get fucked bears Edit #2: this stock is a bargain below $250. We'll be trading at $300 by EOY
$FUBO DD - Connecting the dots, this thing is going to be a MONSTER.
Pretty sure most of you know $FUBO has been shorted like crazy since the news of their Victory acquisition. It shot up 33% with the news and has since lost most of those gains. I'm here to tell you why the shorts are wrong and why this is a MASSIVE opportunity for us. First, I'd like to address the issue of profitability. It was founded in 2015and being a young, growing company and isn't profitable yet. To put things into perspective, even Netflix which was founded in 1997 wasn't profitable until 2003. Fubo has more competition today than Netflix did back then, but it's still growing rapidly. Q3 Results: https://www.yahoo.com/now/fubotv-announces-q3-2020-results-210500756.html
Revenues were $61.2 million, a 47% increase year-over-year on a pro forma basis, or +71% excluding 2019 licensing revenue from the FaceBank AG business, sold in July 2020. This growth was driven by continued subscriber expansion, an increase in subscription Average Revenue Per User (ARPU) and growth of advertising sales:
Subscription revenue increased 64% year-over-year to $53.4 million.
Advertising revenue increased 153% year-over-year to $7.5 million.
Paid subscribers at quarter end totaled 455,000, an increase of 58% year-over-year.
Average Revenue Per User (ARPU) per month was $67.70, up 14% year-over-year.
Total content hours streamed by fuboTV users (paid and free trial) in the quarter increased 83% year-over-year to 133.3 million hours.
Monthly active users (MAUs) watched 121 hours per month on average in the quarter, an increase of 20% year-over-year.
Q4 total revenue is expected to be between $94-$98 million, a 77% to 84% increase year-over-year.* Prior guidance was $80-$85 million.
Paid subscribers at year-end are expected to exceed 545,000, an increase of more than 72% year-over-year. Prior guidance was 500,000-510,000 subscribers.
It smashed its previous guidance because sports and normality are returning. Also note that Fubo was still growing rapidly during the pandemic despite the lack of sports which is its primary focus. This is huge and it will continue to grow faster as sports start to return to normal. FUBO is estimated to announce earnings between Jan 25, 2021 and Feb 03, 2021 Most of us know that Fubo was opportunistically hit by short sellers (Kerrisdale/Rich Greendfield) as their lock up period expired. This made the stock tank considerably from it's high of $60. The short argument is that integrated sports betting is a pipe dream, and that its not profitable yet. As mentioned earlier, it took Netflix a while to scale up and become profitable. At the rate Fubo is growing, they are going to be profitable sooner than later. This isn't even an argument to me, as they scale up a few things will happen: - Customer acquisition costs will become a lower and lower percentage of revenue. - Since they license their content, they need scale to turn those licensing costs to profit (just like Netflix did) - More customers mean they can charge more for advertising. (More on this later) Fubo very clearly addressed the issue of integrated sports betting with the acquisition of Vigtory. The bear thesis is weakening significantly. Almost nonexistent. Now, on to the NBA: https://www.forbes.com/sites/bethkindig/2021/12/31/fubotv-solid-positioning-for-sports-betting/?sh=5fadb7c69cb5 "Over the past few years, Sky Media led investment rounds in FuboTV along with Fox for a 39% stake. This investment round was increased in late 2017/early 2018 with Sky Media holding Board positions. The former NBA commissioner was also part of the last $15 million round. Media has gone through some very big M&A shifts at the top-level with Comcast acquiring Sky and Disney acquiring 21st Century Fox. However, for FuboTV’s formative years, the company was influenced by arguably the top sports betting company in the world – Sky Media from the UK. The Comcast-owned Sky Media is still a backer for FuboTV along with Disney." David Stern, the late former NBA commissioner was involved in funding of Fubo. The current NBA commissioner Adam Silver worked extremely closely with his mentor. I've been a lifelong NBA fan and I had doubts in Adam Silver but I think he's done a fantastic job with the NBA. Why am I bringing up the NBA? https://www.casino.org/news/nba-considering-betting-broadcasts-could-help-draftkings/ (check the date of this and check the date of the Fubo Vigtory announcement) People are missing some key elements to the NBA announcement: this announcement was made literally the DAY after the Fubo Victory acquisition. People are missing the link between the NBA and Fubo, let alone the timing. Fact check me, they were announced a day apart and Fubo is the ONLY company with plans of an integrated sports betting broadcast platform. The NBA wants to get into this because they know viewers watch games for longer with sports betting and fantasy leagues (which is why I think they threw in DraftKings) Now, lets look into two key acquisitions: - Vigtory - Fubo acquired them and put their co-founder in charge of integrated sports betting along with their licenses and tech. Balto - This one is another thing bears are missing. They claim this acquisition was to get into sports betting, it wasn't this was for their fantasy sports platform which Fubo is also planning on integrating. Fubo is going to be an absolute monster going forward. It is trading at a discount thanks to shorts https://www.marketwatch.com/investing/stock/fubo 34m shares short, 62.5% of float shorted. This thing is PRIMED for an epic squeeze AND it's valued at a discount right now. Since the Vigtory acquisition, new price targets came out ranging from $47 to $60. Short term, I'm confident this thing will pop soon. It was hammered down after the Vigtory announcement by shorts, followed by a low volume selloff Friday. It's trading at imo, a massive discount right now. Long term, this thing is shaping up to be a unique competitor in streaming/sports betting. TL;DR - get in long, one way or another. Commons, LEAPS, anything... this thing is going to explode as we inch towards earnings (expected late January to mid-February). We got massive revenue growth, we have strong tailwinds with the return of sports, we have the NBA basically saying they're in as long as Fubo can execute.
