'GME MOASS' on deck: Dividends AND/OR Subscriptions
Today, Barnes and Noble stock went up over 200% due to issuing a subscription to shareholders. This subscription allows all stock holders on issue date to buy 17 more shares at the listed price in the paperwork.
Guess what: the share owners have to be located to issue said subscription, and there are only as many issued as there are shares. The mechanism for this? All shorts must close with this option. This is additional to the previous option I stated today. Which MOASS option will Ryan Cohen choose? He could choose any, depending on how he feels while drinking his morning tea. He could initiate MOASS now at the sleight of hand, impending now at any time.
This is when GameStop would likely sell their 45 million shares, so they profit as much as shareholders will, perhaps for a quick $5 billion dollars more in cash on hand.
Link to the S-3SR filing for the right for GameStop to issue subscriptions to stock holders: https://news.gamestop.com/sec-filings
Example of How Quickly this can occur
9th of May - Barnes and noble releases registration statement declaring their right to issue subscriptions (we are here, since GME released their declaration of right today)
14th of May - Barnes and noble issue prospectus to shareholders that they grant the subscription right
17th of May - date of subscription rate issue and 200% price increase (note that it is estimated that GameStop Corp with current 1.5 Billion shares visible as 'on loan' has been sold short roughly 100x more than Barnes & Noble was, so GME's rise would be much higher than 200%)
Impact on short sellers during a subscription issuance
When a company offers subscription rights to its shareholders, it can significantly impact short sellers in several ways:
Obligation to Cover Rights: Short sellers may need to cover the cost of the subscription rights if they are borrowed and sold shares. This means they might have to buy the rights in the market to pass them on to the holders of the shares they borrowed, potentially increasing their costs.
Price Adjustment: The stock price usually adjusts to reflect the value of the subscription rights. This can affect short sellers because the value of the shares they are shorting changes. If the rights are valuable, the stock price might drop by an equivalent amount when the rights are issued, impacting the short seller's position.
Complexity in Managing Positions: The introduction of subscription rights adds complexity to managing a short position. Short sellers need to keep track of the rights, understand their value, and manage the timing of their actions to cover any resulting obligations. This could involve additional transactions, which increase costs and risks.
Potential for Short Squeeze: If the subscription rights are perceived as highly valuable or if many short sellers need to cover their positions simultaneously, it could lead to a short squeeze. This happens when short sellers rush to buy back shares to close their positions, driving the stock price up.
In summary, the issuance of subscription rights can increase the costs and risks for short sellers, potentially leading to a more challenging environment for maintaining a short position.
$GME (hyper bullish - damn near Apish)
#GME (hyper bullish - damn near Apish)
Bullish
