GME Board Actions - Dividends, Stock Splits and the potential 'Cohen Killshot' DD
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| Author       | Source       | 
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|  [u/Leaglese](https://www.reddit.com/user/Leaglese/) | [Reddit](https://www.reddit.com/r/GME/comments/mf6xef/gme_board_actions_dividends_stock_splits_and_the/) | 

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[DD](https://www.reddit.com/r/GME/search?q=flair_name%3A%22DD%22&restrict_sr=1)

Welcome to yet another in my legal series DD, where GME has a few tricks up its sleeve, and to them, the shorties don't matter.

Customary top TLDR: 1. GME can call a dividend which will either be paid by shorts or cause the price to moon; 2. GME could call a stock split to incentivise mass buying pressure; and 3. RC could negotiate a buy price of the entire GME, which would force all shorts to close, giving him the right to buy the company for nothing (or a profit) if he sells his shares and takes the company private after apes get paid.

I've seen a lot said about the shareholder's meeting and it's potential to cause the MOASS, and even general board decisions that can be made. Stock splits? Dividends? Share recall? What does it all even mean!

I'll wrap this all up as a theoretical tactic we could see at the end, but first, I'll explain what each of these are.

As always, this is not financial advice nor legal advice and this is out of my wheelhouse, so I invite you to correct me where I'm wrong, as we help build the collective knowledge.

*It's important to note firstly, GME does NOT like shorties either, and these actions could be a part of the reason why they included that tasty little shorts warning in their 10k...*

Onto the DD - let's start with dividends shall we?

What is dividen?

Well essentially a dividend is a payment out of the company to its shareholders either via the company's profits or retained cash.

It has 4 stages;

1.  Announcement date (self explanatory);

2.  Ex-dividend date (the set date after announcement, where if you buy stock after this date, you aren't entitled to the dividend);

3.  Record date (the cut off date for determining who's long and short, and what will be paid to whom); and

4.  Payment date (self explanatory).

But GME barely retained enough cash for its purposes right? Why would it issue a dividend??

Well it's not even about that. It's about the acknowledgement GME is over 100% shorted in their 10k, which makes this interesting.

Why? Well stealing straight from Investopedia:

*If an investor is short a stock on the record date, they are not entitled to the dividend.*

In fact, the (short) investor is instead responsible for paying the dividend owed to the lender of the shorted stock that they borrowed.

So GME declares say, I don't know $5 a share dividend on its 70m shares to pay out around $350m.

But management decides they'll throw that straight back into the company so they'll only pay out $5 x 56m shares so that's $280m, easily doable.

But, if the stock is over 100% short, who pays that and the shares over 100% dividend out?

You guessed it. The shorties.

So if it's 200% over the float? That's $560m, 900% over the float? $2.5 billion with a damn B the collective shorts will pay out.

Even more delicious? Retail gets $5 a share, this will become important later, even if it may seem insignificant now.

Hilariously this would give DFV a cool $250k for nothing. Anyway.

CORRECTION: DFV would take $500k as he doubled down, of course

There is literally no downside for the board of GME to do this if they know they're over 100% shorted, either the shorts pay the entire dividend which the board likely reinvests into itself and so does retail or worst case scenario, it pays out $280m, which as we know the majority of the apes would throw straight back in.

What's better? If the shorties can't / won't pay it, they have to buy back the stock! Which would raise the share price and GME's institutions gain waaay more than the dividend from share price hike

Better than that? The stripping of cash from shorts if the float is shorted something ridiculous like 300%+ could cause the shorts to get margin called, affect members of the NSCC'S Clearing Fund and SLD payments and cause them to get their ass liquidated too, and GME can declare this whenever they damn feel like it!

Edit: it has been pointed out GME are indentured to not issue a dividend. My counterargument? To breach an indenture is to pay back the bond / loan which provided this restrictive covenant, which GME should be more than prised to do given their current capital and alleviate this debt

Let me be clear, I do not condone breaching indentures, this should be renegotiated or paid off to protect fiduciary duty

PLEASE READ: Yes GME has a contract not to issue a dividend, but this is tied money being lent to them when they were in a worse financial position and which could be paid off now if they so choose given their healthier financial position if they chose to either breach this condition or just make payment of the debt in full, clearing them of this restriction. I'd recommend they do the latter for the avoidance of doubt.

I still think therefore this remains possible if not plausible, as the public aim for the company is to reduce debt and one that comes with strings attached is all the more important to get rid of first

GME could do this by a minor share issuance to raise sufficient capital beyond what their current cash position may be

*But wait! There's more...*

Are ya still with me apes?

Onto stock split

So the board has essentially implemented a free money glitch for themselves and their investors, everyone's happy right? (Maybe not the shorties)

So the shorties left, which didn't hear no bell, double and triple down again and again as they have been doing.

