Community Discussions
Explore the latest discussions and community conversations related to this domain.
What would happen if money had an expiration date?
Main Post: What would happen if money had an expiration date?
Top Comment:
The economy would become a game of "hot potato" - everyone would be trying to spend or trade their money before it expires. Money would lose value the closer it gets to expiring, so you'd end up with strange situations like trading a $5 bill that expires today for a pair of $1 bills that still have a week left. Money traders who manipulate the exchange rates of bills would get rich, while the average person would get screwed over.
GME - Stock Dividend
Main Post:
TL;DR short sellers and naked shorts still owe dividends. For short sellers they pay the lender. For naked shorts, they pay the dividend to the buyer. It’s doesn’t make sense to hold the short position if the split is 7:1 or higher. So they’ll have to cover and it could cause a squeeze that could cause a gamma squeeze.
Stock dividend isn’t a normal stock split. It has the same effect of a stock split but the mechanism is different.
Stock split: if there is 100 shares worth $10 each, a stock split, say 2:1 will make 200 shares each worth $5. In this case Hedgies etc don’t have to do anything. Life stays the same. Market cap is still $1000.
Stock Dividend: if there is 100 shares worth $10 and they want to do the same as 2:1 split effectively, the company doesn’t just proclaim a split, instead they give every stock holder a share. Effectively doubling the float as the same as the stock split. Market cap MAY stay high, increase or decrease https://www.investopedia.com/articles/investing/091015/how-dividends-affect-stock-prices.asp
The reason why this is a nuclear option on short sellers is that they have to buy an additional share to distribute to share holders they short sold shares to.
Why, that’s the brilliance behind a stock or cash dividend.
If I buy a share and lend it out, and the person who borrowed it sold it, I’m still entitled to the dividend. The company will pay me the dividend. But the person who short sold my share either has to rebuy that share (before the ex dividend date) or pay a dividend to the person who bought the shorted stock. And this holds for phantom shares or naked shorts.
There’s 15M shorts (not including naked or phantom shares) Plus there’s the options chain, which is 10M shares at $200, 15M at $250, 20M at $300 (note my data only looks up to a year so it could be way more!!) So as shorts cover they’ll run into a gamma squeeze.
The free float is 63M. Insiders own 11M or 17% Institutions own 16M or 26% The near other half owned by individuals.
This is why a stock split it a nuclear option.
It forces short sellers to buy back shares before the ex dividend date probably sometime in June.
If they don’t they’re are on the hook for additional shares ie if the split is 2:1, they’ll have to buy 15M shares, if 3:1 30M shares, and if 7:1 they’ll buy 90M shares.
So I bet the split will be higher than the outstanding shares available of 75M. 6:1 will require 5 x 15M shares bought which is 75M. So 7:1 will cause a case where the shares that need to be bought will be higher than the float.
I’m not going to time when things will explode, short sellers are playing a dangerous game. Friday morning they dumped 1M shares at open:
https://i.imgur.com/gLZy29J.png (at the time of the dump, short sales jump 1M)
Also the stock dividend is perfect vehicle to make the stock grow massively. Just look at Tesla:
So I’m just loading up now, don’t care about the price now for me because I know it’ll at least double. If 7:1, it’ll be historical.
✌️
Not financial advice I eat crayons and shit blue
Top Comment:
Yup yup yup, the misinformation was strong this is how it works. Shorts are fucked.