$SNE, MASSIVE DOUBLE DICK INSIDE. Poised to moon long-term (Computer vision boom, EV boom, autonomous driving tech, gaming boom, music streaming boom, cross-media IP, vertically integrated anime streaming monopoly, online medical services boom, shift to mirrorless cameras)
Listen up retards. Do you happen to feel regret because you always think “ohhh if I yoloed my savings on TSLA/AMD/NVDA 🚀 leaps years ago I could be rich by now!!!” Well if you didn't know already, it doesn’t really matter what happened in the past. Hindsight will always be 20/20. You shouldn’t be harsh on yourself on your past self that your past self wasn’t retarded enough to yolo their savings into AMD/TSLA/.... Your past self doesn’t have the same knowledge that your current self has. It’s fine. If you judged those stocks with the best DD you could do at the time and didn’t think they were worth it, then you did a good job. If you always think about what you could/should have done in the past, then you don't have the right attitude to play the stock market casino imho. The single most important thing is to be able to look ahead. There are always plenty of opportunities around. There are thousands of rockets that are still on earth right now. Some may depart this year, others will stay a little longer on earth. The true strength lies in being able to identify those rockets with the knowledge you have right now. And if you still miss most rockets that will take-off this year that's fine, maybe you'll learn, get better and you'll do better next year. Now, what if I told you there’s a big rocket that’s parked right right here on earth and it has decent chance for take-off this year? Maybe it won't quite reach the moon this year yet, but hey leaving the exosphere should already be a cool milestone. It has rock-solid fundamentals and will see lots of growth in the following years/decade. It’s a company that has the fundamental technology to power all the computer vision tech, which is bound to boom this decade. The company we’re talking about is of course Sony, and it is extremely undervalued right now. Its P/E is only 14. They have a P/S of 1.65, a PEG of 0.92 (< 2 is already somewhat exceptional for a company/conglomerate of Sony’s size, under 1 is a steal) Much lower than all of its same-sector peers. This indicates significant undervaluation. Next up Sony has a P/CF 13.2, ROE of 20% (S&P 500 average is 14% which would already be considered pretty good. 20% ROE is excellent), PEGY of 0.89, P/B of 2.65 and finally Sony has $41.6B in cash on hand. This makes Sony one of the cheapest tech/entertainment/EV/semiconductor growth stocks you will find on the market. (ROE of 20% + PEGY of 0.89 + PEG of 0.92 means this company is a growth stock based on the numbers alone, but we’ll dig into the actual company and overall outlook in a moment) I challenge all retards to find a company with similar benchmarks in one of the mentioned sectors, seriously. Quite frankly doing this DD honestly blew my mind. I kept looking everywhere for reasons why the company could be so undervalued and why they may struggle in the future. Very important to look at all the challenges the company faces to make sure I’m not just doing confirmation bias DD. But all I could find was the opposite. After several weeks and months of working on this DD, I can only conclude that it is overall a very solid company for a bargain price. The new CEO is taking the company in a great direction imho and I'm begin to think he could be Sony's Satya Nadella. So if you want some easy tendies, maybe consider $SNE while it is still cheap, I’d say. For the autists out there who care about analyst ratings, SONY ($SNE) currently has 18 BUY ratings, 2 OVERWEIGHT, 4 HOLD and 0 SELL. (= analyst consensus is a STRONG BUY). Very little analysts cover this stock compared to other entertainment/tech companies, so this adds to my assertion that the stock is very much under the radar. Which means you have time to get in before it gets noticed by the larger investing world and before it starts to get a more fair valuation (P/E of around 30 would be more fair for this company I think, but still cheaper than many same sector peers). But, anyway the few analysts who do happen to cover this company are basically all saying it’s an instant-buy at its current price. Most boomer investors still think big Japanese tech companies are dinosaurs that have long been surpassed by China, South Korea and Apple etc ages ago. Young boomers may think Sony = PlayStation and that it's it. But the truth is that PlayStation, while very important (about 24% of Sony's total revenue last year), is a part of a larger story. Lots of investors in general associate Sony with the passé Japanese electronics companies from the 80’s and the 90’s. Just like a lot people may think BlackBerry is a struggling phone company. While Sony may not be the powerhouse in consumer electronics it was in the 80’s and the 90’s, in a lot of ways they are more relevant than ever before. Despite being a well-known brand and being known as the company behind PlayStation, for some reason its stock still seems to be under the radar among both retail and institutional investors. And boy, are they mind-blowingly undervalued. Even if a big part of its business would collapse tomorrow, they would still be slightly undervalued. And I am about to tell you why. (& btw compared to Japanese tech/entertainment stocks $SNE is still super cheap (Canon, Nikon, Toshiba, Sharp, Panasonic, Square Enix, Capcom, Nintendo, Fujitsu all have P/E ratios ranging from 18 to 77 and none of them have the combination of global clout, fundamentals & growth prospects that Sony has)) 2021 Sony as a corparation is not the fucking Sony from 2005-2015’s, just like BlackBerry in 2021 is not the fucking Blackberry from 2012. Just like Garmin in 2021 is not Garmin from 2011. Just like AMD in 2021 is not AMD from 2012. No, in 2021, Sony is the global leader in imaging technology and people do not fucking realize it. Sony has 50% marketshare in the CMOS image sensor market. There’s a very good chance the smartphone in your pocket has Sony image sensors (unless it’s a Samsung phone). Sony image sensors are powering a big part of today's vision/camera technology. And they will power even more of tomorrow's computer vision tech. In 2021, Sony is a behemoth in video games, music, anime, movies and TV show production. Sony is present in every segment of entertainment. Sony’s entertainment branches have been doing great business over the past 5 years, especially music and PlayStation. Additionally, Sony Pictures has completely turned around. In 2021, Sony is the world’s biggest music publisher (and second biggest music company overall). Music streaming has been a boon for Sony Music and will continue to be. In 2021, Sony is among the biggest mobile gaming companies in the world (yes, you read that right). And it’s mainly thanks to one game (Fate/Grand Order) that nets them over $1B revenue each year. One of the biggest mobile gaming companies + arguably biggest gaming brand in the world (PlayStation). In 2021, Sony is an EV company. They surprised the world when they revealed their “Vision-S” at CES 2020. At the reception was fantastic. It is seriously one of the best looking EV’s. They already sell sensors to Toyota. Sony will most like sell the Vision-S's tech to other car manufacturers (sensors for driving assistence / autonomous driving, LiDAR tech, infotainment system). 40 sensors in the Sony Vision-S Considering the overwhelmingly good reception of the Vision-S so far, I suspect the Vision-S could be another catalyst that will put Sony as a company on the radar of investors and consumers. We've seen insane investment hype for anything even remotely related to EV over the past year. We've seen a company that barely had a few EV design concepts (oh wait, they had a gravity-powered truck though) even get a $30B market cap at some point lmao. But somehow a profitable company ($SNE) that has an EV that you can actually drive, doesn't even have a fair valuation? In 2020’s Sony’s brand value is at their highest point since 12 years. In 2021, it is projected to be a its highest point since 2001 assuming same growth as average yearly growth from 2015 to 2020. Keep in mind brand valuation is a bit bullshitty as there’s no standardization to compare brands from different sectors, let alone non-consumer-facing brands with consumer-facing brands. But one thing we can note is that Sony both as B2C brand and as a B2B company is on a big upwards trend. https://interbrand.com/best-global-brands/sony/ https://careers.uw.edu/blog/2020/03/17/these-are-the-10-biggest-video-game-companies-in-north-america-shared-article-from-zippia/ In 2021, Sony is an entertainment behemoth. They have grown their entertainment branches by a huge amount over the past 5 to 10 years (they made some big acquisitions in the music space especially and they’re now also all-in in anime). I don’t think people realize how big Sony is as an entertainment company. I dug up the numbers and as of Q3 2020, PlayStation is the second biggest video game company in the world (Tencent is #1) in revenue (I suspect Sony might dethrone Tencent after Sony’s FY Q3 2020 is released). But Sony already comes very close to Tencent especially if you add Fate/Grand Order (which is under Sony Music and not under PlayStation) under PlayStation. There’s no single other company that has this unique combination of a dominant/important position in all entertainment segments. (video games + music + movies + TV series + anime + TV networks). I guess Tencent maybe? In 2021, Sony has amazing momentum in the camera space. If you’re familiar with the enthusiast photography space, you should know this. Basically, the market is slowly shifting from SLR to mirrorless cameras. This is because mirrorless cameras tend to smallelighter, have faster AF, better low light performance, better battery life and better video performance. Sony is the company that has been specializing in the development for mirrorless cameras for over a decade while Canon’s bread and butter has always been SLR cameras. Sony is in the lead when it comes to mirrorless cameras and that’s where the market is shifting towards. Because the advantages of mirrorless have become more and more apparent and Sony’s cameras have become technically superior, Sony has gained quite a bit of market share over Canon and Nikon in the last few years. In 2019, Sony overtook Nikon as the #2 camera manufacturer. Sony is in an upwards trend here. (they have the ambition to become the world’s #1 camera brand) Sony also has very good marketing for their cameras. (Sony has a lot of YouTubers / influencers / brand ambassadors for their cameras despite being a smaller brand than Canon) (just search on YouTube and/or Google “switching to Sony from Canon” just to give you an idea that they do have amazing brand momentum in the camera space. You won’t get as many hits for the opposite) A huge portion of Sony’s profit comes from image sensors in addition to music and video games. This is in addition to their highly profitable financial holdings division & their more moderately profitable electronics division. Sony’s electronics division, unlike other Japanese brands, has shown great resilience against the very strong competition from China & South Korea. They have been able to maintain their position in the audio space and as of 2020 are still the global market leader in high-end TV’s (a position they have been holding for decades) and it seems they will continue to be able to maintain that. But seriously this company is dirt-cheap compared to any of its peers in any segment and there’s various huge growth prospects for Sony:
CMOS image sensors & Sony’s overall imaging prowess will boom due to increased demand from automotive sector, security & surveillance industry, manufacturing industry, medical sector and finally from the aerospace & defence industry. On the longer term, image sensors will continue to boom due to increased demand for computer vision & AI + robotics. And for consumer electronics demand will remain very high obviously.
