This is a repost of my thoughts on GME price movement from June 22 I posted in DDintoGME (highly censored sub nowadays). I feel price movement is a thing we should start discussing again and its implications. At the time of the post the low was [$19.25], the new low was [$15.41] in January 23. I added the price after the splividend in [brackets].

Hey Apes, Ssup? […] Disclaimer:

This post is not to discuss opinions about people. Just possible price movements, especially on the downside, like materially aka monster dip. Also it should discuss some thoughts about the price movements.
... ehrm, this is not financial advice and I am treated for crayon addiction.

TL;DR:

• Some twatter posts formed the hypothesis “GameStop share price will be below $77 [$19.25] caused by GDP slowing and liquidity drying up”
• Price so far followed a “slide pattern” (up steeply, down gradually) with varying frequency to probably discourage new buyers. Also prices lead to maximized option maker profits. Apes bought and DRS’d the fkn dip and probably will do so again. SPECULATION: price upper bound is as low as possible also to discourage new investors.
• Questions to be clarified in Part 2: How much does GDP slowing aka recession combined with inflation lower Apes buying power? What’s the ratio of buys vs sales in a monster dip under the conditions of 1 accompanied by massive MSM FUD? SPECULATION: price upper bound is as low as possible also to discourage new investors.

Part 1: The hypothesis.

Okay, the reason for this post - and again this should not be about people - were several twatter posts of Pulte - did I say that we don’t want to discuss people here? - which made me think. Will and can there be a monster dip?

For those who haven’t read the posts or can just remember the last 8 minutes because of massive TV addiction in their childhood, here they are:

Apr 12 (price low on this day: $141 [$35.25], high: $152 [$38]):

“[…] Only concern is short term stock price going down, potentially materially, with GDP slowing and liquidity drying up. […]”

(Source: https://nitter.net/pulte/status/1513961584263110668)

May 12 (price low on this day: $77 [$19.25], high: $108 [$27]):

[Cited Tweet Apr 12]

“[…] I will HODL GameStop and at the right time I will buy more. It’s not time yet though. […] Be smart! 🦍”

(Source: https://nitter.net/pulte/status/1524870198746046485)

Jun 7 (price low on this day: $126 [$31.5], high: $149 [$37.25]):

“[…] Again, I think downtrend is next, but still! How great! 🚀”

(Source: https://nitter.net/pulte/status/1534276687340441600)

Well, I am not sure if I mentioned that this post is not about people. Here you go. So we will abandon people for the time and phrase an hypothesis “GameStop share price will be below $77 [$19.25] caused by GDP slowing and liquidity drying up”.

Before we think about how to test this hypothesis lets dive into A) the extend of it and in general discuss B) factors that may determine the price movement as well as C) vice versa effects of the price movement.

A) Since you all know the GME chart by heart this may be no news to you. Looking at the share price since June 2021 the lowest point was $77.58 on March 14, followed by May 12 with $77.77. So within one year the lowest dips were on and around those two days, followed by late January. (Source: https://chartexchange.com/symbol/nyse-gme/historical)

B) Of course price is a function of demand and supply. Nah, just kidding, the price is fake af and under working theory caused by the following:

1. As absolutely dominant factor since the big sneeze we see a “slide pattern”, so like with a slide for kids it goes up very steep, coming back down gradual (see chart https://chartexchange.com/symbol/nyse-gme/). As speculation I think this is mainly to discourage possible new shareholders as the price goes down nearly all the time. Last year nearly every day new patterns were thought to be found on why and when the next upward movement would occur, but none really survived the “next cycle” and being absolutely crushed December last year to mid March this year.
2. Options play a further significant role. We see that most options end up expiring worthless (e.g. see here[OPTIONS DD LINK TO BE UPDATED]). Yes, one can make significant money with options - if one is right predicting the price movement. But price mostly moves to max pain, sometimes even below to crush more calls than puts (especially in Q1 22). If I find the time and someone is interested I maybe will publish the data in a different post. As speculation price at any given time may reflect a strategy by option makers to maximize their earnings.
3. SPECULATION: On the upper side the price is capped by margin calls (note: there are no margin calls for the big player), keeping the balance in their books (note: there are so many ways to hide their positions like swaps, companies abroad, …). So the only real reason I can see to keep the price low is to just show new investors that GME is not an attractive investment.

C) What does price movement cause? You guessed it. Apes keep buying and DRSing the dip. The slope of “Total DRS Estimates” increases significantly after the dip in March, May and January as can be seen on https://www.computershared.net/. Also RC bought the dip on March 22 (Source: https://fintel.io/n/cohen-ryan). On the other hand it looks like high prices are followed by a decreased slope. Would love someone to run some statistics. What do you think u/jonpro03?

So yeah, nothing new, but an interesting comparison. Bananas cheap = Apes buy more bananas. Bananas expensive = Apes buy less bananas. As always.

TL;DR: Price so far followed a “slide pattern” (up steeply, down gradually) with varying frequency to probably discourage new buyers. Also prices lead to maximized option maker profits. Apes bought and DRS’d the fkn dip and probably will do so again. SPECULATION: price upper bound is as low as possible also to discourage new investors.

Further statistical research could be done on how the price influences DRS rates to better predict them in the future.

Part 2: How to test the Hypothesis.

Originally, I wanted to also post my conclusions to Part 2 already. But I decided to rather publish the questions first and get your thoughts on those, maybe add some as well as your thoughts on their answers.

So, how can the hypotheses “GameStop share price will be below $77 [$19.25] (aka the monster dip) caused by GDP slowing and liquidity drying up” be tested?

1. How much does GDP slowing aka recession combined with inflation lower Apes buying power?
2. What’s the ratio of buys vs sales in a monster dip under the conditions of 1. accompanied by massive MSM FUD?

Your thoughts are very welcome.

Just some thought exercise until MOASS.

Shiver me timbers.

Link to the archived version: http://web.archive.org/web/20220623215829/https://www.reddit.com/r/DDintoGME/comments/vjlswr/state_of_the_dip_1_how_is_the_probability_of/--