Peter Kafka, Ninety Bucks, Seven Million discussed on Recode Media

Recode Media


In this video. Peter kafka that is me delighted to talk to enter a circuit. Who has many jobs helped create billions. He has a day job at the new york times. he also has a day job at cnbc. He's a very busy man delighted to take some time to talk to us about the story of the month week year. It's called game staff commander going to be very thing in a year from now. Are we going to think this was. The story of the year was the story of the moment. And as we've watched even just this today the stock falling away it has is that mean the stories over recording this tuesday afternoon. You might get it. Tuesday night wednesday morning. It's it's historian progress but it is interesting right ahead. We talked a week ago. I think this was still in like that's a really weird thing that's happening. It's kind of a sideshow but it's interesting and then by middle end of the week all sorts of people. Sober people were saying. Listen you know. I i the people at read. It have a point and whatever happens here. Things are changing fundamentally in the way we deal with finance but now game stop goes back to where it was. And it's it's falling. It's at what ninety bucks now. We're ninety bucks now so down from four sixty eight if it just turns out that this was just a weird anomalous pop than a bunch people got excited about. It was a bubble. We've seen bubbles before Maybe it's not a story after all maybe does go now. I think we're gonna see more of it. Maybe not in game stop. But i think the idea of social media enable trade where you can actually gather people and funds and money real money i think is not is not going anywhere and i think you're gonna see that play itself out in terms of how it impacts even traditional aspects of of wall street in hedge funds and even the idea of shorting and how people think about that kind of risk in everything I wanna talk more about that but first of all Let's let's let's ask you where where you think this does it does game stop. Go back to where it was a month ago. Is it back into single digits Are we done here. I'm not a stock market prognosticator at all. I you know just on a fundamental basis. Most people would suggest it's ten twenty thirty forty dollar stock. I don i don't know you can. You can take your pick somewhere in there you by the way for all you know. It could could trade premium to that for for some period of time. It's been shocking to me that actually game stop executives have not decided to issue shares amid all of this trying to actually raise cash. Why do you have that. Do you think that is an have that transformational moment that sort of that. They could try to turn themselves into net flicks from was dvd by mail into into net flicks the ecommerce giant. That is why. I don't know. I wonder ice Look my my imagination runs wild. I wonder whether lawyers saito a company like that. Look if you issue shares right now in raise raise money. You're going to be accused of market manipulation yourself. That's what i wonder an interesting that you have not seen the senior executives at least thus far sell their shares. Either and i imagine it's for the same reason. Yes that's the matt levine. The bloomberg com who've had on the show is is that the you're just inevitably going to face a lawsuit if you're selling a share in your management At at those pretty interestingly. Amc theaters did it last week. And and there was not an outcry there was not. And we'll see we'll see what happens whether those losses The the idea that this is sort of a permanent feature part of part of me has a question about that just practically right one of the reasons that that game stop and amc worked is that the street wasn't paying attention to read it for the most part. I'm sure there are people who were looking there but now the secret is out that they've we can all get together. We can all push up heavily. Shorted stock they all did that. Playbook and now everyone knows about it and wall street bats read. It had like two million people we could go. And now it's at seven million right and they can move around but the ideas you wanted a place to gather and so you can't do it secretly because then it doesn't work at the social the social social media and if now everyone is hip to this the all right. Well that's how that short-squeeze works then. We can just sorta react appropriately. And maybe they'll still be a couple of things that spike here and there but it seems a lot harder to pull this off once once the man knows about it. No i think you're right. I think there's particularly unique about even the stocks themselves. Here's how heavily shorted. There were a terms of this sort of true supply and demand imbalance that revolved around game. Stop it was very. There's very few stocks out there. That had that kind of short demand. But i do think wall street will get hip to read it. And we'll we'll be focused on that. But i also think that short shortsellers as a function of this are going to be a little bit more reticent about shorting stocks especially if you know once you get up to twenty thirty forty percent of the float. I think that people are gonna say will. Actually there is a risk of squeeze potentially and i bet you the banks may not even allow you know provide margin for that kind of thing because they'll also understand there is so things have happened here and i also think there's been a real conversation important one about making the system fairer right i do a. You had a column today in the times about that. We should talk about. We can talk about it. But i do think there are elements of this. That are moving the conversation forward as you know though. I still have real questions as to whether this was a genuine protest or whether this was a comp dump scheme masquerading as something else i mean. They're they're not mutually exclusive right. There are people there who were crusading in. There's people there they were pumping and maybe they're the same people but they're certainly people doing look in many ways it's like it's like any protests it starts with real aggrieved folks and invariably gets co opted by looters and opportunist. And i i think you can it very much the way you described you can have both in. We probably do right now This idea that that that this is a protest against. I get the idea that the wealth is not distributed. Equally and people are upset about that. It's hard to reconcile that with pushing up a stock because that's really a very specific thing it it it. It only benefits or hurts very specific people. Sometimes i hear people say well. I'm defending game. Stop this has nothing to do with game. Stop. it's totally separate from game sabah. Except for this theory you have where they could sell all their their shares. Raise a ton of money and become a different company but shorter that this in this exists entirely separately from game. Stop maybe you're sticking it to melvin capital or some other hedge fund but everyone else.

Coming up next