Sony is aiming for 60% market share in the CMOS image sensor market by 2026. Biggest threat here is Samsung here who have recently started to aggressively invest in image sensors and are challenging Sony. Sony has technological lead + higher production capacity (and Sony will soon open a new plant in Nagasaki), so Sony should be able to hold off Samsung.
The iPhone 12 Pro has 3 cameras + a lidar sensor. Apple now buys 3 image sensors (from Sony) + LiDAR sensor (from Sony) per iPhone 12 Pro they manufacture. Remember the iPhone X and iPhone XS? That one had “only” 2 rear cameras (with image sensos from Sony of course). Basically, Sony will be selling exponentially more image sensors as more smartphones get equipped with more and more cameras.
Now think about how many image sensors Sony can sell to Apple if the iPhone 13 will have 5 cameras + LiDAR sensor (I mean the number of cameras on smartphones certainly won’t decrease)
Gaming (PS5 hype, PSN game sales are booming, add-on content is booming, PS+ subscribers count is booming and finally PSNow & first-party games sales are trending upwards as well). Very consistent year-on-year profit & revenue growth here. They have a history of beating earnings expectations here. The number of PS+ subscribers went from 4M to 48M in just 6-7 years. Investors love to hype up recurring revenue and subscription services such as Disney+ and Netflix. Let’s apply the same logic to PS+? PS+ already has more subscribers than HBO Max in the USA.
PlayStation (video games in general) has not even scratched the fucking surface. Most people who play video games now are millennials and kids. Do you think those millennials will stop playing video games when they grow older? No, of course not. Boomers today also still watch movies and TV. Those millennials have kids and those kids are now also playing video games. The kids of those kids will also play video games etc. Basically the total addressable audience for video games will by HUGE by the end of the decade (and the decades after that) because video games will have penetrated all age ranges of the population. Gaming is the fastest growing segment of the whole entertainment business. By a large margin. PlayStation is obviously in a great position here as you can guess from the PS5 hype, but more importantly imho, the growth of PS+ subscribers (currently a bit under 50 million) and PSN users (>100 million MAU) over the past 5 years shows that PlayStation is primed to profit from the audience growth.
On top of that you have huge video game growth in the China where Sony & PlayStation is already much better established than Xbox (but still super small compared to mobile games and PC gaming in China). Within the console market, Xbox only competes with PlayStation in North America. In the rest of the world, PlayStation has an enormous lead over Xbox. Xbox is simply a lesser known and lesser desirable brand in the rest of the world
Anime streaming (basically they have a monopoly already + vertical integration, it might still be somewhat niche right now, but it will be big within 5 years. Acquiring Crunchyroll was a very good move)
Music streaming (no, they don’t have a music streaming service, but as music streaming grows, Sony Music also gets a piece of the growing pie through licensing/royalties, and they also still have a little 2.8% stake in Spotify)
Apple, Amazon, Netflix, AT&T and Disney are currently battling it out in the streaming wars. When there’s a war you have little chances of winning, you shouldn’t be the one waging the war. You should be the one selling the ammo. Basically Sony Pictures (tv shows + movies) is in that position. Sony Pictures can negotiate good prices for their content because Apple, Amazon, Netflix, AT&T are thirsty for content and they all want their own exclusive content. Sony Pictures does not need to prop up their own streaming service just like Sony Music doesn’t need their own music streaming service when they can just license out their content and turn a profit. There will always be demand for TV & movies content, so Sony Pictures is well positioned is as an independent content provider. And while Apple, Amazon, Netflix, AT&T and Disney are battling it out on the forefront, Sony is quietly building their anime empire in the background. Genius business move from Sony here, seriously. They now have anime production & distribution.
Netflix has 200M subscribers and they currently have a 250M market cap. Think about what Sony will have in 5 years? >30M Crunchyroll subscribers (assuming all anime will be consolidated into Crunhyroll) & >100M PS+ & PSNow subscribers? Anime and gaming is growing faster than movies and TV shows. (9% CAGR for anime, 12% CAGR for gaming vs. 5% CAGR for the whole movies & TV show entertainment segment which includes PVOD, SVOD, box office, TV etc etc). And gaming as a whole is MUCH bigger than SVOD streaming. Netflix gets 99% of their revenue & profit through subscriptions. For the whole Sony Group Corporation, their subscription services (games + anime) it’s currently only 4.5% of their total revenue. And somehow Sony currently has a meagre $128B market cap?
PlayStation alone is bigger than Netflix in terms of operating profit. PlayStation has a MUCH higher profit margin than Netflix. For Q3 2020 Netflix posted $790M operating profit and PlayStation posted $988M operating profit. Revenue was was $6.44B for Netflix vs. $4.77B for PlayStation. (and btw Sony’s mobile gaming revenue (~$1B / year) is under Sony Music, it is not even in those PlayStation numbers!!!)
Think about it. PlayStation alone posts bigger operating profit than Netflix (yes revenue is bit smaller, but it’s the operating profit that matters most). And gaming is growing faster than movies. And PlayStation is about 24% of Sony’s total revenue. And yet Netflix has a market cap that is equal to the double of Sony's market cap? Basically If you apply Netflix’ valuation to PlayStation then PlayStation alone should have a bigger market cap than Netflix' market cap.
Sony Vision-S & autonomous driving tech (selling sensors + infotainment system to other car manufacturers). Sony surprised everyone when they revealed their Sony Vision-S electric vehicle last year at CES 2020 (in-house design and made in cooperation with Magna Steyr). And it’s currently being tested on public roads. Over the past year we have seen absurdly big investment hype into anything even remotely related to EV’s (including a few questionable companies). We’ve even seen an EV company with a gravity-powered truck get a $30B market cap in June last year. Meanwhile Sony, out of nowhere, revealed what is arguably (subjectively) one of the best looking EV’s. It got very positive reception at CES 2020. An EV that you can actually drive. But somehow their stock is still dirt-cheap based on their current fundamentals alone? Yet some companies that had pretty much nothing but some EV design concepts got insane valuations purely due to hype?
LTE chips for IoT & Industry 4.0 (Altair Semiconductors)
Cross-media IP (The Last of Us show on HBO, Uncharted movie etc). Huge unrealized potential synergy here (it’s about to change). We have seen that it can turn out super well when you look at The Witcher, Sonic the Hedgehog and Detective Pikachu. When The Witcher released on Netflix, sales of The Witcher 3 significantly increased again. Imagine the same thing, but with Sony IP’s. Sony Pictures is currently working on 7 video game IP based TV shows and 3 movies. We know The Last of Us tv series is currently in production for HBO. And then the Uncharted is currently in post-production and scheduled to be released in July this year currently. If Uncharted turns out to be successful, it will mark a big, new milestone for Sony as an entertainment company imho.
