Is This The End Of The Gamestop Short Squeeze?
The latest news is that GameStop is planning to sell 3.5 million shares which makes perfect sense given their elevated share price.
If there is one complaint about share buybacks and share issuances it is that companies do it at exactly the wrong time - buying back when the share price is high and selling shares when the price is low.
But this gamestop is actually good timing. With prices still 20x off the lows, this is a relatively high price to sell at.
One group of people who might be upset though could be wallstreetbets. With more shares floated, it will be harder to orchestrate a short squeeze.
Perhaps this is the end of the wallstreetbets GME short-squeeze.
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Even with the additional capital they got during this time and this second round of funds if they pull it off it doesn’t fix a broken business model
I know businesses fight to the end but they only prolonging the inevitable.
Yes, it's a broken business model with no easy fix. The only company that managed to turn it around in recent times like that is Netflix. I don't think GameStop's a Netflix so maybe i'll buy some shorts tomorrow.
Yeah the issue with Netflix is they create their own content along with negotiations with distributors for content!
Gaming the publishers can either do direct access or via deals with the console manufacturers.
GameStop apart from its second hand market is irrelevant.
The only way I could see it turn around is if they had enough cash to go and purchase game publishers and had exclusive distribution rights
I highly doubt Gamestop will sell off enough shares to cover the shorts, the whole situation is working very well for them. It makes sense for them to sell off some to help position themselves in stronger stead for the future though, seems like a win-win for them. I'm not an expert by any means.
At current prices, that's roughly $600 million that the shorts need to absorb if they want to squeeze. Definitely possible given some of the hedge funds out there. Good point about GameStop wanting to sell off more in the future.
That is true, it's unfathomable how much capital is floating around at that level. I can't imagine them having any loyalties amongst each other though, they'd much rather tear the whole building down instead of compromising. It's going to be an interesting year watching it all unfold.