Posts about GameStop
This yo resident hype man whatwhyisthisating, I’ve been following GameStop since the sneeze last year. You can see my latest DRS post to peep how much I’m holding. I’m a true believer that GameStop is going to change lives and bring power back to the people. That said, my life is great. Let’s jump in.
TL;DRS get on this spaceship, there’s no coming down 😎
I’m going to share in no uncertain terms, how GameStop lined up all their plans to stop the bears once and for all. No, there is no typo in the headlines, GameStop has lit the fuse and is ready to delight their shareholders as well as their customers. Reverse uno, bears will be crushed. And no, not the DRS rug pull kind of crushing.—seriously, what was that? Anyway, I digress…
If you haven’t had a chance to watch Q3 earning and/or want to hear it (again), here’s a link for viewing/listening pleasure:
Recap: No fluff, no speculative language, no forward guidances, no Q&A, only French baguette. GameStop is running a business that appeals to shareholders and customers alike. Near-term profitability and long term growth is their focus and bullish. Here’s why—
GameStop just reported that they are experiencing free cash flow. If you are unaware of what this is, check out this video posted by another ape—they deserve credit for finding this video, regarding free cash flow, play video at 5:07.
With free cash flow, GameStop is now free to invest in what they believe will bring greater value to their company. Now I checked past quarters earning calls and none of this language was seen nor heard, only discussed in this subreddit, until now; GameStop explicitly stated in this earnings call that they are now exploring potential mergers and acquisitions at the “right price point”.
Similar to how they announced exploring crypto and digital assets in June 2021. Exactly a year later, they released the beta marketplace. Now no timeline for the M&A, as they have to dot their i’s and cross their t’s. If we follow the same pattern and trends on what they are planning to accomplish, a potential M&A is likely, close to, in the process, or nearly complete!
Now let’s get to the juicy stuff.
Y’all remember back in November 4, 2021, GameStop “entered into a new $500 million global asset-based revolving credit facility (“ABL Facility”) with a syndicate of banks”? No?
Well, now with this new loan credit facility, they now have lighter convenants, as we learned that their old credit facility (agreement) of $420 million prevented distribution of dividends. This is is important because the restriction from paying out dividends meant shorts could hold their positions indefinitely and free from the threat of paying out on the cost of dividends. And now with this new ABL credit facility, GameStop could have released a dividend at any point. Why haven’t they?
In simplest terms, large investors want to see a company improve their performance. In addition ABL is usually for items that they can quickly turn around and pay off like a credit card.
If we wanted to take this a step further, what if the asset used for this loan agreement was for something like an NFT? One: Gamestop’s agreement with WF and syndicate of banks is kind of obscure.—as in, do we know exactly what was underwritten? likely not, and who are these banks?; two: Typically, if you are a short seller and the company provides a dividend, short seller has to to pay out for every share they shorted. Source
Okay, try to follow my logic here
What if this ABL credit facility will be used to fund the distribution of the NFT dividend. And the agreement is that the only line that GameStop is on the hook for is the cost to mint? Shorts must buy back all the dividends… which could pay back the loan after let’s say very few transactions. And, if none of them are able to buy back all dividends cause the cost is too prohibitive, what would happen with shorts’ positions? 😏
Edit 1: ABL assumes the risk to the lender and I simply provided a hypothetical, but let’s assume that the ABL agreement was simply a way for GameStop to create a lighter covenant, one that would allow them to distribute a dividend at any time.
This is for y’all 😎
Prepare your tits.
On Feb 23, 2022, ComputerShare posted this video: https://youtu.be/ZdZXCJxs5fs with the part I’m referring to beginning at 2:32 but read on to get right to the juicy bits.
Here are the screenshots of the important parts for this post:
ComputerShare administers over 12 million dematerialized or uncertificated holdingsof which, approximately 8 million are pure DRS holdingsand 4 million are "book entry" plan relateIn this video, they say that they manage over 12M dematerialized or uncertificated shares (note that this total is not specific to GME only) of which approximately 8M are pure DRS (Book shares) and 4M are book-entry plan related (Plan shares).
NOTE: These descriptions have been updated to more accurately reflect the meanings of these terms.
Dematerialized shares are just digital shares, basically the paper certificates have been made digital and therefore have been dematerialized
Uncertificated shares are just another name for dematerialized shares, there’s no physical certificate
Don’t get confused by the term “book-entry” plan, those are the Plan shares
Reminder that GameStop receives both Plan and Book numbers from ComputerShare, and also a reminder that this video content is not specific to GME.
Something I want to note before we continue… this video was posted on Feb 23rd, but it likely took at least a month to make. I’ve been involved in the creation of YouTube videos for large corporations and there are a lot of steps, a lot of hoops to jump through, and a lot of approvals to get for each tiny thing. Someone has to write the script, get it proofed, approved, someone has to record the voiceover, that needs to be approved, edited, approved again, there are also all the graphics that need to be prepared and approved piece-meal as well as together in animation, the audio and visual components need to be put together… my point is it takes a long time, and I would expect that the numbers that ComputerShare presented were likely from around end of year 2021 rather than mid-Feb numbers.
In mid-March, GameStop released their annual report (pre-split) which noted:
As of January 29, 2022, 8.9 million shares of our Class A common stock were directly registered with our transfer agent, ComputerShare.
So there are a couple of possibilities here based on what ComputerShare says in their video…
Option 1: about 1/3 of DRSed shares held by ComputerShare are for other companies, which strikes me as unlikely considering how quickly GME took top spot on give-a-share, how confused brokers were at the beginning, and how many people have been told by brokers that people asking for DRS are always asking for GME.
Option 2: More likely (in my opinion) is that GME makes up most of the DRS shares that ComputerShare talked about. This was likely year-end 2021 data, so would have been before popcorn and towel stocks started to get on the DRS bandwagon. But… this one only makes sense if the numbers reported in GME’s 10-K are ONLY reporting book entry DRS shares.
So if I'm correct that GME makes up the majority of these holdings at ComputerShare, and the % of shares purchased directly from ComputerShare hasn’t changed (those recurring direct purchases go into plan rather than book), then based on the video ComputerShare posted back in February we may actually have closer to 107M shares locked up (since 8 x 1.5 = 12… so 71.8 x 1.5 = 107.7). Maybe I’m overly optimistic, but I would guess that the percent of shares held in plan currently would be more than it was when we kicked off 2022, because I get the impression based on posts here on Reddit that more people have recurring purchases set up than they did in 2021. So... we might actually be a good amount over 107M.
ComputerShare released some numbers at the beginning of the year that, when compared to the numbers that GameStop released in their annual report, suggest that shares held at ComputerShare in “Plan” are not part of the total that GameStop has been reporting. So we actually probably already own way more of the float than we ever realized.
I wonder what would happen if everyone converted those Plan shares to Book…? 🤔
Edit: updated the descriptors to more accurately reflect the meaning of those terms
