Two months after Reddit day traders took GameStonk ( $GME ) shares to surprising heights in a massive short squeeze, the video game retailer is finally trying to cash in. On Monday, it announced plans to issue up to 3.5 million new shares worth $650m via an “at-the-market” offering, or ATM.
Okay so back in january i made a video on the short squeeze happening with gamestop you know gamestop the hottest stock of the pandemic and since then i’ve been inundated with question about gamestop yes question not questions it’s one guy hello steven and he asks me about game stunk in the comments of each of my videos if you take a look in the comment section
Of this video right now there’s a good chance that he’s there and make sure you say hi to him well there hasn’t been a ton of news about gamestop since january they had an earnings report but who really cares the earnings don’t actually matter with gamestop this story is just about diamond hands and no one really cares if they sold a few video games or not in
Fact if you want to know how much anyone cares about gamestop and their earnings just look at the gamestop congressional hearing that was held back in march you’ll note that they invited the guy from melvin capital he didn’t look like he wanted to be there the guy from robin hood he had his hair done for the occasion and they had roaring kitty there who is not
An actual cat but they didn’t bother to invite anyone from the management team at gamestop the ceo of gamestop had to watch the hearing about his own company on tv with everyone else well we finally had some news this morning that gamestop stock price tumbled on the announcement that it had filed a prospectus with the sec under which it may offer and sell up to a
Maximum of 3.5 million shares of its common stock from time to time through an at the money equity offering program that just means that they notified the sec that they may sell that many shares over time and that they disclosed the risk of buying those shares so that if you buy them you can’t say you weren’t warned the company says that they intend to use the
Proceeds of that stock sale to further accelerate their transformation as well as for general corporate purposes and further strengthening of their balance sheet the timing and amount of any sales will be determined by a variety of factors considered by the company so what does all of this mean well the main takeaway from these headlines is that the wall street
Bets boys don’t appear to trade in the pre-market but they sure do step in at the open so while gamestop opened down almost 10 percent it rallied off the open and closed down about 2.3 percent which is just noise in a stock as volatile as gamestop back in january i discussed gamestonk on another channel coffeezilla and i said that it would most likely drift back
Down to fair value i’ll note that i didn’t give a time horizon on that i pointed out at the time that when gamestop rallied from 40 to three hundred and twenty five dollars the price of the ten dollar strike put options actually went up i think they almost quadrupled in value even though they were much further out of the money at the peak of the squeeze these
Put options are only valuable when the stock price falls below ten dollars a rather significant fall now there’s a few reasons that the put option prices did this one was that implied volatility had gone way up and that’s a major component in option pricing so put owners were making more on vega than they were losing on delta but the other reason i gave was that
Gamestop management could quite reasonably issue more stock when the price was high like amc did and then when it fell back to fair value that fair value would be much lower because of all of the new shares outstanding so why didn’t management issue more stock when it was trading at 325 well according to reuters they did look into it back then but they decided
That they were restricted under u.s financial regulations from selling shares because management were in possession of significant non-public information about their finances by the time its stock price took off the company had already compiled some accounting data and management had a reasonably clear picture of what the quarter’s earnings would look like
They were two and a half months into their quarter and from a legal and corporate governance perspective they would likely be obliged to pre-announce some high-level financial information along with a stock sale i guess back then they thought that their earnings report actually mattered and they were also probably busy deciding what to wear for their televised
Congressional hearing i’ve heard that the ceo still checks his mail every morning in case the invitation from congress got delayed in the post so that’s the reason that they gave was that they had this material non-public information but it is possible that the real reason they didn’t sell is that they have diamond hands we’ll never know but anyhow this morning
They finally announced that they actually have paper hands and will sell three and a half million shares which at today’s stock price would bring in around 650 million dollars 650 million dollars it’s worth noting is more than gamestop was worth a few months ago the only question that i have is that why are they selling so little gamestop is now a 13 billion
Dollar company the management of gamestop really need to ask themselves what would elon musk do i’ll tell you what he’d do he’d sell more stock and tweet some rocket and moon emojis so that the stock price goes up it’s the only responsible thing to do see you next week bye you
Transcribed from video
GameStop Selling New Shares! $GME By Patrick BoyleliveBroadcastDetails{isLiveNowfalsestartTimestamp2021-04-06T023110+0000endTimestamp2021-04-06T023915+0000}
