This is an excerpt from The Buzzer, which is CBC Sports’ daily email newsletter. Stay up to speed on what’s happening in sports by subscribing here.
The GameStop saga has some sports links
In case you’re foggy about the hottest story on the internet at the moment, here’s a quick explainer:
GameStop is a retail chain that sells video games and related equipment. Like a lot of brick-and-mortar outfits, the company has been losing money for years. Betting that its downward spiral would continue in a pandemic, some traders shorted GameStop stock. That’s when you borrow stock from a broker, sell it right away and hope for its price to fall. That way, you can buy it back for a lower price, return the shares you borrowed and pocket the difference. Pretty standard stuff on Wall Street.
Until, that is, a bunch of amateur traders who congregate on the popular Reddit forum r/WallStreetBets noticed that some big-time hedge funds had shorted billions worth of GameStop stock and decided to stick it to them. They did this by buying (and encouraging each other to accumulate even more) GameStop stock and/or options, causing the share price to go up (and up and up). They also weaponized social media by shaming (even harassing) establishment types who suggested publicly that the stock was dangerously overinflated and people should sell.
This army of small-time traders gobbling up GME stock (and refusing to sell it) created a nightmare for anyone with a big short position. Faced with theoretically unlimited losses if they didn’t act, the short-sellers had little choice but to buy the dwindling supply of available shares at inflated prices so they could pay back the shares they’d borrowed and stop the bleeding. These purchases, of course, caused the stock’s value to rise even higher and faster.
How high and fast? Well, back in the summer, a share of GME was trading for about four bucks US. A few weeks ago it was up to around $20. Two days ago, it became the most-traded stock in the United States. This morning, it peaked at almost $470 before finally (and inevitably) tumbling. Bottom line: those savvy amateurs made out like bandits at the expense of the deep-pocketed shorters who do this for a (very nice) living. The Joes beat the pros.
Some of the hedge-fund types that lost a boatload are now complaining that it’s wrong for a band of renegades on the internet to be able to manipulate stock prices like this. They’re warning of a dangerous rise in “meme stocks” after buying stakes in dying companies became a craze over the last few days. Shares in the pandemic-ruined AMC movie theatre chain quadrupled yesterday before coming back to earth. People were rushing to buy Blackberry!
But others (including the renegades themselves) are hailing the r/WallStreetBets traders as anti-establishment heroes — little guys beating the big guys at their own game. Dallas Mavericks owner Mark Cuban, who still fancies himself a disruptor, and Golden State Warriors minority stakeholder Chamath Palihapitiya cheered them on via Twitter.
At least two other sports owners are directly involved in the GameStop mayhem — and, unfortunately for them, not on the right side.
Gabe Plotkin is one of the two New York-based investors who bought a sizable piece of the Charlotte Hornets from majority owner Michael Jordan in 2019. He’s also the founder and Chief Investment Officer of Melvin Capital — the hedge fund that took perhaps the biggest hit on GameStop. To stay on its feet, Melvin took a $2.75-billion bailout from two other hedge funds. A reported $750 million of that came from the fund owned by Plotkin’s old boss, Steven Cohen, who’s the new owner of the New York Mets. Cohen’s Point72 is reportedly down 15 per cent this year, partly due to its positions in GameStop.
Mets fans are understandably scarred by their experiences with the team’s previous owners, the Wilpon family, who initially profited from and then got burned by Bernie Madoff’s Ponzi scheme. Now some are worried that Cohen’s involvement in the GameStop bloodbath might cause him to renege on his promise to reverse the Mets’ penny-pinching ways. But they can relax. With an estimated worth of more than $14 billion, Cohen is three times richer than the next-wealthiest Major League Baseball owner.
If you want a more in-depth explainer on the GameStop saga and what comes next, by someone who actually covers business, check out this piece by CBC News’ Pete Evans.
Rebecca Marino says she “feels like a different person.” She’s playing like one too. The 30-year-old Canadian tennis player recently earned her first Grand Slam berth in eight years by winning three straight Australian Open qualifying matches. She was ranked as high as 38th in the world in 2011 before stepping away from the sport in 2013 for almost five years as she battled physical and mental-health issues. Her current ranking is a humble 313th, but Marino says she’s in a far better place personally. Her message for others going through a difficult time? “That period of your life is not forever. And if you do the right things to get yourself into a better mental state, whether it’s talking or other different steps to take care of your mental health, it’s obviously very important. And I feel like had I not done that, I wouldn’t be in this position I am right now.” Read more about Marino’s battles and her comeback here.
One of the WNBA’s biggest stars is changing teams. Candace Parker spent her first 13 seasons with the Los Angeles Sparks, winning a championship and two MVP awards with them. The 34-year-old forward/centre isn’t quite the scorer she was in her prime, but she still led the Sparks last year with 14.7 points per game, tied for the league lead in rebounds with 9.7 and was named the WNBA’s Defensive Player of the Year. WNBA free agents can’t officially sign until Monday, but Parker says she’s headed to her hometown team, the Chicago Sky. Read more about her move here.
Kyle Lowry scored his 10,000th point as a Raptor. He’s the third player to reach that many in a Toronto uniform, joining DeMar DeRozan (13,296) and Chris Bosh (10,275). Just in case you were wondering: the highest-scoring player in Vancouver Grizzlies history is Shareef Abdur-Rahim, who had 7,801 over five seasons before the franchise moved to Memphis. Read more about Lowry’s milestone night here.
Coming up on CBC Sports
We’re in the thick of the winter Olympic sports season, and on Friday you can live stream World Cup competition in skeleton, luge, Nordic combined and speed skating. The latter looks the most enticing after Canadian speed skaters won five medals at last week’s season-opening meet in the Netherlands. Watch this week’s races live starting Friday at 8:50 a.m. ET here. For the other sports, check the full streaming schedule here.
If you’re looking for a taste of summer sports, the semifinals of the men’s world handball championships start Friday at 11:20 a.m. ET and you can watch them here. You can also watch the Canadian Premier League’s draft for collegiate players at 3 p.m. ET on CBCSports.ca and the CBC Sports app.
You’re up to speed. Get The Buzzer in your inbox every weekday by subscribing below.