| Author | Source |
|---|---|
| u/HomeDepotHank69 |
”"”The tendies are coming, the tendies are coming” - Paul Revere” - Homedepothank69” - Homdepothank69
Apes, I have more excellent news. This is a continuation of my previous post on the similarities between April 2020 and today, so please read that before reading this. This post will be shorter and more speculative but still based on DD. This is essentially just Uncle Hank adding more pieces to the puzzle that I put out the other day. As always, I am not a financial advisor and this is not financial advice. This post is going to be about how the recent announcement that GME may sell shares makes a vote and recall more likely based on GME’s 10-k filing.
I usually post on WSB but had trouble posting there, and I refuse to post on GME after what they did to our four heroes, so I am posting on here, standing in solidarity with our four heroes. Thank you to u/rensole u/wardenelite u/redchessqueen99 u/heyitspixel for all you do. I truly appreciate your posts and I know that everyone else does too! Finally, just wanna give a quick shoutout to the mods at r/GME for destroying the sub! Your brains are truly smooth, AND NOT IN A GOOD WAY.
GME share announcement
The announcement can be found here:Â https://news.gamestop.com/static-files/33c3ed1d-f47e-403f-81f7-9b75d3cf1adc
This announcement states that GME is reserving the right to issue or sell up to 3.5M shares or the equivalent of $1B of stock (they stated that both of these are maximums). It is important to note that at this time they have not issued or sold any shares, they are simply reserving the right to do potentially do so in the future. Again 3.5M shares or $1B in value are MAXIMUMS. They may not even sell or issue any stocks at all or may sell/issue a lower amount than the above.
10k Filing
The filing can be found here:Â https://news.gamestop.com/node/18661/html#i3ad65c8584a445ee94e4314f67ce616c_109
Thank you to u/keebs107 for showing me this.
I want to make it known that this is not a new filing. This has been released for about two weeks. In pertinent part, the filing states:
“There have been significant changes to our Board since June 2020 as previously reported in our periodic reports filed with the S.E.C., and we expect to experience additional changes to our Board at our 2021 Annual Meeting. As of the date of this Form 10-K, the Board has not determined the definitive slate of nominees for election at our 2021 Annual Meeting but currently expects that the following incumbent directors will retire from the Board at the 2021 Annual Meeting: Lizabeth Dunn, Paul Evans, Raul J. Fernandez, Reginald Fils-Aimé, William Simon, James K. Symancyk, Carrie W. Teffner and Kathy P. Vrabeck. See Item 9B. Other Information of this Form 10-K. Turnover among our Board may disrupt our operations, our strategic focus or our ability to drive stockholder value. If we fail to attract and retain new skilled personnel for our Board, our business and growth prospects could disrupt our operations and have a material adverse effect on our operations and business.”
2.
“The market price of our Class A Common Stock has been extremely volatile and may continue to be volatile due to numerous circumstances beyond our control.
The market price of our common stock has fluctuated, and may continue to fluctuate, widely, due to many factors, some of which may be beyond our control. These factors include, without limitation:
-“short squeezes”;
-comments by securities analysts or other third parties, including blogs, articles, message boards and social and other media;
-large stockholders exiting their position in our Class A Common Stock or an increase or decrease in the short interest in our Class A Common Stock;
-actual or anticipated fluctuations in our financial and operating results;
-risks and uncertainties associated with the ongoing COVID-19 pandemic;
-the timing and allocations of new product releases including new console launches;
-the timing of new store openings or closings;
-shifts in the timing or content of certain promotions or service offerings;
-the effect of changes in tax rates in the jurisdictions in which we operate;
-acquisition costs and the integration of companies we acquire or invest in;
-the mix of earnings in the countries in which we operate;
-the costs associated with the exit of unprofitable markets, businesses or stores;
-changes in foreign currency exchange rates;”
(Notice how “short squeezes” is the first thing they list and that they use it in the PLURAL).
3.
“In particular, a large proportion of our Class A Common Stock has been and may continue to be traded by short sellers which has put and may continue to put pressure on the supply and demand for our Class A Common Stock, further influencing volatility in its market price. Additionally, these and other external factors have caused and may continue to cause the market price and demand for our Class A Common Stock to fluctuate substantially, which may limit or prevent our stockholders from readily selling their shares of our common stock and may otherwise negatively affect the liquidity of our Class A Common Stock.”
4.
“A “short squeeze” due to a sudden increase in demand for shares of our Class A Common Stock that largely exceeds supply has led to, and may continue to lead to, extreme price volatility in shares of our Class A Common Stock.
