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heybrendan | 1 year ago
> "As of March 20, 2024 [...] approximately 75.3 million shares of our Class A common stock were held by registered holders with our transfer agent (or approximately 25% of our outstanding shares)."
I've never seen anything like this. It seems absolutely unprecedented.
Recently Ian Carroll posted an overview [2] on X where he attempts to untangle the mess of the chaos surrounding Gamestop and its stock. I'm not going to pretend to understand the (dys?)function of our financial markets or everything that he shared, but my eyes are peeled.
jcranmer|1 year ago
So just so you're aware... this is not a good source for financial understanding. This is the financial equivalent of someone who struggled with high school physics going to the Wikipedia article on quantum chromodynamics to then turn around and explain it to you.
Like, the explanation of derivatives is wrong. Leverage has nothing to do with derivatives; derivatives are essentially trades that are trading on the value of another asset rather than the asset itself.
The short answer as to what has happened is GameStop is a video game retailer that hasn't been managing the trend to digital distribution. For $REASONS, the stock experienced a massive bump in 2021. The rapid inflation caused Robinhood (among a few other apps, but mostly Robinhood) to suspend the ability to buy shares, for reasons beyond proponents' ken [1]... which caused it to be interpreted as some financial conspiracy to keep the hedge funds alive at the expense of regular people. When the resulting short squeeze proved less calamitous than expected [2], the people who bought high have turned to increasing amounts of copium to motivate why the short squeeze hasn't happened yet, and turned to anything they can find that might enable them to trigger the "real" short squeeze (which at this point is no longer a mere short squeeze but a total financial apocalypse).
[1] The simplest explanation (though not entirely accurate, it is sufficient to get the reasons why across) is that Robinhood was borrowing money to buy the stocks on users' behalf, and the counterparties effectively did a margin call on Robinhood.
[2] One hedge fund failed.
lfmunoz4|1 year ago
what does this mean? what is the significance?
jcranmer|1 year ago
The longer answer involves trying to make a coherent story by people who are financially illiterate trying to read moderately advanced modern finance textbooks to explain why they were unsuccessful in fleecing Big Bad Finance™ by somehow finding a way to trigger financial apocalypse. The more you try to understand it, the less sense it is going to make.
heybrendan|1 year ago
Given the example of risk HN user /deified/ shared regarding suspicions of brokers clandestinely distributing IOUs without investor knowledge where they should, in fact, be purchasing real shares, DRS offers the ability to move shares from one's broker to the company's transfer agent.
In effect, what DRS seemingly provides is a far more robust chain of trust and custody, as well as a more concrete level of assurance that shares in one's account are, in fact, real (and not IOUs).
In this case, the 10-K filing provides direct evidence that investors are consistently moving their Gamestop shares out of their respective brokers, to Gamestop's transfer agent, a company called Computershare (or purchasing shares directly via Computershare).
A conclusion one could possibly draw from this is that hundreds of thousands of Gamestop investors have collectively agreed that they can no longer trust their brokers, they are fed up with the true reality [and limitations] of "beneficial ownership", and are instead registering their Gamestop shares with the transfer agent (Computershare). All to the tune now of 25% of the total outstanding shares. As far as I'm aware, behavior of this magnitude has never before occurred.
Should that percentage continue to climb, it will be interesting to see what effect (if any) it will have on Gamestop's share price, assuming true supply and demand and real price discovery is still a fundamental part of how our markets function.
Ian released a video [3] this past December 2023, related to this topic.
[1] https://www.computershare.com/ca/en/insync/summer-2016/about...
[2] https://content-assets.computershare.com/eh96rkuu9740/630fe9...
[3] https://x.com/Cancelcloco/status/1740515711775346762