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No they didn't. It would have been unethical to be the boss of the company that offer new shares, got them bought on a market, but also unblocking all the shor

No they didn't. It would have been unethical to be the boss of the company that offer new shares, got them bought on a market, but also unblocking all the short sellers in the process. The consequence would be shorters would be happy, the price would drop, the people who bought into the hype would lose, and the gamestop boss would look like the guy who helped the hedge funds and stole from the common people.

gowld 6y ago
Why does "what he looks like" to uninformed stock speculators matter? AMC raised $300M in the rally and no one seemed to mind. People who bought into the hype lost anyway.
pjc50 6y ago
> It would have been unethical to be the boss of the company that offer new shares, got them bought on a market, but also unblocking all the short sellers in the process. Why? What general rule of ethics is this violating? How could you write this as a general rule to be applied in the future?
mrfredward 6y ago
>It would have been unethical to be the boss of the company that offer new shares, got them bought on a market, but also unblocking all the short sellers in the process. The stock market exists so that companies can access capital. If Gamestop were able to raise money, pay off some debt, avoid closing some stores and laying people off in the future, and fund a turnaround plan, that would have been the best possible outcome. The only ethical issue is whether all the information is out there for investors, and in this it wasn't, so they couldn't raise money until whatever they are holding on to is announced.
kgermino 6y ago
They absolutely missed out on an opportunity. You can argues it would have been unethical for them to take advantage of it. But there was an opportunity to raise a substantial amount of money, which would help the company. Unlike AMC and AA they couldn’t easily take advantage of it due to disclosure requirements.
- NoOneNew 6y ago
  As much as I am on the WSB side of this fiasco, I still agree it was mature and smart for Gamestop not to make an opinion or jump on this in any form. It would have been a legality mine field for them to cross and properly capitalize on. Public companies are under a lot more scrutiny than private ones. Dont assume inaction was just because they're stupid. Theres zero wrong with picking and choosing battles that you know you can win. They probably saw this as so drastically out of their control, it would be too difficult not to get swept up in the turmoil. But I do believe they made some good on the momentum, just not publicly. Probably got some more exec's from other companies willing to come aboard that they're still negotiating with.
  - JumpCrisscross 6y ago
    > it was mature and smart for Gamestop not to make an opinion or jump on this in any form GameStop couldn’t. They were deep into the quarter and had non public financial information. The companies that could sell stock did. If GameStock could have sold stock and didn’t, and if I were a shareholder, I’d sue. They have an obligation to current stockholders. And a duty to be honest to new ones. Nobody bought their shares at inflated prices under duress.
    - andrewon 6y ago
      They already had shares that scheduled to sell but decided not to execute. It seems like the advice I always got from my company's legal department when I asked if it was ok to something: don't do it.
    - spoonjim 6y ago
      Your lawsuit would be thrown out, there is no obligation in US law to issue stock in this scenario. "Fiduciary duty" has been quite well-defined by courts and this isn't even in the same galaxy.
      - JumpCrisscross 6y ago
        > Your lawsuit would be thrown out It would be a disclosure lawsuit. Lesser claims have been settled. The bar for throwing out cases is pretty low.
umanwizard 6y ago
The hedge funds vs. common people narrative is ridiculous. There were hedge funds on every side of the trade. I do agree that it would have been unethical (or at least pretty dubious) for the company to sell the stock knowing it’s massively overvalued.
- WJW 6y ago
  > knowing it’s massively overvalued. Overvalued is in the eye of the beholder, in this case the market. There were people willing to buy the stock at that price, why not sell it to them? If the buyers really believed it was going "to the moon", then you could just as well argue they cheated a lot of potential buyers out of the chance to get in on that action. Finally, if you do think it's overvalued, arguably the best thing to do as a company is sell more stock, to maximize the amount of money per share you get. This is the way Tesla does it for example: they only sell more shares into the market when the stock price is particularly high.
  - GordonS 6y ago
    It always boggles my mind when I think about how public companies' shares are valued based purely on "what the market thinks". It just seems so ripe for abuse. And I guess as someone who lived in a world of software, I don't like the lack of "logic" behind valuations. I wonder if there are there any markets anywhere in the world where company shares are publicly traded, valued by a quantitative means, such as a multiplier of revenue or profit?
    - WJW 6y ago
      According to "regular" stock market philosophy, the "correct" price for a company is the sum of all of its future cash flows. However it is not really feasible to predict what the future profits of a company in a free-ish market are going to be, since at any point a new competitor might pop up and take some market share. In addition, you can't predict if a growing company will not start stabilizing at some point in the future, which would affect its future earnings and thus its price. So the answer to your question must be no, there are no stock markets where shares are traded on a purely quantitative base. This is because the only way for price discovery on such a market is by perfectly predicting the future, which is not (as far as we know) possible.
solaxun 6y ago
I'm sorry and I don't mean to throw stones but this is an incredibly myopic view. - It would be unethical to issue debt the company doesn't have the cash flows to pay without assuming refinancing is possible (the ENTIRE high yield market) - It would be unethical to buy back debt in the open market at a discount ... they should pay what they borrowed! - It would be unethical to raise capital by selling overinflated stock, the proceeds of which may lead to the life or death of the company. The board has a fiduciary responsibility to it's shareholders to take the best course of action to maximize share-price. Assuming they actually could pull off a capital raise in the short amount of time the reddit bubble lasted, it would arguably be unethical NOT to do so. They didn't raise not because they are altruistic saints, but because it's an involved process that typically can't be done spur of the moment without planning.