Investors may purchase shares of our Class A Common Stock to hedge existing exposure or to speculate on the price of our Class A Common Stock. Speculation on the price of our Class A Common Stock may involve long and short exposures. To the extent aggregate short exposure exceeds the number of shares of our Class A Common Stock available for purchase on the open market, investors with short exposure may have to pay a premium to repurchase shares of our Class A Common Stock for delivery to lenders of our Class A Common Stock. Those repurchases may in turn, dramatically increase the price of shares of our Class A Common Stock until additional shares of our Class A Common Stock are available for trading or borrowing. This is often referred to as a “short squeeze.”
A large proportion of our Class A Common Stock has been and may continue to be traded by short-sellers which may increase the likelihood that our Class A Common Stock will be the target of a short squeeze. A short squeeze has led and could continue to lead to volatile price movements in shares of our Class A Common Stock that are unrelated or disproportionate to our operating performance or prospects and, once investors purchase the shares of our Class A Common Stock necessary to cover their short positions, the price of our Class A Common Stock may rapidly decline. Stockholders that purchase shares of our Class A Common Stock during a short squeeze may lose a significant portion of their investment.”
The above snippets show that GME is going to need to get an entirely new board for the annual shareholder’s meeting and that the company is BRUTALLY aware that its shares are EXTREMELY shorted. This is kind of like when Porsche “warned” the market during the VW squeeze.
Significance of these documents
Together, I believe that the above documents are very significant for the future price of GME. The 10k filing is significant because it essentially confirms that they will need to do a vote. The statements, “There have been significant changes to our Board since June 2020 as previously reported in our periodic reports filed with the S.E.C., and we expect to experience additional changes to our Board at our 2021 Annual Meeting,” and “the Board has not determined the definitive slate of nominees for election at our 2021 Annual Meeting but currently expects that the following incumbent directors will retire from the Board at the 2021 Annual Meeting” confirm that there will be significant changes to the board at the annual meeting, which means that a vote will be necessary. I’m gonna take a guess and say that Cohen will do what Hestia did last year and will try to nominate someone of his choice, which will force a vote. The filing also makes it blatantly clear that GME is aware that it’s stock is extremely shorted and could be short squeezed again (they said “short squeezes” in the plural form). This is essentially GME covering themselves so they aren’t liable for trying to manufacture a squeeze and is similar to Porsche warning the market about the VW squeeze.
The share announcement is even more significant. As stated above, the share announcement states that they can sell 3.5M shares or the equivalent of $1B in value. The price at close on Friday (using that because that would be their reference when they released it) was 191.45. 191.45 x 3.5m = $670m, which is 67% less than their maximum of $1B in value. $1B / 3.5M = $285.7, which represents the price of 3.5m shares being equivalent to $1B in value. Now, why is all of this advanced calculus confusing maths important? It shows that GME is waiting for the price to go higher. GME did not sell or issue any shares after this announcement. Therefore, it is reasonable to assume that they plan on selling/issuing at a higher price than $191.45 (if that was their target price they would’ve just done this instead of reserving the right to do it). GME was also probably aware that this announcement would tank the price of the stock, so they are confident that the price will recover and go well above $191.45. Why are they confident? The 10k tells us. As the 10k confirms, GME will need to vote on basically an entirely new board of directors at their annual meeting, which, similar to last year, will require a vote (see my last post on why the vote created a share recall that made the price rise almost 3x). They are also warning the market about the potential for a short squeeze to cover themselves. Think about it this way: why would GME not actually issue new stock at this time knowing that simply announcing that they might issue new shares will make the price drop? Because they believe that it will go up above 191.45 in the near future. Why? Because they are going to call for a vote, which will create a share recall and thus a short squeeze (again, see my post for how this happened last year in April).
Finally, this makes even more sense because of Ryan Cohen. Let me be clear, this announcement is not him abandoning us and using our diamond hands to get more money for his company. Cohen is on our side because he knows that our support is what is best for his company. Cohen wouldn’t have tweeted about bears choking or getting smoked/taking a hit. He is well aware of the squeeze potential and wants to maximize it to help his company, which is why they simply reserved the right to sell shares and didn’t actually sell them today.
TL;DR
The recent 10k filing shows that GME is essentially replacing its entire board at the annual meeting. This will require a vote. The recent share announcement was simply GME reserving the right to sell shares. The fact that they didn’t sell any means that they believe the price of the stock will rise above 191.45. Why? A share recall due to a vote, which is similar to what happened last year. The company is also aware of the high short interest in their stock.