WallStreetBets Goes in for the Kill: Melvin Capital Lost 53% in January
- As WSB buckles down on its anti-establishmentarian stock pumps, hedge funds are quaking in their boots.

The r/WallStreetBets (WSB) saga that shook the world last week is far from over. In fact, it seems as though this may only be the beginning.
After a group of determined traders set out to send GameStop Inc (NYSE:GME) stock prices to the moon, squeezing Wall Street hedge funds in the process, it seems that the group of rogue traders is continually realizing the full extent of its potential power.
Melvin Capital Lost More Than 50% of Its AUM in January Alone
Indeed, since the GameStop pump began, spin-off groups of traders have used Reddit to organize their powers around a number of other assets: last week, the group pumped DogeCoin, and then XRP; Finance Magnates previously reported double- and triple-digit percentage increases in both assets, respectively. (Both assets have seen significant drops since their peaks.)
However, while these crypto pumps are certainly intended to earn money for some WSB traders, these latter targets do not carry the same anti-establishmentarian sentiment that WSB’s investment in GameStop and other 'meme stocks': to squeeze hedge funds so hard that they would fold, and, to that end, WSB has already done significant damage.

As the WSB Pump Continues, Hedge Funds Are White-Knuckling Their GME Holdings
Indeed, CNBC reported on Sunday that hedge fund, Melvin Capital lost more than 50 percent in January because of the WSB squeeze.
The fund was in such bad shape that Citadel and Point72, two other hedge funds, injected $3 billion into Melvin as an emergency effort, bringing the fund’s total AUM back to roughly $8 billion, still significantly down from the $12.5 billion it held before the squeeze began. Both Citadel and Point72 also sustained losses in January, though they were not nearly as serious as Melvin.
But, WSB investors are not done making their point: traders are still pumping money into GameStop, AMC (NYSE:AMC), and other companies that hedge funds bet against.
According to CNBC, a number of other hedge funds still have holdings in GME: “short-selling hedge funds have suffered a mark-to-market loss of $19.75 billion year to date in the brick-and-mortar video game retailer, GameStop,” CNBC reported, adding that the funds are either “holding onto their bearish positions” or “being replaced by new hedge funds willing to bet against the stock.”
At press time, GME was trading at $325; AMC was sitting comfortably at $13.26. Just one month ago, both stocks were trading for $17.25 and $2.06, respectively.

"Dumb Money" Ain’t So Stupid after All
So. What happens next?
Thomas Yeung, certified Financial Advisor and InvestorPlace Market Analyst wrote on Saturday that WSB’s retail reckoning is far from over: “as Wall Street picks up the remnants of Melvin Capital and the GME fallout, two things have become clear. 1) ‘Dumb money’ isn’t so dumb after all, and 2) ‘smart money’ is getting taken to the woodshed.”
('Dumb money' meaning retail investors and 'smart money' meaning the hedge funds that the 'dumb money' is currently KO’ing.)
Indeed, 'smart money' may have a lower IQ than we thought. Yeung pointed out that in fact, “Melvin Capital...lost 30% of its net worth in the first three weeks of January. But, it took another six days (after the stock had gained another 250%) for the hedge fund to finally relinquish its mammoth position.”