gowld 6y ago

Why does "what he looks like" to uninformed stock speculators matter? AMC raised $300M in the rally and no one seemed to mind. People who bought into the hype lost anyway.

pjc50 6y ago

> It would have been unethical to be the boss of the company that offer new shares, got them bought on a market, but also unblocking all the short sellers in the process. Why? What general rule of ethics is this violating? How could you write this as a general rule to be applied in the future?

mrfredward 6y ago

>It would have been unethical to be the boss of the company that offer new shares, got them bought on a market, but also unblocking all the short sellers in the process. The stock market exists so that companies can access capital. If Gamestop were able to raise money, pay off some debt, avoid closing some stores and laying people off in the future, and fund a turnaround plan, that would have been the best possible outcome. The only ethical issue is whether all the information is out there for investors, and in this it wasn't, so they couldn't raise money until whatever they are holding on to is announced.

kgermino 6y ago

They absolutely missed out on an opportunity. You can argues it would have been unethical for them to take advantage of it. But there was an opportunity to raise a substantial amount of money, which would help the company. Unlike AMC and AA they couldn’t easily take advantage of it due to disclosure requirements.

NoOneNew 6y ago
As much as I am on the WSB side of this fiasco, I still agree it was mature and smart for Gamestop not to make an opinion or jump on this in any form. It would have been a legality mine field for them to cross and properly capitalize on. Public companies are under a lot more scrutiny than private ones. Dont assume inaction was just because they're stupid. Theres zero wrong with picking and choosing battles that you know you can win. They probably saw this as so drastically out of their control, it would be too difficult not to get swept up in the turmoil. But I do believe they made some good on the momentum, just not publicly. Probably got some more exec's from other companies willing to come aboard that they're still negotiating with.
- JumpCrisscross 6y ago
  > it was mature and smart for Gamestop not to make an opinion or jump on this in any form GameStop couldn’t. They were deep into the quarter and had non public financial information. The companies that could sell stock did. If GameStock could have sold stock and didn’t, and if I were a shareholder, I’d sue. They have an obligation to current stockholders. And a duty to be honest to new ones. Nobody bought their shares at inflated prices under duress.
  - andrewon 6y ago
    They already had shares that scheduled to sell but decided not to execute. It seems like the advice I always got from my company's legal department when I asked if it was ok to something: don't do it.
  - spoonjim 6y ago
    Your lawsuit would be thrown out, there is no obligation in US law to issue stock in this scenario. "Fiduciary duty" has been quite well-defined by courts and this isn't even in the same galaxy.
    - JumpCrisscross 6y ago
      > Your lawsuit would be thrown out It would be a disclosure lawsuit. Lesser claims have been settled. The bar for throwing out cases is pretty low.

umanwizard 6y ago

The hedge funds vs. common people narrative is ridiculous. There were hedge funds on every side of the trade. I do agree that it would have been unethical (or at least pretty dubious) for the company to sell the stock knowing it’s massively overvalued.

WJW 6y ago
> knowing it’s massively overvalued. Overvalued is in the eye of the beholder, in this case the market. There were people willing to buy the stock at that price, why not sell it to them? If the buyers really believed it was going "to the moon", then you could just as well argue they cheated a lot of potential buyers out of the chance to get in on that action. Finally, if you do think it's overvalued, arguably the best thing to do as a company is sell more stock, to maximize the amount of money per share you get. This is the way Tesla does it for example: they only sell more shares into the market when the stock price is particularly high.
- GordonS 6y ago
  It always boggles my mind when I think about how public companies' shares are valued based purely on "what the market thinks". It just seems so ripe for abuse. And I guess as someone who lived in a world of software, I don't like the lack of "logic" behind valuations. I wonder if there are there any markets anywhere in the world where company shares are publicly traded, valued by a quantitative means, such as a multiplier of revenue or profit?
  - WJW 6y ago
    According to "regular" stock market philosophy, the "correct" price for a company is the sum of all of its future cash flows. However it is not really feasible to predict what the future profits of a company in a free-ish market are going to be, since at any point a new competitor might pop up and take some market share. In addition, you can't predict if a growing company will not start stabilizing at some point in the future, which would affect its future earnings and thus its price. So the answer to your question must be no, there are no stock markets where shares are traded on a purely quantitative base. This is because the only way for price discovery on such a market is by perfectly predicting the future, which is not (as far as we know) possible.

solaxun 6y ago

I'm sorry and I don't mean to throw stones but this is an incredibly myopic view. - It would be unethical to issue debt the company doesn't have the cash flows to pay without assuming refinancing is possible (the ENTIRE high yield market) - It would be unethical to buy back debt in the open market at a discount ... they should pay what they borrowed! - It would be unethical to raise capital by selling overinflated stock, the proceeds of which may lead to the life or death of the company. The board has a fiduciary responsibility to it's shareholders to take the best course of action to maximize share-price. Assuming they actually could pull off a capital raise in the short amount of time the reddit bubble lasted, it would arguably be unethical NOT to do so. They didn't raise not because they are altruistic saints, but because it's an involved process that typically can't be done spur of the moment without planning.