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2) NOT INVESTMENT ADVICE

3) Is ftx.com/trade/GME/USD worth a $30b market cap?

4) I mean, in some sense, "fuck no". Try googling "GME earnings" and you'll realize why it's P/E ratio isn't usually listed.

5) But, in another sense, it is: you can sell GME, right now, for $462 per share. That implies a market cap over $30b. So who's right?

6) When people talk about cryptocurrencies, they generally don't talk about fully diluted valuations; they talk about circulating. The reason, basically: that's a better representation of what something has actually raised.

7) This can be generalized, though: if you buy $1 of something, it's market cap probably increased by more than $1. Don't believe me? Try buying $1b of BTC. Do you think it's price will increase by more or less than, uh... 0.11%?

8) And that's not just in crypto. If you buy $1B of the S&P500, you'd better expect price to increase by more than 1b/30T = 0.003%. This is because, when you buy something, *everyone*'s share prices increase, not just the people you're buying from. Market cap go brrrrrr.

9) So does that mean it's fake? Not necessarily! People have said that, many times: about BTC, and TSLA, and internet companies, and gold. They're often wrong.

10) It still matters that those other shares increased, *and the holders chose not to sell*. And people chose to buy anyway. The buyers and the holders and the sellers met, and agreed that TSLA was worth $822 per share. And

@elonmusk

chose not to sell (too much, I guess!).

1:57 PM · Jan 28, 2021Twitter Web App

11) So in some sense the world still does think that's really what the asset is worth, even if it hasn't really bought $800B of TSLA yet. Because the world, and

@elonmusk

, and the buyers, and the sellers, and the VC firms, all agree, I guess: That TSLA is more than its earnings

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12) Because they see where it was, and where it is, and where it might be. In 15 years, will 20% of all cars be TSLA? How confident are you that the answer is 'no'?

13) So, ok, this has happeend before, but not like _this_. Not like

@wsbmod

. What changed? Social media. Love it or hate it, it's changed the world.

14) See, before, if a few friends decided to buy GME, they'd buy $3k, and pay a 1% spread. Then the internet came, and those 3 people became 10,000 people. So they bought $10m, and it went up 5%. And then hedge funds sold because it was "rich", and it went back down.

15) But now there's social media, and

@wsbmod

has 400k followers in a day. And so now it's not a few friends, or ten thousand message board readers. Now 1m people, together, decide to buy GME. And together they buy $1b.

16) And when they buy $1b, GME goes up in market cap by $10b. And then something new happens. For the first time, the masses, together, sometimes add up to a larger trade than the hedge funds. And so if the hedge funds short... Maybe GME goes up anyway.

17) And then there are the cascade effects: the liquidations and short squeezes and press and follow-on. And so GME goes up more.

18) And, of course,

realized this first. Because he's popular enough--and his vision is compelling enough--that when _he_ fought for his company, it grew $800B.

19) And, of course, there's Bakkt, a company with no revenue or users (but a healthy dose of expenses!), looking towards a $3b+ listing. twitter.com/SBF_Alameda/st (If that gets you $3b, imagine what actual volume and revenue and profit gets you!)

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Jan 11, 2021

1) BAKKT is about to go public. There are a number of "interesting" things in their deck. sec.gov/Archives/edgar

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20) And, again, none of this says who's right, or who's wrong. Because, in the end, some things have direct physical value (or revenue, or something like that). To some extent--to a very real extent--everything else is what we all make of it.

21) Most value in the world is born from and sustained by our collective imagination.

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22) So I don't know if these will go up or down. Maybe they're a bubble; maybe they're a rocket ship. Maybe they've found a new in-between. They're volatile and risky, and you should use your best judgement. Maybe you should go long, maybe short, and maybe neither.