Oh man we got to talk about gamestop so last night on july 6th wednesday. Wednesday. We got the news that gme is going to go for a stock split. It's technically a stock split through a dividend and i want to get into the whole storyline.

And what this all means because i see a lot of questions and a lot of business information. So let me quickly run this down for all of you june. 2nd gme. Shareholders approved new shares to the tune of a billion shares right after that we got this interesting article.

There's an interesting detail in gamestop's stock split proposal the stock split option in the form of dividend shares consists of a slightly different mechanism than a normal split each gamestop shareholder will receive one more share as a dividend so in addition to a stock split shareholders will also receive an extra dividend share. Now this came out right after the vote. But not with the recent news. This was posted a little bit before so we didn't know the ratio or anything at the time that this article was written it gets a little bit more complicated even from this and i'll do my best to get into what all this does mean it doesn't mean so as you can see here this is the official sec filing july 6.

2022 from gme on july 6 gamestop issued a press release announcing that its board of directors had approved and declared a four for one stock split in the form of a stock dividend. This is the mechanism that's a little bit different than normal usually. It's a straight up stock split and this is one of those things. Where semantics and technical detail actually matters a lot of the people in this world.

This has happened before it's not like gme is the one that's created this this has happened and a lot of the time people don't care because functionally at the end of the day. Most of it is the exact same as in you end up. Owning more stock for less of a price so your money amount doesn't really change the best example. I have for this is instead of owning.

We'll just use a different one but a 20 bill you would now have 20 one dollar. Bills so you have more. Bills ie more shares. But the same amount it's not changing the market cap of the company.

So your dollar amount is the same you just own more shares at less price per share. So that happens with a normal stock split and also a stock split in the form of a stock dividend now to get into some of the semantic differences. Here. When you do a stock split for a stock dividend.

That requires the approval of these extra shares and that's exactly the billion that i was just alluding to that was functionally necessary for stock dividend. They had to have it to be able to disperse it in the form of a dividend payment remember dividend payments aren't just cash it's just something you get paid for owning a stock on a certain date. It could be anything it could be cash or it could be a dividend or probably whatever they really want to do as a company normal stock splits. They don't need that extra stock.

It's just everything is multiplied and divided appropriately in terms of the stock. So a little functional difference and for most people for most stocks for most markets. It doesn't really matter this nuance difference at the end of the day. But in this particular scenario.

It might and i want to explain that but before that i just want to give you the dates of all this stuff each company's stockholder of record at the end of business on july. 18th so this is the x. Dividend date july 18th at 4. Pm.

If you own the stock you will be part of the four for one stock dividend. So they're gonna basically do a snapshot on business close on july 18th and then it'll officially go through at the end of training on july 21st. So you'll see the change in everything as of trading on july 22nd. So the important dates are basically.

July 18th and july 22nd the start of training on july 22nd. Is when you're gonna see it now obviously. This was just announced and on the news. People really liked what they saw.

I mean gamestop ended up closing at 117 43. And at one point shot as high as 131. Now you might be thinking to yourself. Well why does that make sense matt you're telling me that the market caps.

Not changing at all that the money value. There's no difference there well most of the time in a stock split. I agree with you there are some psychological things of people just because they see less of a price. It's a psychological impact and they just think that it's cheaper so they're going to buy more they feel like they're getting a deal even though the market caps.

The same you could argue that functionally. There are legitimate changes in the options market for example. It's way easier to get options of equity. When it's of a lower value in its equity price options are more affordable.

So yeah you could argue that but in this particular one this is where i personally still have some questions so i want to share this all with you i'm very familiar with stock splits stock splits in the form of a stock dividend is now where you're throwing a wrench into the entire situation. This is from investopedia investors short a stock are never entitled to its dividends and that includes those short a stock on its dividend record date. Which in gme that would be july 18th. It's also called the ex dividend date rather short sellers owe any declared dividend payments to the shares lenders once again this is very very important rather short sellers owe any declared dividend payments to the shares lenders now if i'm being completely frank and honest with all of you this is something i'm not the most aware of i'm not that absurdly confident because i understood this of if you're short of stock and they pay a cash dividend well the short has to pay the dividend to the right party.

I don't know if that is also applicable to stock dividends. I know it's very applicable to cash dividends if you're short. I do not know if it is applicable to stock dividends. It very well may be and now.

The question is the fact that they went through a stock split in the form of a dividend opposed to a normal stock split is this now going to make all the shorts. Which there's currently a decent amount of them right here the short interest is almost 21 is this 21 of short sellers are they now on the hook for the financial nature of all the new stocks that they would have to pay and that's my current question of the scenario. I reached out to many people who are going to be highly informed about this and as soon as i get a concrete answer. I'm going to share it with you but i just want to let everyone know my purpose and kind of doing this a little bit of a monologue here is this is a little bit more different and a little bit more complicated than a normal stock split and this comes back to why semantics actually matter.

Why technical accuracy is very very important. Because it might lead to a little bit of a different fallout than we expect and just before the bell goes. Ding. Ding.

Ding. Ding ding. Big sword. Investor michael bury.

Pokes. Fun at gamestop uh. Not the biggest fan of the stock split like obviously just kind of making fun of it gme should have announced a 40 for one split for old times. Sake.

The investor of the big short fame is likely skeptical about the upcoming split which promises to lower the gamestop stock price and make it more accessible to retail investors breweries worm meme socks will inevitably crash and gamestop shares are still up about 500 percent since the start of 2021 so like in normal stocks. But it's going to come down in price. But you own more so your amount of money is theoretically going to be the same he labeled the saga unnatural insane and dangerous uh. I just thought that was a funny way to describe the whole gme craziness unnatural insane and dangerous.

So uh obviously. There's some people who are still very much outspoken against it but i for one am excited to see how this all plays out.