Meme-Stock Influencers Charged in $114 Million Fraud Scheme

[gabby60]

https://www.bloomberg.com/news/arti...uencers-charged-with-114-million-fraud-scheme

Eight men who used social media platforms to promote stocks they owned were charged by federal prosecutors with engaging in a $144 million “pump and dump” scheme.

Edward Constantinescu, known on Twitter as “@MrZackMorris,” and Perry Matlock, whose Twitter handle is “@PJ_Matlock,” were among the defendants charged in an indictment unsealed Tuesday in federal court in Houston.

Constantinescu and Matlock are co-founders of Atlas Trading, a stock-trading forum on the Discord social media platform. Constantinescu has more than 550,000 Twitter followers, according to the US Securities and Exchange Commission, which sued the eight men yesterday. Matlock has 340,000.

The shares they hyped were in little-known companies including GTT Communications Inc., Surface Oncology Inc. and Universe Pharmaceuticals Inc., according to the indictment.

Also charged were Thomas Cooperman (“Tommy Coops”) Gary Deel (“Mystic Mac”), Mitchell Hennessey (“Hugh Henne”) Stefan Hrvatin (“LadeBackk”), Daniel Knight (“Deity of Dips”) and John Rybarczyk (“Ultra Calls, “The Stock Sniper”).

The case is US v. Constantinescu, 22-cr-00612, US District Court, Southern District of Texas (Houston).

 

[rusty_shackleford]

@gabby60 If you're making moves based on the advice from guys with names like Zack Morris, The Stock Sniper, and Mystic Mac, you can't be too surprised when something fishy happens.

 

[finishedcross]

@rusty_shackleford *Looks over at /r/wsb*

 

[michaeljamess]

@finishedcross Or /r/investing before they cracked down on the due diligence posts

 

[fire_starter]

@michaeljamess Like I don't care if your DD is somewhat basic, or even rudimentary, however what kills me is when you have like 5 pages of "DD" and go on about past news, products ect....then have ZERO MENTION OF FINANCIALS!

Zero mention of debt, zero mention of current assets, zero mention of revenue / earnings / cashflow.

Like you think it would be obvious that if you do "DD" on a company you would at least look at their P&L or BS statements but here we are....

 

[resjudicata]

@fire_starter 99% of what gets labeled as DD on reddit is complete garbage. And that's per-post. Per-word it's like 99.99%, because you have all these meme stock cults setting up entire mythologies to explain why the dark forces have once again stopped a dying mall store from becoming the locus of human existence.

 

[askgoddotbiz]

@finishedcross looks at rule #4 on /r/wsb

 

[tom9821]

@askgoddotbiz It's the same nonsense these pumpers are using in their defense. Well if I pin a message that says "We're not actual traders, don't take our advice!", that gives me free will to do whatever I want! No it doesn't. But you gonna learn!

 

[askgoddotbiz]

@tom9821 I was referring to the real wsb where the rule is about market cap size.

 

[jgarlits]

@finishedcross

Looks over at /r/wsb

I wonder what their usernames are.

 

[99godgaveuswomen99]

@rusty_shackleford Exactly. The real deal have names like /@christiananon

 

[rusty_shackleford]

@99godgaveuswomen99 To be fair, I was pretty surprised when all that happened.

 

[kebliss]

@rusty_shackleford To be fair, his analysis was also spot on in 2020. He didn’t believe in a short squeeze, he just thought a certain stock was massively under valued

 

[fire_starter]

@kebliss

He didn’t believe in a short squeeze,

This is a half truth and context matters , when GME was trading for $1 a share or less (split adjusted) he thought it was undervalued , he even goes on to mention a target that it could go to $15/20 a share what at the time was a 200-400% increase depending .

He also thought buying pressure from shorts closing would also put upward pressure on the stock , maybe not a short squeeze but would just add to the buying pressure.

By his own analysis the stock would be overvalued at current valuations

 

[kebliss]

@fire_starter Didn’t he buy more at $155 pre split? Isn’t that the most upvoted and gilded post in Reddit history?

 

[loverofchrist69]

@kebliss Wait, you're telling me I'll have to actually evaluate analysis on its own merits and not just by the username that posts it?

 

[nanayah]

@rusty_shackleford Never ended

 

[ford5window]

@nanayah Somebody needs to tell him, I don't have the heart to do it.

Oh wait I'm a heartless asshole.

Gamestop as a play is dead my dude. They don't know how to make a profit, their marketplace is dead, and they have no path to profitability.

 

[freedominjc]

@ford5window FWIW they have $1B (billion!) in cash, no debt and are cash-flow positive as of Q3 earnings. Trending well to be profitable in Q4 or Q1 ‘23.

Edit (adding source): https://www.thestreet.com/memestocks/gme/what-gamestops-cash-position-says-about-the-company

 

[ford5window]

@freedominjc Wow, a billion dollars in cash with a 6.4 billion market cap, totally not overvalued at all.

Cash flow positive because accounts payable increased by 672 million dollars. What do you think happens when that gets paid? I hope you don't think accounts payable means they get to keep that money. Literally the opposite.

Hint: It will have a negative 672 million dollar effect on their cash flow when it is paid by Gamestop.

At least the first things you said weren't blatant lies, I'll give you that much credit.

But saying they are trending to be profitable in Q4 or Q1 '23? That's a straight up lie. Even the CEO isn't saying that will happen. The three analysts covering Gamestop don't expect it to happen. The analyst estimate is an average loss of 14 cents a share for Q4.

The 3 analysts covering Gamestop estimate 2023 will be unprofitable for the year.

They also estimate a loss for 2024. Not a single one of them expects a profit.

Hopefully you can at least admit the last sentence you made was a lie.