4 ms·

Dumb question - could the shorts actually negotiate with Gamestop directly to get them to issue new stocks? Wouldn't that be a win-win (and the retail loses, b

Dumb question - could the shorts actually negotiate with Gamestop directly to get them to issue new stocks? Wouldn't that be a win-win (and the retail loses, because a) the stock is diluted, and b) no one would be "forced" to buy from them)

tempsy 6y ago
who knows but their market cap has become so bloated that any new issuance would probably not be that dilutive. i doubt that is what would trigger a crash.
dannyw 6y ago
Sounds like a great way for management to get into a fiduciary duty lawsuit.
- VikingCoder 6y ago
  If no one is selling GME, but someone is willing to buy GME, and GME actually gets to pocket the cash, that sounds like it would be in the long-term interest of GME shareholders to me. But like I've said elsewhere, I'm an idiot.
nceqs3 6y ago
Related... Hedge funds have "asked" companies to PURPOSELY DEFAULT on their debt before. Great Matt Levine piece on this: https://www.bloombergquint.com/view/blackstone-may-do-its-cleverest-cds-trade-again https://www.bloombergquint.com/view/blackstone-may-do-its-cl...
jannes 6y ago
I believe those shares would not be tradable for 6 months. But I am no expert.
challenger-derp 6y ago
An associated qn is what price GME would issue new stock at if such a deal took place? higher/ lower/ current stock price? Suppose lower. Unlikely. Because a better price for GME to raise capital exists -- the current stock price. Suppose at (approx.) current stock price. Possible. But what's in it for GME to offer such a deal to shorts instead of offering it to stockholders? Suppose offer to stockholders, then shorts still have to cover and thus potential of short squeeze remains (which is beneficial to future capital raises). Now, suppose GME offered it to shorts, squeeze is extinguished, the rally fizzles, stockholders who propped up GME's price feel betrayed. At offer to raise capital at current stock prices seem better placed with stockholders than shorts. Suppose higher. Now we might be on to something. Without GME's offer, the shorts have to close out huge positions by buying from the secondary mkt -- short squeezing the price up and making future purchases to close remaining short positions increasingly costly. Shorts don't want this. Shorts would rather close by buying shares at a higher, _constant_ price (constant means not subject to squeeze). GME, if desperate for capital, could extend an olive branch to shorts with a deal that says, hey, I'm offering n stocks at a 75% premium to the current price of $400, wanna take it?

tempsy 6y ago

who knows but their market cap has become so bloated that any new issuance would probably not be that dilutive. i doubt that is what would trigger a crash.

dannyw 6y ago

Sounds like a great way for management to get into a fiduciary duty lawsuit.

VikingCoder 6y ago
If no one is selling GME, but someone is willing to buy GME, and GME actually gets to pocket the cash, that sounds like it would be in the long-term interest of GME shareholders to me. But like I've said elsewhere, I'm an idiot.

nceqs3 6y ago

Related... Hedge funds have "asked" companies to PURPOSELY DEFAULT on their debt before. Great Matt Levine piece on this: https://www.bloombergquint.com/view/blackstone-may-do-its-cleverest-cds-trade-again https://www.bloombergquint.com/view/blackstone-may-do-its-cl...

jannes 6y ago

I believe those shares would not be tradable for 6 months. But I am no expert.

challenger-derp 6y ago

An associated qn is what price GME would issue new stock at if such a deal took place? higher/ lower/ current stock price? Suppose lower. Unlikely. Because a better price for GME to raise capital exists -- the current stock price. Suppose at (approx.) current stock price. Possible. But what's in it for GME to offer such a deal to shorts instead of offering it to stockholders? Suppose offer to stockholders, then shorts still have to cover and thus potential of short squeeze remains (which is beneficial to future capital raises). Now, suppose GME offered it to shorts, squeeze is extinguished, the rally fizzles, stockholders who propped up GME's price feel betrayed. At offer to raise capital at current stock prices seem better placed with stockholders than shorts. Suppose higher. Now we might be on to something. Without GME's offer, the shorts have to close out huge positions by buying from the secondary mkt -- short squeezing the price up and making future purchases to close remaining short positions increasingly costly. Shorts don't want this. Shorts would rather close by buying shares at a higher, _constant_ price (constant means not subject to squeeze). GME, if desperate for capital, could extend an olive branch to shorts with a deal that says, hey, I'm offering n stocks at a 75% premium to the current price of $400, wanna take it?