January 8, Friday.
GME closed at 46 yuan and 30 cents the day before, and pre-market trading was already oscillating above 48 yuan.
In addition to regular data, the Bloomberg Terminal in front of Lin Shicheng also had a piece of news that he had just called up--
Bloomberg's Breaking News column, titled "Iceberg Research Announces Short Position in GameStop".
Zhao Chen put Zisha Pot on the table and took the mobile phone from Lin Shicheng.
Iceberg Research is a research institution famous for its Short Selling Chinese concept stocks. In the past few years, it has Short Selling interviewed more than a dozen companies, with a high success rate.
They chose to publicly release the Short Selling statement at this point in GME, and their intention is obvious--
While GME's stock price was fluctuating at a high level around 48 yuan, a strong enough bearish report was used to disperse the sentiment of retail investors.
"What is the core logic of Iceberg's report?" Zhao Chen asked.
"Three things. First, GME's stock price has completely broken away from Fundamentals--
According to Iceberg's Model, the reasonable value of GME is between ten and fifteen US Dollar.
Second, Ryan Cohen's transformation plan will take at least two to three years to produce substantial financial improvement, and GME's cash can only last less than four quarters.
Third, and the most important one - Iceberg claims that they have confirmed from multiple channels that the position of Era Vanguard is close to the upper limit, and there will be no further large-scale buying in the future.
Once Era Vanguard stops, GME's Buying Pressure will drop sharply and the stock price will fall back quickly."
Zhao Chen put the phone on the table, picked up the teacup and took a sip.
"Iceberg's third piece of logic is betting on our position.
They know that our position is 9.4%, and they know that we are only 0.59% away from the upper limit of 9.99%.
Their reasoning is - Era Vanguard will not cross the red line of Section 16 for GME, so Era Vanguard's Buying Pressure will have to stop sooner or later.
Once Buying Pressure stops, retail investors' Follow-up Orders will ebb and the stock price will fall."
"Yes. So they established Short Position around 48 yuan, betting that after Era Vanguard and Buying Pressure are exhausted, the stock price will fall on its own."
Lin Shicheng switches Bloomberg Terminal to the Short Selling data page,
"Iceberg's Short Selling statement was issued at 7 o'clock this morning. The pre-market Short Selling ratio jumped from 65% yesterday to 72%.
New Short Selling volume was approximately 5 million shares, mostly from Iceberg and the small-cap Hedge Fund that followed them."
At nine-thirty, NASDAQ opens.
GME jumped up and opened to 49.80 cents, but within 15 minutes after the opening, the stock price fell back from 49.80 cents to 47.22 cents.
Iceberg's Short Selling statement had been partially digested by retail investors on WallStreetBets Forum before the market opened, and panic was released after the market opened.
Selling orders poured out in large numbers near $49, and an almost vertical downward negative line appeared on Time-sharing Chart.
"Retail investors net sold approximately two million shares within fifteen minutes of the opening."
Lin Shicheng stares at the transaction data,
"This is the first time since the GME Short Squeeze market started that net selling has occurred among retail investors.
WallStreetBets Forum's sentiment indicator fell from extremely greedy to greedy territory.
Someone posted on the forum-'Iceberg Short Selling.
Era Vanguard is almost out of bullets. We should run.'"
Zhao Chen looked at the downward time-sharing line on the disk and did not immediately place an order.
He opened the exposure monitoring report sent by Shen Zhiyi--
After yesterday's close, the total exposure was 9.4%, which is still 0.59 percentage points away from the upper limit of 9.99%, corresponding to about 410,000 shares.
"Don't buy it today. Let's see how far Iceberg's Short Selling statement will go.
If the stock price drops below 45 yuan, we will take over again.
If we hold on to 46 yuan, today's buying volume will be reduced by half."
In CNBC's live broadcast at 11 a. m., the host placed Iceberg's Short Selling report and Era Vanguard's 13G filing documents side by side on the screen.
The title of the Iceberg report on the left of the screen is "GameStop: A fireworks display that is about to end."
On the 13G declaration document on the right side of the screen, the position number of Era Vanguard is circled in red.
The host used an analytical tone--
"Iceberg Research released a Short Selling report on GameStop this morning, claiming that GME's fair value is between ten and fifteen US Dollar.
The core argument of the report is that the position of Era Vanguard is close to the upper limit, and there will be no further large-scale buying in the future.
Once Era Vanguard stops, GameStop's stock price will quickly fall back.
The question is - is Iceberg's reasoning correct?"
The commentator of Bloomberg invited a senior analyst who has tracked Iceberg's historical Short Selling record on the midday show.
The analyst said something in front of the camera--
"Iceberg's Short Selling report has a premise - buying Era Vanguard is the only driving force for the rise in GME stock prices.
But this premise ignores a more important fact - GME's Short Selling ratio is still 72% of Circulating Supply.
Iceberg himself established Short Position around block 48, but GME's total Short Position still exceeds 50 million shares.
If the stock price continues to rise, Iceberg's Short Position will also be involved in the stampede.
Their Short Selling report may weigh on the stock price in the short term, but in the long term,
They are adding to an already overcrowded Short Sellers trade."
By the fireplace in the Explorers Club, White-Haired Old Man threw a printout of Iceberg's Short Selling report on the coffee table.
There were a few more people in the room than in previous days - representatives from Melvin Capital and Point72 were also present.
On Bloomberg Terminal in front of them, GME's stock price was fluctuating around 47 yuan.
The Short Selling ratio dropped from 72% before the market opened to 68%.
"Iceberg built Short Position on Block 48."
White-Haired Old Man Turn the report to the last page,
"Their logic is - Era Vanguard is almost out of bullets. This logic is not wrong.
Era Vanguard holds 9.4% of the position, which is only 0.59 percentage points away from the upper limit of 9.99%.
They dare not cross the red line of Section 16. The problem is--Iceberg ignored one thing.
Era Vanguard Although they cannot continue to buy on a large scale, they will not sell a single share of the 9.4% position they already hold.
Iceberg's Short Sellers needs to buy back five million shares to close his position.
And 9.4% of the Era Vanguard position will be locked in the account and will not turn into a selling order.
What Iceberg needs is new selling.
But where are the selling orders for GME coming from? Retail investors are buying, Era Vanguard is not selling, Ryan Cohen is not selling, and DFV is not selling."
"So Iceberg's Short Selling report is betting that retail investor sentiment will collapse."
The Melvin Capital representative placed the coffee cup on the table,
"If retail investors panic sell after Iceberg's report, GME's selling will increase, the stock price will fall, and Iceberg can close the position at a low level.
If retail investors didn't panic, Iceberg's Short Sellers would be trapped at $48.
Their call line is around 60 yuan. If the stock price rises to 60 yuan, Iceberg will be forced to close the position."
White-Haired Old Man leaned back on the chair, his eyes falling on the winter sky Manhattan outside the window.
"Iceberg thought they were betting on the Era Vanguard bullet, but in fact they were betting on the confidence of retail investors.
Retail investor confidence is stronger than Iceberg expected.
DFV did not run, and the sentiment on WSB fell from extremely greedy to greedy, but there was no collapse.
Era Vanguard's 13G declaration provides an anchor for retail investors – someone is standing with them.
Iceberg's Short Selling report may suppress the stock price in the short term, but in the long term, they are adding fuel to the Short Squeeze market.
Because with every additional Short Sellers, the stampede in the future will be more violent."