Aniplex (Sony Music Entertainment Japan subsidiary for anime production, distribution & mobile games) had a fantastic year in 2020. (more on this later) There is a lot of room for mobile games growth with Aniplex. Thanks to Aniplex, Sony might beat their earnings forecast.
Drones. DJI just got put on Entity List in USA and Sony started developing drones for prosumer / professional a few years ago. Big opportunity for Sony here to take a bit from DJI’s dominance. It only makes sense for Sony to enter the drone market targeting the professional & prosumer video market, considering Sony’s established position in the professional audio/video/photography space
Currently Sony also has several ventures & investments in AI & robotics
Over the past decade, Sony has also carefully expanded into medical equipment tech & biotechnology. Worth noting that Sony also has an important 33% stake in M3 inc (a medical services through-the-internet company with a market cap of $65.5B) (= just their stake in M3 Inc is worth $22B alone, remember Sony, with their large, diversified revenue streams & assets only has a market cap of $128B?)
Sony Pictures has a great upcoming movie slate (MCU Spider-Man, Uncharted, Ghostbusters: Afterlife, Venom 2, Morbius, Spider-Verse sequel, Hotel Transylvania 4, Peter Rabbit 2, Vivo, The Nightingale). They will profit from the theatre reopening and covid recovery. They may even become more favourable among movie theatre chains because they won’t release their movies on the same day on streaming services like Warner (and yeah movie theatres are here to stay, at least for a while imho)
All the above comes on top of established, mature markets (Financial Holdings & Electronic Products)
Oh yeah, btw though TV’s are a cyclical and mature market and are not that important for Sony Group Corporation’s bottomline*, Sony TV’s will continue to do well for the following successive years: o 2020: continued pandemic boost
2020-2021: PS5 / Xbox Series X/S
2021 Summer Olympics (tv sales ALWAYS spike during the olympics) (& the effect is more pronounced for high-end TV’s, = good for Sony because Sony’s market share is concentrated in the high-end range (they are market leader in the high-end range)
2022 FIFA world cup (exact same thing as for the olympics)
You could say it’s already priced in, but the stock is already ridiculously undervalued so idk…
You would think this company somehow has a bad outlook, but that could not be further from the true, let me explain and go over some of the different divisions and explain why they will moon: Sony Entertainment While Netflix, Disney, AT&T, Amazon, and Apple are waging the great streaming war, Sony has been quietly building its anime streaming empire over the past years.
Sony recently acquired Crunchyroll for $1.175B (it is a great deal for Sony imho and will immediately be more valuable under Sony. Considering the growing appetite for anime I honestly do not even understand why AT&T sold it, they could have integrated it with their other streaming service (HBO Max) but ok)
With Crunchyroll Sony now has the following anime empire:
Aniplex (anime production & distribution, subsidiary of Sony Music Entertainment Japan) F
Funimation
Manga Entertainment UK (production, licensing, and distribution, UK)
Wakanam (licensing and distribution in Europe)
AnimeLab (licensing and distribution in Australia & New Zealand)
Crunchyroll (3 million paying subcribers, 90 million registered users and 50 million social media followers)
* Why anime matters: Anime growth “The global size is expected to reach USD 36.26 billion by 2025, registering a CAGR of 8.8% over the forecast period, according to a study conducted by Grand View Research, Inc. Growing popularity and sales of Japanese anime content across the globe apart from Japan is driving the growth” (tl;dr anime 🚀🚀🚀🚀🚀, Sony is all in on anime and they have pretty much no competition) Anime is the fastest growing subsegment of movies/video entertainment worldwide.
Sony also has a partnership with Bilibili for anime distribution in China:
Bilibili already partnered with Sony Music Entertainment Japan to bring Aniplex’s hugely successful Aniplex’s Fate/Grand Order mobile game in China.
Sony acquired a 5% stake in Bilibili for $400M in March 2020 (that 5% stake is now already worth $2.33B at Bilibili’s current share price ($BILI) and imho $BILI still has lots of upside potential considering it is the de facto video creation/sharing/viewing à la YouTube/Twitch for GenZ in China)
Sony Music (mobile games) generated $400M revenue from its mobile games in Q2 FY2020, published through Aniplex (Sony Music Entertainment Japan, “SMEJ”) subsidiary
They are the publisher of Fate/Grand Order, one of the most profitable mobile video games of the past 5 years (has generated $4B in revenue (!!) by the end of 2019 and is still as popular as ever). Fate/Grand order is the 7th most profitable mobile game in revenue worldwide as of 2020 (!)
Aniplex launched Disney: Twisted Wonderland in March this year. In Q3, it was the #10 most downloaded mobile game in Japan. (Aniplex now has two top ten games in Japan)
Fate/Grand Order was the #2 most tweeted game in 2020 and #3 was Disney: Twisted Wonderland. You can see that Aniplex has two hugely successful mobile games. (we are talking close to $1B of revenue a year here). It is the #2 game in Japan by total revenue from Q1 2016 to Q3 2020 and the #9 game in worldwide revenue from Q1 2020 to Q3 2020.
SMEJ earns about > $1B from mobile games in revenue from mobile games and there is still a lot of future growth potential here considering Japan’s mobile game market grew a whopping 32% yoy from Q3 2019 to Q3 2020.
Aniplex recently co-distrubuted the movie Demon Slayer: Mugen Train in Japan in October 2020. It became the highest grossing film of all time in Japan with a total gross box office revenue of $380M. In the middle of a pandemic. It still needs to release in South Korea, China and USA where it will most likely do great as well.
Sony Interactive Entertainment (SIE) (Game & Netwerk Services business unit):
We all know 2020 was a huge year for video games with the stay-at-home pandemic boost. The whole video game sector brought in $180B of revenue in 2020, a whopping 20% increase yoy.
But 2020 will not be just a one-off temporary exceptional year for video games. The video game market has a CAGR of 13% which means it will be worth $291B in 2027. Video games is by far the segment with the highest growth rate in the whole entertainment industry.
PlayStation obviously has a huge piece of this pie and over the past years has seen consistent yoy revenue and profit growth. Think about it, for every FIFA/Call of Duty/Assassin’s Creed sold on PS4/PS5, Sony gets a 30% cut. There have been sold a billion PS4 games so far.
5 years ago 20 to 30% of PS4 games were purchased digitally. Flashforward to 2020 and it’s 60-75% and the digital ratio looks set to still increase a bit. This means higher profit margin for game publishers and for Sony at the expense of retailers
SIE has seen huge success in its first-party games over the past 5 years. Spider-Man, God of War, Horizon: Zero Dawn, The Last of Us Part 2, Uncharted 4, Ghost of Tsushima, Days Gone, Ratchet & Clank have all been huge successes. This is really big and represents a big change compared to the previous generations where Sony never really hit it big as a games publisher even though most of their games were considered quality games.
SIE is now not only a powerful platform holdeprovider, but also a very successful games publisher with popular IP’s (Uncharted, God of War, The Last of Us, Horizon, Ghost of Tsushima, Ratchet & Clank). This is an enormous asset, because firstly it increases the chances of success for cross-media opportunities (Sony Pictures can make TV shows and movies out of it to expand the popularity of those IP’s even more). And secondly, it is an obvious selling point for PS5. The more popular and bigger their exclusive content, the more they can draw people to their platform/service. This should increases PS5 total marketshare over its competitor.
