The other reason why it's dropping (albeit only 6%) is that a number of brokers are selling the 1 share and buying 4, rather than just issuing 3 new ones. The sale is happening on the lit exchange, the buy on the dark pools. Hence the price drops.
It's been really interesting to see how some of the brokers have been handling this splividend (spit delivered as a dividend). A ton of them have not been able to, so have been selling of the one share, and buying 4 more (synthetics) to cover, rather than just getting the 3 new shares from Computershare (the Transfer Agent). There's a very interesting thing going on here... something the market makers call "infinite liquidity". Basically, it means that price discovery is meaningless, because they can generate infinite synthetic shares that live in an infinite "failure to deliver" state. I have a bunch of GME in my TD (Canadian) broker account, and I DRS'd a shit-ton. Watching how they work has been fascinating. So many of the shares have been nothing more than IOU's to make money... and now the piper is starting to play.
how easy is it to sell once you DRS to compushare? Let's say... in a squeeze type scenario? That's why I've been hesitant to DRS. I don't have a ton of shares -- have 4x as many now -- but I've just been seeing buy/hodl strategy and, well, yeah if it gets to a certain price point of course I'd like to sell as well.
The squeeze will take weeks, not days, not hours. They can do all the kind of selling you'd normally do with a brokerage... it just might take a bit longer to get into your account (they take 3-5 days for funds to settle into my CDN account).
Here's a good resource: https://www.reddit.com/r/Superstonk/comments/ptvaka/when_you_wish_upon_a_star_a_complete_guide_to/
From that article: What Now And What’s An Exit Strategy? https://preview.redd.it/b8d4sv1hpap...bp&s=51240350388eb426476dbbb1e54745371b8dee1f So everything sucks and there is no right answer? Kinda. If you feel like you are being overloaded with information, I feel you. We have spent the last year learning so much about this fraudulent system it’s hard to know what the right thing to do is. I wrote this post because I had questions and I wanted answers. I still haven’t found all of them but I was able to learn enough to personally believe that Computershare is an integral part of this whole saga. Before we wrap this up the final piece of the puzzle is what it looks like to SELL with Computershare. We all know that account creation and buying shares is a convoluted, confusing and slow process. This is just because most people that would use a system like Computershare don't need it to be simple or fast. CS batches buy orders together and does not execute them immediately. Remember most stocks are nowhere near as volatile as GME and waiting a few days to execute a purchase order is not a big deal. The good news is there is indeed a light at the end of the tunnel. Selling through Computershare is extremely easy and fast. I have committed the ultimate sin in the name of science and for the first time since this all began I SOLD A SHARE so YOU DON’T HAVE TO. Please forgive me Papa Cohen, it was for the greater good. So yes, there are fees associated with selling. We are so used to commission free trading we have forgotten that “if the service is free, you are the product”. It’s a little annoying to see these fees but when the share price looks like a phone number I don’t think it will bother you. When I placed this sell order I instantly got a text confirmation. So while buying takes longer than we would prefer, selling takes no time at all.
I've had previous experience with Computershare, as they are the transfer agent that handled my company's acquisition. Basically, they were the broker for the sale when it came to stock/options. That means I've already had an account with them for a few years, and all my financial info has been set up with them.
Just DRSed my shares. Finally remembered to after getting more than a bit pissed about fidelity treating them as a split rather than a dividend. That was stupidly easy.
Yeah... there's some weird shit going on right now. There is SERIOUS push back from brokers about processing this spit as a dividend... even though Tesla and others have done so without problems, this time it's being balked at... big time. It couldn't POSSIBLY be because it's so naked shorted that it'll collapse the markets if someone fails a margin call. Not at all. After all, we all know the shorts covered last year, right? Between that and these magical (literally, named Magical) Chinese IPO's that are skyrocketing to billions of dollars in valuation on next to no volume? Totally normal! Nothing to see here! They're not at all being pumped to provide collateral for other shit. But have no fear, the SEC is on your side... they've got your back... they won't let bad shit happen to retail. Trust them!
okay, I’m a little slow on the pickup here, but it sounds like what you’re saying is that, at one point, it was so popular to short GME — essentially thinking it’s gonna go bankrupt — and so many places did it, that now, we’re on the verge of a margin call collapsing the financial markets because those hedge funds would lose so much on their shorts that they would have to pay for it out of everything else?
