Tag: GameStop Shareholders

Will GME Stock Split Force a Short Squeeze?

GME Stock Split

GameStop announced a GME stock split late March which should have received more attention than it did.

GME stock surged afterhours when the announcement was made public but failed to maintain its momentum as we’ve seen in the weeks since.

What will this split/dividend mean for shareholders and short sellers alike?

Let’s break it down together.

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GameStop announces stock split in form of dividend

GameStop stock split dividend

Let’s discuss what a GME stock split in the form of a dividend would mean for both shareholders and short sellers.

When GameStop first announced the stock split/dividend news, I published an article breaking down how a stock split and dividend essentially work.

You can read the article here for a more in-depth description on the two.

But no matter how you take it, one thing is certain.

The borrower of the stock is responsible for paying any dividends to the lenders.

Here’s what we can see happen before the split/dividend.

1. Continuous shorting in GME stock

I don’t expect short sellers to ease off shorting GME stock prior to a stock split or dividend.

Afterall, we are in a bear market.

So, the market sentiment overall continues to be on a downtrend.

In a recent article titled, “How close are AMC and GameStop to squeezing?“, I explain how a bull market will trigger massive price action in both these stocks.

Primarily because the market sentiment during this time will be sending share prices upward.

Shorts will have to close to their positions to profit from this bear market, or face riskier bets on the way up.

So, while the GME stock split is bullish in nature, stocks are being kept in line due to the bearish course of the markets in general.

2. Gamma prior to approval of stock split/dividend

GameStop’s stock split/dividend still has to be approved by the board and shareholders.

The game retailer merely announced the move; however, it must undergo the approval process.

You can bet short sellers will be on a ticking time bomb before this process goes into full effect.

You see, the lender is going to want their dividend.

If you short sellers don’t want to pay this dividend to the lender, they’ll have to return the shares they borrowed in the first place.

This is where we can expect to see big gamma occur prior to GME’s stock split becoming official.

What will happen if shorts don’t deliver borrowed shares before stock split?

If GameStop’s price surges, shorts will accrue greater losses and the lender will still require shorts to pay back that dividend.

Any dilution from a stock split won’t necessarily affect short sellers, but if a dividend is approved then shorts will have to pay that dividend to the lender.

The issue of a stock split/dividend has often been seen as bullish.

Shorts betting on this play could be exposing themselves to very big risks.

Will a GME stock split or dividend expose naked shares?

There’s this concept floating around that a GME stock split or dividend yield will expose many more shares are circulating the market than there are in existence.

I can’t speak too much on this, but I would love to know your thoughts on this below.

It’s an interesting concept that would essentially unveil millions to billions of synthetic shares.

The premise behind this concept is to expose the shares and get short sellers to close every single share, resulting in a GameStop MOASS (mother of all short squeezes).

Leave your thoughts in the comment section of the blog.

What will this move mean for shareholders?

GameStop shareholders will be able to vote on this GME stock split/dividend.

A stock split will dilute the float providing shareholders with more GME stock shares at a lower price.

An approved divided will yield quarterly or yearly compensation for holding the stock.

It’s extremely bullish if you’re a shareholder and believe in the company’s long-term vision.

GameStop and Loopring just launched their beta NFT marketplace last month.

The company is evolving into a tech company with its ecommerce foundation and use of blockchain technology, which we will see more of in the metaverse without a doubt.

GameStop is adapting to the use of new technology for the future of gaming and I’m excited to see this space evolve.

I’d love to hear your thoughts.

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GME Shorts Face Nearly $500 Million in Losses from Surge

GME shorts face nearly $500 million in losses from surge
Chairman Ryan Cohen purchases 100,000 shares of GME stock

GME shorts are suffering approximately $500 million in losses from GameStop’s price surge today.

GameStop soared to $123.14 per share, up almost 31% from its previous close of $94.20.

And GME shorts are facing the wrath of retail investors yet again.

Will this cause short covering to occur?

Let’s break it down together below.

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Welcome to Franknez.com – retail investors are sticking it to short sellers again! Both AMC and GameStop saw impressive gains today, causing millions in losses for short sellers betting against the so called ‘meme stocks’.

Let’s dive right into it!

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GameStop surges nearly 31% starting the new week

GameStop surged 30.72% today causing GME shorts nearly $500 million in losses.

GME’s trading volume was also significantly higher than its average volume of 3 million.

Today GameStop’s trading volume reached 14 million, driving the stock up nearly 31%.

We’re also seeing a lot of afterhours activity.

GameStop has gains upwards of +16% afterhours.

And although afterhours price action should be taken with a grain of salt, it certainly elevates investor confidence.

Will GME shorts finally close their positions?

Be sure to leave a comment at the end of the article with your thoughts.

GME shorts are without a doubt going to continue to lose money holding on to their short positions.

The retail community has only grown which puts short sellers at a disadvantage.

Furthermore, retail investors continue to fight for market transparency and short seller scrutiny in the market grows.

Ryan Cohen purchases 100,000 shares of GME stock

Co-Founder of Chewy and Chairman of GameStop Ryan Cohen just purchased 100,000 shares of GME stock, shown in this SEC filing.

Cohen now has a total stake of 11.9% in GameStop.

Here’s the Chairman’s response to his latest position increase.