The hype for God of War: Ragnarok will be absolutely through the roof. Hype for Horizon: Forbidden West is also very good already (10 million yt views, 273K likes which is very good). Gran Turismo 7 and Ratchet & Clank will also do very well in 2021. (I suspect that GoW oand Horizon might be delayed to 2022)
PS5 reception has been extremely good. Demand is through the roof as well all know. The only problem is that they cannot quite capitalize on the demand due to lack of supply, but overall, it is a very good thing that demand is very high, and that reception has been very positive. The challenge will primarily supply and production-related for the following 6 months and to be able to maintain brand momentum. Hopefully, they won’t push disappointed/inpatient customers to competitors.
Considering there’s backwards compatibility from PS4 to PS5, users will want all their PSN content to transition with them as well, so I expect them to lose very little marketshare to Xbox. Also, I do not know if Americans realize it, but Xbox is not nearly as big as PlayStation in the rest of the world as it is in the USA. PlayStation just has global brand power that Xbox just doesn’t have, so Xbox isn’t much of threat at all I’d say. Where I live, in Belgium, In Europe everyone is talking about the PS5, nobody really seems to care about Xbox Series S/X that much. Comparing PlayStation to Xbox in terms of mindshare is like comparing Apple to Motorola (not meant to be a diss to Motorola, I have a Motorola phone myself, just saying that Xbox has significantly less mindshare / brand power in Europe).
SIE is likely working on PSVR 2, this could be big.
Sony has a small stake in Epic Games (1.4%) and they have a good business relationship with them, so this might also make them open to release first-party games on Epic Games Store after exclusivity period on PS5.
Remember the Travis Scott concert in Fortnite? I believe that was one of the reasons why Sony invested in Epic Games. It serves as an example how music can sometimes converge with video games, and this can play to Sony’s strengths.
PlayStation also has way superior presence in Asia compared to Xbox. Have been expanding into China as well. Another great opportunity for revenue growth.
PS+ subscribers grew from 5.7 million by the end of 2013 to 46 million by October 30th, 2020. This is an average growth rate of 28% over the past 5 years. Considering most of the growth was early on, it will slow down, but I predict that they will have about 70 million PS+ subscribers by the end of 2023. This is huge and represents a stable, recurring source of income. Investors who keep hyping Netflix/Disney+ will love this, but it seems they have yet to discover $SNE.
There is a reason why Amazon, Google, Nvidia have been aggressively investing in video games & games streaming. They know the business is huge and is about to get even bigger. But considering the established, loyal PlayStation userbase, the established global brand of PlayStation and the exclusive games, PlayStation should be able to easily standoff competition from Amazon, Google and Nvidia (GeForce Now) in the next few years. So far, Amazon’s venture into game development, publishing & streaming has completely failed. Stadia and GeForceNow seem to have a bit more success, but still relatively niche. Therefore, I think PlayStation is well-positioned to remain one of the leaders in the industry for the following decade.
I'll get to the other divisions later, I figured this is a good first step. But so far the tl;dr Image sensors: 🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀 IoT/Industry 4.0 chipsets: 🚀🚀🚀🚀🚀🚀🚀 PS5/PSN/PS+: 🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀 Online medical services (M3 inc.): 🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀 Anime: 🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀 Fate/Grand Order: 🚀🚀🚀🚀🚀 Demon Slayer: Mugen Train 🚀🚀🚀🚀🚀 Sony Music / music streaming (the performance of Sony Music’s in Sony’s business is seriously understated. The numbers speak for themselves): 🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀 Sony Electronics 🚀 Sony Financial Holdings (very stable & profitable business, even managed to grow slightly during pandemic when most insurance companies performed more poorly): 🚀🚀🚀 Still have to cover Sony Pictures, but their upcoming movie slate looks pretty good honestly (Spider-Man sequel, Venom: Let There Be Darkness, Ghostbusters: Afterlife, Uncharted, Morbius, Hotel Transylvania 4 so that's worth one rocket as well imho 🚀 tl;dr of tl;dr: 🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀 Disclaimer: I am not a financial advisor. I am an idiot that's trying to understand why $SNE stock is so cheap. Positions: SNE 105C 21st January 22
What's up dingleberry danglers! It's ya boy, Agent00Funk, here to welcome you back to another edition of the TendieDome! That's right, its time for another wall of text for your literary entertainment, definitely not for your financial advice. By popular request, I even figured out how to add pictures. Keanu help us. If you're as illiterate as a Mississippi high school drop-out, go ahead and skip to the bottom for the TL;DR and my positions. I don't wanna hear no bitching about your lack of attention span, alright, because I will call you a slack-jawed cousin-fucker. Bet. So staple your eye shades open, Clockwork Orange style, and get ready to be blown away by how one of America's worst companies is gonna make you tendies. Those of you that have been following my DDs know that I'm not about rocket ships, I'm not gonna send you to the moon or Mars (but Uranus is in the cards). No, no, no, my sweet little summer autists, my plays are are all about steady accumulation of tendies. The goal? Acquire enough tendies so you can buy a first class ticket on whatever rocket a superior autist says is launching. Most of my plays are LONG term HOLDs, today's is a slight exception as we're looking for a Q3 or Q4 pay out. Maybe one day I'll grace you with my casino plays, but before I do that, we gotta make sure you're bringing enough dough to the paste-eating competition. And I sure as shit don't want y'all dick whistlers to blame me when the casino play doesn't pan out, so we're sticking with safe territory for now. Alright, now that I've masturbated enough and have that post-nut clarity to tell you why you should be putting money in CMCSA. That's right you little chode yodlers, muthafucking Comcast. Lots of you are probably already their customer, and have evolved to instantly wanna shit on Comcast. I don't blame you, they seriously suck, bunch of fucking assholes. But you know what sucky fucky assholes do? Make stacks on stacks on stacks. They're fucking you, AND taking your money. These guys have prostitution really figured out....you don't even know that you their ho. So, let's channel our inner Charlie, and do some Pepe Silivia deep dive due diligence. That's right, it's not just a DD like your wife's bra, we're going for the DDDD! This is us rn. Would you take financial advice from this guy? So, CMCSA....where do even start? The highway-robbery pricing (tendies)? The understaffed and overworked employees (tendies)? The geographical monopolies they hold? (tendies). The reliance on dumbfuck Boomers as a customer base (I wanna hear the choir sing it with me now:...tendies)? No, no, no....you may be retarded, but you know when you're getting fucked, and you know you pay for getting fucked anyway, just like everyone else (tendies). fr fr CMCSA basically makes money in two ways: 1.) fucking you. 2.) fucking others. But wait! There's more! They have even more ways of taking money from you and everybody else, and if your goldfish attention span can handle it, you'll see what I'm talking about. Oh and charts. I do have charts. Fuck, me and Billie Eyelash have been spending so much time in the Crayon Room together, those charts have so many colors, most of them green. Before I bust out these fucking rainbow crayons, let's cover some ground facts. For the Europoors among us, you may be shocked to find out that most Americans have NO CHOICE in who their ISP is. I know, cue the Sarah McLachlan and charity pitch, it's fucking pathetic. Free markets, my ass. But you know what that means? Tendies. That's right, Comcast has the most little fiefdoms of all the ISPs in the land. Only $T can compete, but here's the kicker: people have been ditching $T for CMCSA. Why? Because $T offers DSL in a gigabit world, that's locked inside because of a pandemic, re-discovering what made cyber sex so awkward over AIM, but now with cameras! (All the real Gs were around for that A/S/L/ convo, shit was Catfish City). So, while all you fuckwads are going to work in your Superman pajamas on Zoom, more people signed up for that sweet, sweet broadband., so they too could go to work in their Cookie Monster pajamas. (Mine are camouflaged, my co-workers don't even know I'm there, they just see square burger patties getting flipped on the griddle and are like "woooooooooooooaaah") I know you bell-end ringers don't read, but you can read a little more about subscriber increases here: (https://www.cnbc.com/2021/01/28/comcast-cmcsa-q4-2020-earnings.html) Did you notice that link? CNBC? Reputable shit, right? I know some of you motherfuckers pay CMCSA like $200/month just to watch that shit, along with 400 other channels of garbage. That's right Europoors, CMCSA isn't just an ISP with a monopoly, it's a cable TV provider with a monopoly (tendies). And you know what else? They own CNBC. Fuck, they own ALL of NBC. Now, I know, some of you more erudite ballsack gargglers already know this, but let's let the retards catch up. Because, guess what you molasses racers, CMCSA also owns Universal Studios. For the nerds in the front row, shut the fuck up, we already know you're smart. Are you seeing this shit? Like, seriously, are you piecing this shit together? CMCSA owns the pipes, CMCSA owns the shit in them, large swatches of America have no choice