While other hedge funds are still holding death grips on their positions on NYSE:GME, the events of last week have left many 'big money' market managers shaking in their boots. Specifically, Yeung pointed out that short-sellers are proceeding with greater degrees of caution than ever before.
Many of them are taking steps toward preventing similar events in the future: for example, “Citron Research’s Andrew Left has already vowed never again to publish short-seller reports.”
The Us Government Is Considering Its Next Move
In the meantime, lawmakers in the United States and abroad are carefully considering what this all means for the regulatory world.
Last week, Representative Alexandra Ocasio-Cortez (D-NY) and Senator Ted Cruz (R-TX) made an odd couple when both of them called for action against Robinhood, the popular commission-free stock brokerage that pulled the plug on GME after the WSB pump went into full effect.
Meanwhile, Robinhood still has not restored trading of GME to its retail customers. Furthermore, the company is maintaining blockages on AMC Entertainment Holdings Inc and Blackberry Ltd, in addition to several others. However, as of yesterday, only eight companies remain on Robinhood’s blacklist; previously, Robinhood limited Retail Trading Retail Trading In finance, retail trading refers to individual traders, trading through a broker, or on a platform. This can include novice traders and experienced traders. Trading and investing are divided into two categories, retail and institutional. Institutions include investment banks like JP Morgan or Citibank and global central banks like the US Federal Reserve and the European Central Bank. When we talk about retail trading however, we usually are referring to forex trading, but there are retail traders in every market ranging from commodities to stocks. The forex market is by far the largest and has the most retail traders. Retail foreign exchange trading is a small segment of the broader foreign exchange market where individuals speculate on the exchange rate between different currencies. In 2020 it is estimated that the forex market will exceed 7 billion dollars in daily activity. Retail Trading Sector Continues to GrowThe retail sector has developed with the advent of dedicated electronic trading platforms and the internet, which have allowed individuals to access the global currency markets. In 2016, it was reported that volume from retail foreign exchange trading represents 5.5% of the whole foreign exchange market or $385 million in daily trading turnover. Individual retail traders can access the same trades as central banks and online financial institutions. The retail forex trading industry is growing every day with the advent of trading platforms and their ease of accessibility on the internet.Retail traders rely on brokerage services who provide access to markets in the form of comprehensive trading platforms. The most common of these are MetaTrader 4 (MT4) and MetaTrader 5 (MT5), which offer trading to forex, stocks, contracts-for-difference (CFDs), and other assets. In finance, retail trading refers to individual traders, trading through a broker, or on a platform. This can include novice traders and experienced traders. Trading and investing are divided into two categories, retail and institutional. Institutions include investment banks like JP Morgan or Citibank and global central banks like the US Federal Reserve and the European Central Bank. When we talk about retail trading however, we usually are referring to forex trading, but there are retail traders in every market ranging from commodities to stocks. The forex market is by far the largest and has the most retail traders. Retail foreign exchange trading is a small segment of the broader foreign exchange market where individuals speculate on the exchange rate between different currencies. In 2020 it is estimated that the forex market will exceed 7 billion dollars in daily activity. Retail Trading Sector Continues to GrowThe retail sector has developed with the advent of dedicated electronic trading platforms and the internet, which have allowed individuals to access the global currency markets. In 2016, it was reported that volume from retail foreign exchange trading represents 5.5% of the whole foreign exchange market or $385 million in daily trading turnover. Individual retail traders can access the same trades as central banks and online financial institutions. The retail forex trading industry is growing every day with the advent of trading platforms and their ease of accessibility on the internet.Retail traders rely on brokerage services who provide access to markets in the form of comprehensive trading platforms. The most common of these are MetaTrader 4 (MT4) and MetaTrader 5 (MT5), which offer trading to forex, stocks, contracts-for-difference (CFDs), and other assets. Read this Term on 50 companies.
The r/WallStreetBets (WSB) saga that shook the world last week is far from over. In fact, it seems as though this may only be the beginning.
After a group of determined traders set out to send GameStop Inc (NYSE:GME) stock prices to the moon, squeezing Wall Street hedge funds in the process, it seems that the group of rogue traders is continually realizing the full extent of its potential power.
Melvin Capital Lost More Than 50% of Its AUM in January Alone
Indeed, since the GameStop pump began, spin-off groups of traders have used Reddit to organize their powers around a number of other assets: last week, the group pumped DogeCoin, and then XRP; Finance Magnates previously reported double- and triple-digit percentage increases in both assets, respectively. (Both assets have seen significant drops since their peaks.)
However, while these crypto pumps are certainly intended to earn money for some WSB traders, these latter targets do not carry the same anti-establishmentarian sentiment that WSB’s investment in GameStop and other 'meme stocks': to squeeze hedge funds so hard that they would fold, and, to that end, WSB has already done significant damage.

As the WSB Pump Continues, Hedge Funds Are White-Knuckling Their GME Holdings
Indeed, CNBC reported on Sunday that hedge fund, Melvin Capital lost more than 50 percent in January because of the WSB squeeze.
The fund was in such bad shape that Citadel and Point72, two other hedge funds, injected $3 billion into Melvin as an emergency effort, bringing the fund’s total AUM back to roughly $8 billion, still significantly down from the $12.5 billion it held before the squeeze began. Both Citadel and Point72 also sustained losses in January, though they were not nearly as serious as Melvin.
But, WSB investors are not done making their point: traders are still pumping money into GameStop, AMC (NYSE:AMC), and other companies that hedge funds bet against.
According to CNBC, a number of other hedge funds still have holdings in GME: “short-selling hedge funds have suffered a mark-to-market loss of $19.75 billion year to date in the brick-and-mortar video game retailer, GameStop,” CNBC reported, adding that the funds are either “holding onto their bearish positions” or “being replaced by new hedge funds willing to bet against the stock.”
At press time, GME was trading at $325; AMC was sitting comfortably at $13.26. Just one month ago, both stocks were trading for $17.25 and $2.06, respectively.

