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0 pointsJackson125y ago0 comments

It wouldn't exactly bail them out. It would in effect crystalize massive losses. And, were I asked to advise the GME board, I would tell them it's in the best interest long term of the company at this point (because it is). It would also have the benefit of effectively cashing out all the GME longs at once. Otherwise, there'll be a frenzy on the way out the door, and the most connected/sophisticated people will beat the retail traders.

Also, you can't run a company into the ground by shorting it. A firm's stock price has no inherent effect on its day to day operations. There are plenty of operating companies that are bankrupt. Equally so, GME doesn't benefit from the run up in its stock price at all. The only time the market price actually effects a company is when its time to raise or return capital. So the only way GME will actually benefit from this episode is if it sells stock.

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4 comments · 2 top-level

fileeditview5y ago· 2 in thread

Wouldn't you make the company e.g. more vulnerable to a hostile takeover by running the stock price into the ground? As mentioned in many threads there was no inherent reason to think that GME would bankrupt any time soon.

I agree that GME don't really benefit by the current stock price. However the benefit from the publicity for sure. What would they lose by sitting this out? It for sure be better for their image than creating "a way out" for the traders sitting on their shorts. You say the will still pay a price.. sure but what price they will pay if GME does nothing is still open.

TLDR I am not convinced that this would be their best play. It at least would have a massive loss of image for their customers(many of which currently are invested).

Jackson12OP5y ago

That's actually pretty much what happened. Ryan Cohen was able to do what he did (buy a lot of stock and get a board seat) because the stock price was low. But that arguably saved the company. Change of control isn't inherently bad. And it often leads to incompetent CEOs being fired.

The firm has an opportunity raise a ton of capital very cheaply that it can use to fund productive investments. That's good for the firm, and its good for the people who work there.

I have no sympathy for the short sellers. They're paid a lot of money to understand the game they're playing. And if they lose, that's too f*cking bad. But the same goes for WSB. If they're gonna be pissed off that the company makes what is unequivocally the right decision for the firm, then they're just as hypocritical as the short sellers.

fileeditview5y ago

You may be right about this. However I would expect massive blowback from their target audience which has a big intersection with the WSB movement.

Whether justified or not if they get blamed for letting the hedge funds off-the-hook it will not be good for their business.

excitednumber5y ago

The idea that the board approving the sale of shares at this massively overinflated price "bails out the shorts" ignores what duty boards and companies have to shareholders.

Gamestop selling shares at this price would, all else equal, be the best thing for gme to do for the company's future prospects.

That being said, I don't know who was long by accident going into this (eg an investor who saw gme as a value or deep value investment) who didn't already sell because this is the accidental win of a lifetime.

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