MOASS

"Mother of all short squeezes"
Summary
  • A short squeeze is an event that can happen when a high amount of short interest is faced with the rising price of the underlying stock
  • MOASS is a term used to refer to an incredibly large short squeeze event pertaining to GME and some other stocks
  • Many GME shareholders believe that the circumstances pertaining to GME are conducive to an inevitable MOASS event
  • Critics of GME express great skepticism towards this idea
Background

The sneeze of January 2021 was a phenomenal and dramatic event that exposed a certain reality to the world that something about GME was amiss.

On social media, the rising price of GME attracted attention towards GME, which created more interest in GME, which caused more buying of GME, which caused the market share price of GME to rapidly accelerate in a positive feedback loop.

Wall Street panicked and took dramatic action to stop this from happening. Wall Street incumbents colluded to prevent retail investors from purchasing any more shares of GME. A multitude of brokerages disabled purchasing of shares of GME and other stocks, while allowing sales of GME. As many as 178 financial institutions in unison disabled investors from purchasing additional shares of GME. This went on for just long enough so that the incumbents could more favorably reposition themselves in this situation, and kill the momentum that was carrying the movement.

What was happening then was the beginnings of an event that would have become MOASS.

For GME short sellers, MOASS is a cataclysmic event that represents complete loss of everything, were it to occur. Naturally, short sellers do not want this event, however probable or improbable, to ever happen.

Those that bet on GameStop's demise (and took other actions to help arrive at this outcome) are now faced with a bet on a company that has no real risk of further deterioration, but do not have the ability to close their bet.

If any participant that is short on GME wants to close their position, it would require buying shares of GME at the current market price until their position is closed. This act of buying shares of GME at the market risks igniting MOASS from happening, and so there is no real way for them to exit their bet that allows for their continued existence.