Ryan Cohen has been public about his distaste for short selling in the market.

Among other public figures to show their dislike for short sellers has been Elon Musk (Tesla), Adam Aron (AMC), and Jon Stewart.

Short sellers have been driving the prices of AMC and GameStop down for over a year now in efforts to refrain retail from creating squeezes.

But will retail power drive GME shorts out before they incur beyond-repair losses?

Related: GameStop is evolving into a tech company: Q4 highlights

GameStop short interest data

GameStop Short Interest
GameStop shorts – Short interest data

Mainstream media has been pumping out that GameStop can no longer squeeze.

However, this narrative is false and part of a ‘short and distort‘ campaign produced to fuel corporate leaders’ short selling agenda.

GameStop currently has a high short interest of 23.87%.

I update GME’s short interest here daily in case you’d like to bookmark it for your convenience.

GameStop’s utilization is at 100 and there are currently 20.13 million shares out on loan.

In other words, GameStop has plenty of short squeeze juice to skyrocket its share price to new all-time highs.

GameStop’s massive surge to $500 last year in January triggered Robinhood to halt trading.

AMC, and other ‘meme stocks’ that were rising in share price were also halted.

GME shorts lost billions.

History might just repeat itself, only I think we all know the damages today will much more superior.

Read: AMC surges more than 15% entering the new week

Stick around for more market news

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GameStop Is Evolving into A Tech Company: Q4 Highlights

GameStop Q4 highlights
GameStop Q4 Highlights

CEO Matt Furlong said during GameStop’s Q4 conference call that the company is transforming into a tech company.

The video game retailer is making significant changes to their business model and adapting to the changing world of digital and crypto gaming.

In this article, I’m going to break down the key highlights of GameStop’s Q4 earnings call.

Let’s begin.

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9 major changes happening with GameStop

There are 9 major changes happening or changes that have happened with GameStop since Q4 of 2021 and that fiscal year.

The company has invested in many great assets that are going to fuel the company’s long-term growth and transition into a tech-oriented business.

I will break down GameStop’s financials for Q4 and its fiscal year of 2021 at the end of the list.

#1. Management team of technology veterans

GameStop said during its Q4 conference that it installed a new management team made up of technology veterans.

It also introduced a more ‘equity focused’ executive compensation structure to increase alignment with stockholders.

#2. Refreshed its entire board

The company refreshed its board with stockholders and individuals who possess records of ‘value creation’ while reducing individual director compensation.

#3. Ended relationships

GameStop ended relationships with high-priced external consultants who were costing the company millions of dollars per year.

#4. GameStop recruits hundreds of e-commerce experts

Matt Furlong said during GameStop’s Q4 report that the company hired hundreds of new individuals with e-commerce and technology experience.

They reduced redundant and unnecessary roles.

#5. GameStop ends Q4 with $1.7B in capital

The company recapitalized their balance sheet raising approximately $1.7 billion in capital.

#6. Expanded product catalog

Matt Furlong said GameStop expanded its product catalog to seize more market share in areas such as PC gaming, personal electronics, and virtual reality.

#7. GameStop fulfillment centers

The company invested in fulfillment networks by standing up new facilities in the east coast and west coast.

GameStop opened fulfillment centers in Reno, Nevada and in New York and in Pennsylvania.

#8. U.S. customer service

Matt Furlong also announced during GameStop’s Q4 earnings conference that the company invested in a U.S. based customer service facility based in southern Florida.

#9. Blockchain team dedicated to developing GameStop’s NFT marketplace

And of course, GameStop invested in a dedicated blockchain team to develop its upcoming NFT marketplace.

The CEO said GameStop’s NFT marketplace will be launching by the end of the second quarter of 2022.

“We have learned from the mistakes of the past decade when GameStop failed to adapt to the future of gaming.”

GameStop CEO, Matt furlong

GameStop Q4 Finances

GameStop Q4 earnings

The company had an incredible Q4 and fiscal year in 2021.

Here’s the breakdown.

Sales in Q4 2021: $2.25 Billion
Net Sales Fiscal Year of 2021: $6.01 Billion
Losses in Q4: $147 Million
Net Income in Q4: $80.3 Million
Liquidity in 2021: $1.27 Billion
GameStop Q4 Finances

Debt

GameStop has no debt other than a $44.6 million low interest stimulus associated with the French government’s response to Covid19.

Here are 3 honorable mentions from GameStop’s Q4 earnings call:

  1. GameStop grew its power-up rewards pro members by 31.8% taking memberships to $5.8 million.
  2. The company launched and redesigned their app with improved scalability for a larger catalog and more functionality to support exclusive offers and promotions.
  3. GameStop entered a partnership with Immutable X to support the development of GameStop’s NFT marketplace coming this year.

GameStop’s Q4 earnings call was brief and straight to the point.

The company is taking the steps to transform into a tech company with the use of blockchain gaming and crypto innovation through their upcoming NFT marketplace.

GameStop’s NFT marketplace is going to increase in value as the Metaverse becomes a reality at scale.

GameStop Q4 Earnings Call – Recording – GameStop Q4 highlights

Are you a GameStop shareholder?

Leave a comment below.

Are you invested in GME stock?

What do you think the future looks like for GameStop?

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