except CMCSA, and more people need those shitty ass pipes, because it's way fucking better than the old ass copper $T is selling. "Alright," you say, "CMCSA would've been a good pandemic play, what's the bull case looking forward?" Well tug my dick and call me Rick, that's why we're here. I can already tell this is going become a damn book of retardation, so I'm going to add some chapters. TV Subscriptions. We've got the finest stock art, just for you This is the weakest part of CMCSA, everyone is cutting the cord, they're sticking to streaming, but if you check that link above, you'll see that they actually managed to add over 400k new subscribers. Sure, some of that can be attributed to people being bored as fuck at home during the pandemic and figuring they'll get 400 channels of dog vomit to help ease their soul-crushing ennui. There aren't a lot of reasons to expect these growth figures to continue, except one, which I will get to in a bit, but I do think they'll be a bit sticky. Why? Fucking Boomers man. Boomers have this very strange addiction to channel surfing. I don't get it. They just sit there and flip through 400 channels at 10 channels/second for hours on hours on hours. They aren't even watching anything, just surfing. Don't believe me? Go ask a Boomer near you how much time they spend channel surfing and why they won't give it up. They love complaining about it too: "all these fucking channels, and nothing to watch." If you point out that they could just STREAM something they want to watch, they just go right back to surfing, because they don't actually know what they want to watch. TV may be going the way of the dinosaur, but there are still lots of dinosaurs surfing channels for now, hell, they even picked up more. How? Is it all just bored people signing up for TV during the pandemic? Maybe, but I've got another theory about geography! Internet Subscriptions Yup. So, even though people may be cutting the cord, they can't do that without internet, and...well....yeah, CMCSA may see declines from TV subscriptions, but definitely not internet subscriptions, not this year anyway. Again, I refer to the earnings report to show you jello heads the subscription numbers. I'm not going to belabor this point much, surely you know people need broadband, and CMCSA is the only game in town in many places. Geographic Monopolies in Growth Markets Awwww yiiissss gimme Park Place If you've been reading along thus far, congratulations, you'll remember that we talked about the little fiefdom monopolies these guys have across the country. So, where are those fiefdoms located? Right here: https://en.wikipedia.org/wiki/List_of_communities_served_by_Comcast Now, I won't bust out the charts for population growth in all of these, because there is a fuck ton, but even just looking at Alabama (Roll Tide), you see that 80% of their markets in that state are growth markets, and only 1 is showing population decline.... and they're only in 6 markets there! Now, they don't hold 80% of growth markets in every state, but they hold a lot. This means that as these cities attract more people and grow, those poor saps will have no choice but to sign up for CMCSA if they want TV and/or internet. Yes, goons and goblins, CMCSA doesn't just have a captive audience, it has a captive audience in places where the audience is growing. Do I really need to spell out how these equates to tendies? Want to know something even better? Biden's infrastructure plan includes heaps of money for increasing broadband access to underserved and rural communities, communities that will then become part of CMCSA's growing fiefdoms. Streaming Trying to catch my shows fresh from the stream with my bare hands CMCSA has also launched its own streaming service, Peacock, and if you look at the CNBC link, you can see subscriber numbers for that as well. Seeing the writing on the wall, CMCSA has gotten in on making money from cord-cutters. Again, CMCSA owns the entire NBC and Universal Studios catalog, but it really doesn't matter because just like a bunch of people signed up for Disney+ just to watch The Mandalorian, a bunch of people have and will sign up for Peacock just to watch The Office. And yeah, it fucking sucks that before you could have Hulu and Netflix and not need any more streaming services, that they are Balkanizing the streaming space just like they did with cable, and now you need like 20 different apps, but go look at the Universal/NBC catalog and tell me that you wouldn't pay $5/month for access to it if you couldn't get it anywhere else. I mean shit. WWE is exclusive to Peacock...do I need to say more? Do you smell-l-l-l-l-l what The Funk is cooking? Theme Parks and the Recovery Who else re-installing RCT2? Here's a kick in the pants that you didn't expect. Universal studios. That's right, these motherfuckers got their own janky-ass wannabe Disney World. Hell, if anyone ever does open a Jurassic Park, it'll be CMCSA because they've got the rights to it and know how to run a theme park. How much do they add? About $6 billion/year (pre 2020). How much did they make in 2020? $1.8 billion. There's $4 billion set to come back into the pot. But wait, there's more! They're going to open their largest park ever this year, been building it since 2016, and the opening has been confirmed despite the Rona. Where? In Beijing, so you know the place is gonna be huge and full. https://en.wikipedia.org/wiki/Universal_Studios_Beijing So as the vaccine gets out there, the world returns to "normal" and people go spend absurd amounts of money to slide across bits of metal, not only will missing revenue return, but CMCSA is ready to make the pot bigger. When is it opening? May. This is important because we're not looking for a pay-out until after the park has opened. If you feel more retarded after having read this far, imagine how retarded I am for having written all that linguistic linguini. So, now that we know what the bull case for CMCSA is, let's bust out those crayons and look at some charts to get the full confirmation-bias effect and look at possible entry and exit points. CRAYON ROOM TIME! I don't know if this will be mo bigga when you fumble fucks look at it, I'm too retarded to figure out formatting. I really don't know fuck about shit when it comes to numbers, but I do know the lines look pretty. So, let's run this down real fast. This is a weekly chart going back to 2018. I wanted to go that far back to show you two things. 1.) CMCSA recovered from a dip in 2018 much like it has from the COVID dip, and is on pace to match or exceed it's growth average since 2018. 2.) Annual dividend increases of around 10%. Looking at the chart, there is no reason not to expect the same announcement towards the end of the year, and in fact the next quarterly dividend has already received the increase. I've got a few other lines in there, but what I want to point out is how much the price rises above the moving price average, weather measured as a simple moving price average or within Bollinger Bands. Dips below the average tend to recover and be above the average again within 2-3 weeks. Crayons are awesome. I should invest in Crayola. Now let's look a little at demand. Again, this is a weekly chart, but this time we're mostly going to be focusing on the right side of the chart. The top chart is a Stochastic Full measurement, the two horizontal blue lines represent oversold (top) and overbought (bottom). Generally speaking, if a stock is oversold, the price goes down, people buy, and the price goes up, leading to a position of it being overbought where people sell for profit, price goes down, and rinse and repeat. The squiggly lines are the two measurements of where the stock is in relation to being oversold or overbought. So what is it showing us? That the stock was recently oversold, and is heading towards being overbought. Best time to get in would've been 2 weeks ago, but try posting a DD on WSB back then that wasn't about the holy trinity cult. So what does this mean? Well, buying now could lead to a little rise followed by a little dip as it fluctuates between oversold and overbought. The second graphs is the MACD (Moving Average Convergence Divergence) this chart essentially measures sentiment, if it's up, it's bullish, if it's down, its bearish. I know some of you eggheads will correct me with finer points, but I don't have time to write a textbook that I'm incapable of understanding. As you can see, it has leveled off, which makes me believe it will dip, this also corresponds to it's movements in the Stochastic measurements. So don't buy at open, watch it for a bit, it might dip. The third graph...I have no fucking clue y'all. It had the word "projection" in it, and the line is pointing up, and that was good enough for me. Timing and Prices If you can get in for under $50, do it. I'm not sure if it will dip that low again soon, but it's within possibility. Calls aren't terribly priced, they're not the value they were 2 weeks ago when I first wanted to write this, but they're still a good value, especially for July and beyond, which is the timeframe we're looking at for an exit. Or not. I mean, you could sit on this shit forever and not really have to worry, which is another thing I like about it. But I have calls for July and October and may even pick up the 2022 LEAPs. We're looking for two events to provide a nice pop for our exits; the new park opening and Q3 earnings report that should include initial earnings from the parks, both new and re-opened. We want to see if the customers are going back to the parks, and returning that missing money into the pot, and we want to see how growth of broadband customers has increased. But again, don't sweat too much about timing and prices, this thing just keeps marching upwards. Positions CMCSA Shares CMCSA 16 July $50c CMCSA 15 Oct $52.5c Tl;dr CMCSA. No rockets, but good value. 7/10 Would buy again. DISCLAIMER: I don't know what I'm doing, you listen to me at your own peril, please leave me alone SEC.