It's actually a shade worse than that. Now it was certainly popular to short GME and that by itself would be a problem once the stock spiked. But normal shorting would have been one kind of problem - in that case, someone actually owns a stock, and sells the short. The bigger problem seems to be that there was widespread "naked shorting" - where these financial companies were shorting stocks that nobody owned. That's a much bigger problem, because there are only so many stocks that exist, and price is dictated by demand. So if these naked shorts get called in, the companies who did the shorting now have to go out and acquire the stock on the open market, which drives the price up, which results in more margin calls, which drives the price up further... it's the foundation of why some of the GME believers think that the stock could spike to insane prices, like tens of thousands of dollars per share or some saying even far, far higher than that - because, at some point, the naked shorts need to actually go buy the stock they shorted, and all the GME "apes"/true believers are buying and holding massive quantities of the stock, so the only place for the shorts to get it from is the consumer market. If a bunch of true believers think the stock will go to $50k/share and won't sell until it does, where does a company acquire this stock from that they need to fulfill their short? They either pay the $50k or they (theoretically) get put out of business by the SEC.
I'm curious how many people actually hold on for that long though? I'm sure there's some whales that are in it just to mess with the markets, play a lottery ticket, whatever, but for the regular people with credit card debt and student loans and all that, you'd have to think that once it hits the point of "stop hodling and I'm free and clear" they'd have some tough decisions to make.
It's all based on a bullshit concept called "infinite liquidity". The Prime Brokers and Market Makers are allowed to create "fake" shares with the understanding that they eventually have to deliver on this promise. Failure to deliver these shares is called FTD... failure to deliver. There are a few different deadlines that these people have to deliver these shares, the most common being T+2, or 2 days after the transaction. At that point, if it's an FTD, they are supposed to reverse the transaction. The concept of "infinite liquidity", which Market Makers swear by, totally undermines the concept of "price discovery", which is the typical bid/ask you see in an exchange. It negates that effect, meaning that the brokers/prime brokers/market makers, etc can rig the outcome of the stock prices. Never mind the fact that they do this thing called PFOF (payment for order flow), as well as use dark pools for some actions, and they are totally manipulating the prices. (all downward price moving actions get done on the "lit" or public exchange, forcing the price down, but anything that would raise the price, they do behind the scenes on a dark pool, meaning it doesn't have the same effect to push the price up). The problem is that these shorts were betting, and betting HUGE, that they could do something called "celler boxing" a stock... basically driving it down via various forms of manipulation to get the price so low that everyone gets scared, sells, and the company is forced to go broke. This was supposed to happen so that they could then cash out their short positions, win a ton of cash in the casino, and nobody would know that they had illegally opened up a bunch of naked short positions to accomplish it. Well, in this case, Gamestop has a bunch of rabid gamers and Redditors (called Apes), that are doing nothing buy buying, and not selling when they "should be", according to "normal" investor psychology. Price goes down? BUY THE DIP! The end result is that the shorts are in too far... and rather than take a huge motherfucking loss and close their positions, they opted to keep pushing... keep kicking the can down the road. They've taken these synthetic shares they created to continue shorting the stock (and thereby dropping/controlling the price), and are wrapping them up into a ton of other financial vehicles, like swaps, baskets, etc, and otherwise hiding the short positions so that they don't have to report or handle them like "real" short positions. So, while these shorts are really shorts, they are wrapped up in a bunch of other shit that aren't really shorts, so they don't have to report them as shorts. They've also gotten the legistlators to agree to delay the reporting of this other "hidden instruments" until 2023, so even if you wanted to, you have no clue what the numbers are for these various instruments. Now... the other main component to this is what you talked about, DRS or Direct Registering the Shares. Computershare, GME's Transfer Agent, is responsible to the company to create and manage all the shares for the company. There are 2 main paths those shares can take... they get kept by Computershare on behalf of "direct registered" shareholders, and whatever is left over for the float, is delivered to a company called Cede and Co, who then give that to a company called the DTC who adds it to an internal ledger they have. They then use a subsiderary called the DTCC to electronically distribute shares all around to the various brokers, etc, for trading. Well, as more and more shares get DRS's, that is supposed to reduce the number of shares that are supposed