Is Melvin Capital Done For?

Idk how many of you have been following, but GME might be the biggest short squeeze since Tesla. Yesterday, there was an epic gamma squeeze because MMs sold 60 0dte calls (up over 20,000% at one point), which might only be the beginning. Now, the short float right now is absolutely insane, and I know that Melvin Capital is down something like 15% already from this bet (or a combination of this and other positions). Literally every single call option Friday expired ITM, so it appears that brokerages will be offering 115 1/29 calls at Monday's open. Given how much retail loves risk, I cannot imagine that this will not eventually happen again, especially because MMs can't be caught with their pants down selling 115 naked calls. And then with the gamma squeeze initiated, that will trigger the inevitable short squeeze that has been building. There might even be a 1% chance this causes a credit crisis due to some MM blowing up and spreading across the entire industry. Either that or just the fact that millions of WSB retards will be buying shares at Monday's open might send this to the moon. My apologies for turning WSO into WSB, but I thought this was very interesting and we are in for a crazy week ahead. Thoughts? Are bears doomed?

WSO Elite Modeling Package

  • 6 courses to mastery: Excel, Financial Statement, LBO, M&A, Valuation and DCF
  • Elite instructors from top BB investment banks and private equity megafunds
  • Includes Company DB + Video Library Access (1 year)

Comments (44)

Jan 27, 2021 - 11:18am

This is going to be one of the most legendary profile hedge fund failures of all time and we're literally on "Wall Street Oasis." If anything this is the MOST appropriate place to be discussing this lol


  • 8
Jan 30, 2021 - 11:33pm

Totally agree 💎🙌

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee

Learn More

300+ video lessons across 6 modeling courses taught by elite practitioners at the top investment banks and private equity funds -- Excel Modeling -- Financial Statement Modeling -- M&A Modeling -- LBO Modeling -- DCF and Valuation Modeling -- ALL INCLUDED + 2 Huge Bonuses.

Learn more
  • Analyst 3+ in PE - Other
Jan 23, 2021 - 3:35pm

I have an old professor who is personal friends with Gabriel and brought him in for several lectures during the semester. I'm tempted to reach out and ask how he's doing, but also low key gloat that his genius friend's epic failure has made me a multi-millionaire...

Jan 27, 2021 - 10:42am

lol it's hilarious watching CNBC complain about reddit autists as if they are a Nazi-Commie Zombie invasion

"Work ethic, work ethic" - Vince Vaughn

Most Helpful
  • Analyst 3+ in RE - Comm
Jan 27, 2021 - 11:14am

From Wizard of Soho on Instagram...

"For years and years CNBC let hedge fund managers come on their talk shows and pump up their books and make retail guys buy their stocks then dump on them. Hedge funds manipulate prices all the fucking time. For the first time in history... the regular retail investor has the balls of hedge funds by the hands squeezed up and CNBC and all their moderators are calling it stock manipulation and making every retail investor look bad and vilifying an entire community because their hedge fund daddies who come on their show are about to lose it all. Fuck you CNN. Melvin Capital got a 2.5 bn bailout injection a few days ago. What happens when the retail trader lost everything in 2008 or March 2020 or in regular trades everyday. Who came and put money in your bank account. Nobody. No fucking body. Fuck you Jim Cramer and Andrew Sorkin for putting down the retail guy who is putting his life on the line for some hedge fund fuckers who did not hold their fiduciary responsibility and now you are willing to plant fake stories to manipulate prices for them. You should be put in jail and have your money gone."

"We ride to fucking Valhalla on the tears of Melvin Capital and Cohen"

*edited for full quote

Jan 31, 2021 - 12:48am

Based 🙌  💎 🚀 

Have so much respect for Tom Keane & Jonathan Ferro calling out the  elitism. 

Deep fucking value is the analyst of the decade 

Jan 27, 2021 - 11:34am

Yes that's the sad part. It's a win for the small guys on reddit, a loss for big billionaire hedge fund managers, but also a loss for people who invest in those hedge funds. It could be a pension fund for teachers, nurses, etc.

Jan 27, 2021 - 11:42am

Exactly. It's also why I love when people say HF is "risky." Yea maybe for the pension funds who invest in you. But risking other people's money isn't "risky" (I totally acknowledge that PE is the same thing, before people call me a hypocrite)

Jan 27, 2021 - 11:47am

They will lose out on bonuses this year, but they all made tons of money in previous years taking on the same bets without any sense of risk management. Anyone below PM will have no issue finding a new job (I've seen this play out many times before with peers whose funds have blown up). PMs...who knows, but maybe they will learn a valuable lesson on the importance of risk management

  • Analyst 1 in IB - Gen
Jan 27, 2021 - 12:57pm

lol you think a hedge fund with 12 billion AUM can lose 6 billion + and "be fine"?? investors will pull out all their money, Gabriel will be known as a joke in the investing world, and not to mention the hedge fund has already gone bankrupt. in terms of individual net worth, yes they'll be ok, but Gabriels career will never fully recover from this

Jan 27, 2021 - 1:25pm

Good point and realizing now that I should've clarified - Melvin Capital probably won't be ok, but most of the employees there are fine. They'll get new jobs in short order. This happens all the time and it's only the PMs who take on way too much risk that have trouble getting back on track.

Gabe may not recover simply because he doesn't know anything about risk management. If he did, he wouldn't have held onto the position for that long. He'll be known as a joke because the call he made on this stock tells the whole story. Of course, he'll still be rich because he has gotten away with taking on this type of risk for so long. Maybe there's a lesson in there...

Again, it's not his money, it's other people's money. None of these guys/gals will see any meaningful decline in their own bank accounts. That's why they are "fine." It's the pension funds that trusted this idiot that are seeing real losses.

Jan 30, 2021 - 4:59pm

I've seen people post 70% YTD. Don't have a source though, it was a picture with a bunch of other HFs that were also down big percentage points, up to 40% if we exclude Melvin.

Jan 31, 2021 - 10:46am

Aut libero repudiandae sed tempora aut. Fugiat explicabo aliquid esse quidem eum. Quod nihil id porro voluptatem dolorum. Voluptas saepe architecto ad id voluptatem qui eum. Illum cumque harum at ex vitae minus similique. Aut vel eum tempora velit quis itaque nisi.

Start Discussion

Total Avg Compensation

October 2021 Investment Banking

  • Director/MD (10) $853
  • Vice President (39) $363
  • Associates (229) $233
  • 2nd Year Analyst (138) $155
  • 3rd+ Year Analyst (31) $147
  • Intern/Summer Associate (104) $143
  • 1st Year Analyst (502) $135
  • Intern/Summer Analyst (387) $83