Illegal Tactics and DTCC/Prime Broker Complicity In Naked Shorting & Retail Shutdown of GME (DTCC/Prime Brokers decision makers need to be questioned at the 2/18 GameStop Congress hearing)
TLDR: GameStop’s Congress hearing is on Feb 18th, they need to investigate the Prime Brokers and DTCC for their complicity in enabling naked shorting within GME and by extension, potential collusion to shut down trading on Jan 28th, the day the short squeeze was going to kick off. (stick to the end for an analysis of some illegal tactics short side hedge funds have been using) Thesis: On the day the retail market for GME shut down on 1/28 (the day the short squeeze would’ve happened had there been no market intervention), DTCC (clearing house monopoly) shut down retail buying in order to protect itself and Prime Brokers (which privately own the DTCC) from being exposed to the consequences of being party to illegal activity. I believe Prime Brokers and DTCC need to be called to the GameStop hearing on February 18th to be questioned for their complicity in enabling illegal naked shorting of the GME stock, as well as potential collusion to shut out retail buyers on 1/28. In my previous post (which I recommend reading for some context) I explored the subject of rampant illegal naked shorting in GME, and how Prime Brokers (consisting of banks like Goldman, Morgan, etc) and DTCC would be complicit in the naked shorting. This in turn raises the thought experiment that they would be incentivized to do anything possible to prevent the short squeeze from happening on 1/28 because had the short squeeze happened, the shorts would go bankrupt and their Prime Brokers who lent them their naked shorted shares would need to cover the shares. This would not only represent a humongous capital expense for Prime Brokers, the culpability of Prime Brokers (and that of the DTCC) in this situation would also have likely been exposed as well. A quick primer on what a Prime Broker is: Prime Brokers are essentially the service side of the short- selling business. They lend out securities and cash, you can think of them as the “house” in a casino: They provide a gambler with markers to play and to manage his winnings. According to Matt Taibi, “Under the original concept, if a hedge fund that wanted to short a stock they would first need to “locate” the stock with his Prime Broker but as time passed, Prime Brokers increasingly allowed their hedge-fund customers to use automated systems and “locate” the stock themselves, and what this does is enable short-sellers to sell stock without delivering and thereby perform naked shorts with counterfeit shares. (source: https://web.archive.org/web/20210213125246/https://www.rollingstone.com/feature/wall-streets-naked-swindle-194908/). (I highly recommend you read Matt Taibi’s article on naked shorting and how it was used to take down Bear Stearns and Lehman Brothers. There are so many parallels with GME it’s hard to miss. It’s amazing to consider that 12 years after this article was published and brought to public awareness, the problem of naked shorting still exists as a systemic issue.) Prime Brokers have a long history of being associated with naked shorting. To highlight a few examples, Prime Brokers like Merill Lynch and Goldman have long been implicated for naked shorting Overstock.com (https://www.rollingstone.com/politics/politics-news/accidentally-released-and-incredibly-embarrassing-documents-show-how-goldman-et-al-engaged-in-naked-short-selling-244035/, https://www.forbes.com/2007/02/02/naked-short-suit-overstock-biz-cx_lm_0202naked.html?sh=271400d1763f). Another example is when Goldman’s Prime Brokerage was implicated by the SEC in 2016 and got away with a small fine of 16 million (Source: https://www.sec.gov/news/pressrelease/2016-9.html). An example that very recently came in the news is a story where CIBC, BOA, UBS and TD Bank Prime Brokerages are accused of facilitating naked short selling and using counterfeit stock to attack and bring the stock price of a company from $34.77 to $1.83 (Source: https://www.securitiesfinancetimes.com/securitieslendingnews/industryarticle.php?article_id=224548). The DTCC also has a very long history of being associated with naked shorting. The Wall Street Journal noted that 1% of the DTCC’s volume end in failure to deliver which “have put DTCC in the middle of a long-running fight over whether unscrupulous investors are driving down hundreds of small companies' share prices… DTCC has turned a blind eye to the naked-shorting problem. ” (Source: https://www.wsj.com/articles/SB118359867562957720). The DTCC has also had numerous complaints submitted to the SEC for enabling naked shorting (source: https://www.sec.gov/rules/proposed/s72303/decosta122203.htm) and have been sued tens or hundreds of times for assisting naked shorts (source: https://smithonstocks.com/part-3-in-series-on-illegal-naked-shortings-role-in-stock-manipulation-prime-brokers-and-the-dtcc-have-a-troubling-monopoly-on-clearing-and-settling-stock-trades/ and http://counterfeitingstock.com/CS2.0/CounterfeitingStock.html and https://www.wsj.com/articles/SB118359867562957720) On 1/28 Robinhood received a letter from the DTCC at 4 am requiring them to halt trading or come up with 3 billion dollars, which Robinhood did not have, and therefore with one swoop of the pen the DTCC shut down buy side momentum but strangely allowed selling. Retail investors were shut out of the market and as any student of microeconomics would know, by shutting buy but only allowing sell, the price is bound to fall. Meanwhile while hedge funds were able to keep trading not only in the market but also crosstrade in the dark pools (“private” stock markets that retail is shut out of, more on this later), and use this crucial lifeline given to them by the DTCC to prevent the squeeze from happening that day. With retail abruptly being shut out from buy (even cash accounts were shut out, which didn’t make sense) and only allowed to sell, almost everyone could smell manipulation was afoot (which triggered the Congress hearing) and the most of the blame was pointed at Robinhood. Personally and in hindsight, I believe Robinhood was just a willing scapegoat. When we think about who had the most to lose if a short squeeze occurred, I’ll narrow it down to three entities, Shorts and their stakeholders (ie Citadel), Prime Brokers and the DTCC. It’s important to remember that the actual impetus that triggered the shutdown of the market for retail investors came from the DTCC. Working backwards, if you consider that GME was rampantly naked shorted and DTCC and Prime Brokers would have to be complicit in it, I believe the DTCC, Primer Brokers and possibly Citadel (who provides 40% of Robinhood’s revenue) brazenly manipulated the market on 1/28 by shutting down purchasing for retail buyers to prevent the squeeze from being squoze on that day as doing so would be catastrophic for all aforementioned parties involved. I believe that on the upcoming Gamestop Congress hearings the Financial Services Committee needs to call on decision makers of DTCC and Prime Brokers explore their role and complicity in the shut out of retail buyers that day as well as being enablers of naked shorting in GME. An interesting thought experiment: On 1/28 when the price was 450+ and shorts were likely under 100, if we assume prime brokers allowed naked shorting in GME, then when the squeeze was about to happen (or happening), if Prime Brokers had margin had called the shorts, they would presumably also also gone down because shorts would not be able to pay in that event and the brokers would be holding the bag. By that logic, they have every incentive in this case to NOT to margin call and instead the most logical option would probably would have been to make a backroom deal, which is what I personally think most likely happened. If you’ve read up to this