They get that FUD machine whirring and pay for stories on MSM like "Struggling GME bizarrely issues dividend after disappointing year end" or some other such bullshit, full well knowing the shorties just paid for the dividend and increased their revenue and/ or stock price for those who had to buy back to avoid paying it.

Well apes now have a little bit of extra money paid into their broker account, but it ain't enough to buy a share for some or most. I mean I know most of you apes would just buy a fraction of one, but how could you incentivise more buying?

Order a stock split

A stock split is where a company increases the number of its shares by a ratio, so for instance a 1:10 stock split for GME would increase the available shares to 700m. Any apes who held 1 share now holds 10, 10 shares? 100.

You get the idea. The current stock price is then divided by the number used to split.

As @PPL did, they can even choose to provide investors before the split some additional shares too, like 1:10+4 making the short problem even worse, as if you hold 1 share you'd now have 14

So GME @$200 becomes $20 instead. Nothing actually changes, the shorts have a 10x increase in their short position and so do the longs

Therefore every $1 price movement equates to $10 for the shorts, as all their existing positions are amplified in the same manner

But now? I have say $20+ dollars sitting in my account from the dividend and the price of the stock just became $20, so yes please I'll take another.

The price then become FAR more attractive to those on the sidelines, like those on the fence saying fuck it I'll take 5 etc etc and suddenly the already overwhelming buy pressure from the dividend and those on the sidelines ramps up significantly.

If this triggers the MOASS, then 50k a share for those who held before the split is actually 500k a share, 200k a share is 2m a share, it just appears a factor of 10 smaller.

Remember, the shorties positions remain; they've just increased, and the number actually needed to be bought back is significantly higher.

But to combat this, the shorties create a literally never seen before number of naked shorts to try and suppress the price resulting in a record FTD train, o noes what now?

Cohen buys GameStop

The final nail in the coffin on my theory if they are used in conjunction with one another. It's why I call it the Cohen Killshot.

In order for RC to "buy" GameStop outright, he needs 50% of the shares.

Now we know he currently owns 12.9% of the shares with the option to bump this up to ~20%. All he needs to do now is agree a price with the new board of directors for that final 30% and take total control.

If Ryan Cohen or RC Ventures negotiates with GameStop for their purchase and a price is agreed, guess what?

Checkmate motherfucker.

If this happens, and by all intents and purposes this was RC's goal from the beginning, all lent shares will have to be recalled.

Every. Single. One.

Know what that means? Forced buy in of what we assume to be astronomical short positions, whether they be real or FTD.

This will send the price to the moon and do you know what's the icing on the cake for RC?

He can sell his 20% when this thing moons and not only pay *nothing* to acquire a billion dollar company, he'll actually make money whilst simultaneously acquiring the whole damn thing and taking it private

Meanwhile we apes sit back and watch the board go to work, and sell when our price is right.

Now don't get me wrong, any of the above in isolation could result in shorts r fuk, but if I were a tactician lawyer, like RC's (check the damn résumé of Christopher P. Davis); this is exactly what I'd do.

So let's recap, GME could issue a dividend paid by the shorts and all those holding naked or synthetic short positions. This bleeds them of capital putting them in hot water, apes collect this dividend and the price of GME becomes too irresistible following a split and many throw their entire dividend into the stock, and new apes join the case, causing the price to rocket.

Finally, even if the most ridiculous FTD naked positions are made, if RC buys GameStop they're forced to close causing the MOASS, although all could individually. RC then pays nothing and profits by purchasing a billion dollar company, takes it private, turns it into the chewy of gaming and IPOs again for MASSIVE profit, after apes have made some serious $$$.

Let's hope we see some juicy press releases going forwards apes, the end is nigh for shorties.

EDIT: holy crap apes the discussion on this has been great, thank you to every response both in support and against, it's important we challenge each other.

I make it a point of at least reading, if not replying to every comment but there's just so many I can't keep up before I need to sleep, I'll try and get round to you all tomorrow!

Edit 2: I need to make a few things clear here, first this is a theory, not inevitable dang apes I'm outlining possibilities GME could take

Second yes GME has a contract not to issue a dividend, but to breach this or be freed from this obligation, they could choose to pay off the debt, breach it and pay off the debt in accordance with the contract, or renegotiate this term if they so wished, all of this is within the realm of possibility as negotiations of this type happen all the time

Third yes RC has a contract not to buy more shares but again, this is an agreement with the *old board*, when the new board is put in place this too could be renegotiated, not everything agreed in a contract is set in stone, and contracts are breached and/ or renegotiated all the time, I think it's plausible RC renegotiates this deal when he helps install a majority on the board

Taking over a company requires stepping on toes. The corporate world is a minefield of actions to achieve your aim, my point is you don't employ someone of RC's lawyers experience if you don't plan on shaking things up to reach your goal and he's assisted in his clients becoming a major shareholder and taking over companies. Hell, we don't even know if some of the previous board were introduced by shorts to help run the business down, this is how things work
