wouldn't that drive the value of stock down and threaten the company itself?
I am financially illiterate, but I understand the reddit posts to mean that short squeeze is inevitable because GME is >100% shorted and issuing more shares would kill the short squeeze and drive the price down
Unless the company is selling or buying stock (or otherwise exchanging value for stock, as with employee grants), the price is immaterial to it. Just a random number on a ticker.
A low stock price creates risk because it makes it hard (expensive) to raise capital. Well, here you are, it doesn't get better than this!
As Matt Levine pointed out in his columns this week, GME would likely attract a huge amount of SEC scrutiny if they tried to take advantage of this obvious insanity. That doesn't mean they would ultimately be found guilty of anything, but it would be a huge distraction from, you know, adding shareholder value by selling video games.
But that's the thing here. The reason their fundamentals are so terrible is that their business model is going the way of Blockbuster. Selling disks is distracting them from reinventing themselves. Many people buying GME are doing so because they don't want to see a company they have some sentiment for be destroyed by Wall Street. I think of this like a last-ditch public offering or a Kickstarter Hail Mary. They have an opportunity to raise the capital they need to reimagine the company and become worthy of their new valuation and continued existence.
Really? I saw a local Software Etc. and Funcoland both get replaced by GameStops. Both times, it was a straight downgrade in terms of customer experience.
I think raising capital by issuing more shares would provide incredible shareholder value if they leverage that money to pivot into a better business model
A couple billion dollars in the bank buys you a lot of lawyers.
As Matt pointed out, AMC is doing it. I agree with dougmwne, this is the corporate kickstarter opportunity of a lifetime. They should take it.
It's also a negative feedback mechanism in a market full of positive feedback mechanisms (ie, the short squeeze). Creating more stock makes the market more stable.