point, you might be thinking what can I do about this? I am aware that there a lot of cynicism that we can’t do anything, that there will be no justice for retail investors who were harmed this situation, and that institutions and people in power will prevent anything from being done. I feel this sometimes too, but remember: A single voice can be drowned out, but if we all speak together then we will make our voice heard. Ape Strong Together. With the hearing coming up on February 18th, I highly recommend you email and tweet the representatives involved in the hearing, as well as your own district representatives, and urge them to read into the factors presented in this post and call the DTCC and Prime Brokers to the hearingl. They need to be questioned on why GME has so many counterfeit shares, failed to deliver, their complicity in naked shorting, and investigated for their role in the retail shut down of 1/28. Below are 4 members of congress I recommend both tweeting and emailing Alexandria Ocasio-Cortez https://twitter.com/AOC, email: [[email protected]](mailto:[email protected]) Al Green Al Green https://twitter.com/repalgreen, email: [[email protected]](mailto:[email protected]) , email: [[email protected]](mailto:[email protected]) Maxine Waters https://twitter.com/maxinewaters, email: [[email protected]](mailto:[email protected]) Nancy Pelosi Email: https://twitter.com/SpeakerPelosi email: [[email protected]](mailto:[email protected]). And you can find other members of Financial Services Committee here to reach out to: https://financialservices.house.gov/about/committee-membership.htm What follows should probably be a separate post, but I will take the opportunity to summarize some of the illegal tactics that shorts have been identified to be using in their war with retail investors. Note that this may not be an exhaustive list and there may be newer tactics deployed in the future. Retail investors might not have the same tricks, resources and willingness to break the law for profit as hedgies do, but my hope and belief is that if we pool our knowledge and analysis, we will figure out their game and effectively adapt. Feel free to forward the list below to any representatives and lawmakers if you concur that these tactics were used: Rampant Naked Shorting - With the extremely high number of Fail to Delivers (FTID) , short interest being as high as 226% recently, and institutions alone holding a staggering 177% of the total float (likely due in large part to counterfeit shares), signs strongly point to GME being rampant with naked shorts and counterfeit shares. I believe the original goal of shorts was to drive GME to bankruptcy with these naked shorts, using the laddering of naked shorts (aka short ladder attack), executed with the help of counterfeit stock which is a classic and reliable method of driving down the stock price. I believe the GME stock has seen relentlessly aggressive short attacks, especially on the week of Monday February 1st, which drove the stock price down and triggered panic selling. Ladder Attacks with the help of Dark Pools - Another identified method of ladder attacks was identified to come from crosstrading with darkpools (the stock market has its own private stock exchange where institutions can trade…). Essentially darkpools are private stock markets retail investors do not have access to, where short side funds can purchase securities “off market” and then sell “on-market”, with the effect of creating a lot more downward pressure on the market without the upward pressure from buying. Illegally masking shorts with synthetic longs. Another tactic shorts are suspected of using in GME is the use of illegally using options to evade short positions in violation of Reg SHO which SEC describes in this risk alert and which I elaborate in this post. Essentially it’s the use of using options to create synthetic longs to illegally and artificially cover and prolong short positions and at same time obscuring the true short interest %. If you consider that it would be far more profitable for shorts to not cover at high prices but instead ladder attack the price and wait for retail investors to lose interest and close their shorts at as low of a price as possible, then you can see why this strategy would be very effective. Using way out-of-money call options to obscure true short interest. You may have heard about the 43 million worth of 800 dollar calls purchased when the price was 100 and found it odd. Later it was identified as a tactic to cheaply purchase synthetic call options (since at 800 its way out of money) to obscure their short positions (with the added benefit of hedging at 800 if a squeeze does happen) One thing I want to note, particularly to legislators at the GameStop hearing: Retail investors were not incited to pump GME. Retail investors spotted a unique Short Squeeze opportunity created by the greed of short side hedge funds, whereby GameStop was being abusively naked shorted with the goal of bringing it to bankruptcy, and hedge funds were so greedy about it that they shorted the company with a short interest of 226% of float, meaning A LOT of counterfeit shares were being used to short the company. Retail investors saw this as an opportunity to short squeeze the hedge fund shorters, which is a legal and legitimate investment strategy. The short squeeze would have happened had everyone played fair, but instead, financial institutions who were culpable to the naked shorting intervened and shut down retail buying, hurting the retail investors and successfully manipulating the market. The investment itself was in my opinion a sound decision based on the short squeeze, but in hindsight retail investors did not seriously consider the risk of the market would be blatantly and publicly manipulated and that the market would be rigged against them. If this post was useful (and I hope it was! Gave up my Friday night to write this for you Apes), please upvote for visibility and share it far and wide. The GameStop hearings could be a first step and hope towards legislative change, and it’s extremely important that the right story is told at those hearings (and by the right story I mean the real truth of what happened.) I hope the truly culpable parties are investigated and brought to justice. Again, I know many of us feel cynical that anything meaning will be done towards finding justice against the lawbreakers in this case, but if you feel even an ounce of injustice or empathy at how retail investors were unfairly harmed in the course of investing in GME, I strongly urge you to contact a legislator associated with the GameStop hearings and bring this to their attention so they can review this case with more complete information. In addition I recommend you to contact the SEC and any journalist you know or via journalist tip lines. It’s not going to be easy but the more awareness we raise the higher the likelihood our voices will be heard and positive change will be made. As we navigate the rocky waters ahead, I’ll gift you with a favorite quote of mine: The only difference between a nightmare and a dream is how big your balls are. 🚀🚀🚀 Disclaimer: I am not an investment advisor, I just like the stock. Ps. If you’ve read to the end, I’ll leave you with a few more thoughts and reminders: - If I were to distill life into one thing, it would be to never lose hope. - Remember that if you’ve lost money in any way shape or form, don’t be depressed, money can always be made back and the important thing is to maintain a good attitude. - Only invest what you can afford to lose. - Perhaps the most important factor in good investing is patience. If you’d like to read more about counterfeiting stocks this is a good place to start http://counterfeitingstock.com/CS2.0/CounterfeitingStock.html Note: This is a re-post for visibility
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