"Dumb Money" Ain’t So Stupid after All
So. What happens next?
Thomas Yeung, certified Financial Advisor and InvestorPlace Market Analyst wrote on Saturday that WSB’s retail reckoning is far from over: “as Wall Street picks up the remnants of Melvin Capital and the GME fallout, two things have become clear. 1) ‘Dumb money’ isn’t so dumb after all, and 2) ‘smart money’ is getting taken to the woodshed.”
('Dumb money' meaning retail investors and 'smart money' meaning the hedge funds that the 'dumb money' is currently KO’ing.)
Indeed, 'smart money' may have a lower IQ than we thought. Yeung pointed out that in fact, “Melvin Capital...lost 30% of its net worth in the first three weeks of January. But, it took another six days (after the stock had gained another 250%) for the hedge fund to finally relinquish its mammoth position.”

While other hedge funds are still holding death grips on their positions on NYSE:GME, the events of last week have left many 'big money' market managers shaking in their boots. Specifically, Yeung pointed out that short-sellers are proceeding with greater degrees of caution than ever before.
Many of them are taking steps toward preventing similar events in the future: for example, “Citron Research’s Andrew Left has already vowed never again to publish short-seller reports.”
The Us Government Is Considering Its Next Move
In the meantime, lawmakers in the United States and abroad are carefully considering what this all means for the regulatory world.
Last week, Representative Alexandra Ocasio-Cortez (D-NY) and Senator Ted Cruz (R-TX) made an odd couple when both of them called for action against Robinhood, the popular commission-free stock brokerage that pulled the plug on GME after the WSB pump went into full effect.
Meanwhile, Robinhood still has not restored trading of GME to its retail customers. Furthermore, the company is maintaining blockages on AMC Entertainment Holdings Inc and Blackberry Ltd, in addition to several others. However, as of yesterday, only eight companies remain on Robinhood’s blacklist; previously, Robinhood limited Retail Trading Retail Trading In finance, retail trading refers to individual traders, trading through a broker, or on a platform. This can include novice traders and experienced traders. Trading and investing are divided into two categories, retail and institutional. Institutions include investment banks like JP Morgan or Citibank and global central banks like the US Federal Reserve and the European Central Bank. When we talk about retail trading however, we usually are referring to forex trading, but there are retail traders in every market ranging from commodities to stocks. The forex market is by far the largest and has the most retail traders. Retail foreign exchange trading is a small segment of the broader foreign exchange market where individuals speculate on the exchange rate between different currencies. In 2020 it is estimated that the forex market will exceed 7 billion dollars in daily activity. Retail Trading Sector Continues to GrowThe retail sector has developed with the advent of dedicated electronic trading platforms and the internet, which have allowed individuals to access the global currency markets. In 2016, it was reported that volume from retail foreign exchange trading represents 5.5% of the whole foreign exchange market or $385 million in daily trading turnover. Individual retail traders can access the same trades as central banks and online financial institutions. The retail forex trading industry is growing every day with the advent of trading platforms and their ease of accessibility on the internet.Retail traders rely on brokerage services who provide access to markets in the form of comprehensive trading platforms. The most common of these are MetaTrader 4 (MT4) and MetaTrader 5 (MT5), which offer trading to forex, stocks, contracts-for-difference (CFDs), and other assets. In finance, retail trading refers to individual traders, trading through a broker, or on a platform. This can include novice traders and experienced traders. Trading and investing are divided into two categories, retail and institutional. Institutions include investment banks like JP Morgan or Citibank and global central banks like the US Federal Reserve and the European Central Bank. When we talk about retail trading however, we usually are referring to forex trading, but there are retail traders in every market ranging from commodities to stocks. The forex market is by far the largest and has the most retail traders. Retail foreign exchange trading is a small segment of the broader foreign exchange market where individuals speculate on the exchange rate between different currencies. In 2020 it is estimated that the forex market will exceed 7 billion dollars in daily activity. Retail Trading Sector Continues to GrowThe retail sector has developed with the advent of dedicated electronic trading platforms and the internet, which have allowed individuals to access the global currency markets. In 2016, it was reported that volume from retail foreign exchange trading represents 5.5% of the whole foreign exchange market or $385 million in daily trading turnover. Individual retail traders can access the same trades as central banks and online financial institutions. The retail forex trading industry is growing every day with the advent of trading platforms and their ease of accessibility on the internet.Retail traders rely on brokerage services who provide access to markets in the form of comprehensive trading platforms. The most common of these are MetaTrader 4 (MT4) and MetaTrader 5 (MT5), which offer trading to forex, stocks, contracts-for-difference (CFDs), and other assets. Read this Term on 50 companies.