to be in the float used by the DTCC, which reduces the number available to be borrowed/shorted, etc. The main reason that GME did this latest stock split, to be delivered as a dividend, was to force shares to only go to those who have real shares, not just be handled like a normal split where the numbers in the internal ledgers get multiplied. By delivering as a dividend, only those with "real" shares were supposed to get the new, forward split shares. Well, with all this naked shorting (some people think there are a billion additional shares that are not legit), there's no way that the number of shares that Computershare would give to DTCC would come close to the number required. Because of that, DTCC has made this split delivered like a normal split, which does not require that "real share" accounting. It also affects things like cost basis, time stamps of the shares, etc, and could be considered a taxable event to shareholders, whereas a split delivered as a dividend does not. People are starting to speak up, loudly, to their brokers, complaining it was not delivered as a divident, and the brokers in turn are saying "Computershare and GME were wrong". It's a fucking shit show. My shares have been split, removed, split again, etc, a few times as the broker goes through the different actions that the DTCC has instructed them to. In short, a large number of people think the DTCC has intentionally fucked up the split instructions (despite GME's 8k filing with the instructions being public record to the contrary), to try and not force that "real share" accountability. That would probably be a trigger for MOASS. The other side of this is now everyone seems to be rushing to DRS these shares that were just the ledger adjustments, as that forces the brokers to get "real ones" to send back to Computershare. That means they have to go buy them on the open market if they don't have them on their books. And a surprising number of brokers do just that... say "there, we bought that for you", and just keep an entry in their internal ledgers, and don't actually buy the share for you. Again, it's all a shit show... and lots of he said, she said, and even GME has come out with a public statement outlining what was supposed to happen. https://gamestop.gcs-web.com/stock-split That is GME telling shareholders to go, hold your broker accountable, make noise, force the various regulatory agencies to wake up and do their fucking job, rather than just ignore it.
I should mention that once the float gets DRS'd, there should be ZERO shares available for trading. We already see that GME has one of the highest trading volumes in history, for what was a 72 million share float. Once the float is DRS'd, Computershare can take a recall action so that it forces all of the other brokers to close their open/short positions. THAT is when they have to pay up and they lose all of their money. The only available shares are in Computershare, and it's a bidding war (squeeze) to try and be the first to cover their positions at as low a price as possible. That's when you see share prices that look like telephone numbers.
Sure. But what's that point? Nobody knows. And the fact that so many people decided to buy this lottery ticket makes it massively more complicated; there are tons of people who have a couple shares, where a $500 or $1000 stock price doesn't help them even though that will massively hurt the short sellers. They literally bought a lottery ticket and if there's a hope for a big payday from that, what's the point in making a few grand? And you'll of course have people on the other end, who actually spent some cash on GME but did it with the express purpose of being rich if this thing takes off, so they're not selling. And, of course, you have a lot of true believers from Reddit or wherever that aren't going to sell until the stock price matches their social security number. When you have a community of 10+ million people all deciding to hold one stock, it doesn't take a whole lot before they've fucked that market all to hell. This isn't the way markets typically behave, so nobody's quite sure what to do.
Personally, I'll be selling a bit at various times on the way up when it hits certain prices. I will guaran-fucking-tee my financial freedom without giving a fuck about what other people want or expect me to do. When that number shows up, I'll be selling, and will keep a bunch in reserve in case the price keeps going up. I've seen too many people make and lose millions because they were afraid to sell... "but it could go higher". Yes, it could. It could also not go higher. Some people are bought into the concept of "the infinity pool"... just live off the dividends and the infinitely high share price... but I don't think they quite get how that works. At some point, to make the cash, you have to sell.
This post on Reddit is just one of many that are being shared, dealing with brokers around the world. https://www.reddit.com/r/Superstonk...ad_a_call_with_tda_today_i_cant_even_believe/
I still can't get over the guy who committed insider trading and then asked Reddit if he was in trouble.
That was beyond mind boggling. Hilarious, full on retarded, too-stupid-to-know-you're-stupid. "But I just wanted to make some money."
He left no room for interpretation by the SEC either. He didn't say "I bought a few puts," he talked about how took on a massive short position directly related to a forthcoming press release. Good grief.