[aphextron]

> Your investment thesis would then be that GME becomes a token of value independent of the underlying business, dividends, and so on. More of a collector's item.

Yes, that's basically the point we've reached with the stock market as a whole right now. Nothing is tied to any kind of fundamentals. It's all about "we like the stock".

[FabHK]

> Yes, that's basically the point we've reached with the stock market as a whole right now.

Not really, though. GME and other meme stocks might be out of whack a lot, temporarily, and stocks generally might be overvalued somewhat (and, I’d say, harder to value because rates are so low, making the horizon longer), but I’m pretty sure that the mechanisms are still there that fundamentals will reassert themselves.

[stickfigure]

At the very least, GME can print as much stock as they want and sell it into the market. They'd be crazy not to.

[rk06]

wouldn't that drive the value of stock down and threaten the company itself?

I am financially illiterate, but I understand the reddit posts to mean that short squeeze is inevitable because GME is >100% shorted and issuing more shares would kill the short squeeze and drive the price down

[stickfigure]

Unless the company is selling or buying stock (or otherwise exchanging value for stock, as with employee grants), the price is immaterial to it. Just a random number on a ticker.

A low stock price creates risk because it makes it hard (expensive) to raise capital. Well, here you are, it doesn't get better than this!

[dreamcompiler]

As Matt Levine pointed out in his columns this week, GME would likely attract a huge amount of SEC scrutiny if they tried to take advantage of this obvious insanity. That doesn't mean they would ultimately be found guilty of anything, but it would be a huge distraction from, you know, adding shareholder value by selling video games.

[dougmwne]

But that's the thing here. The reason their fundamentals are so terrible is that their business model is going the way of Blockbuster. Selling disks is distracting them from reinventing themselves. Many people buying GME are doing so because they don't want to see a company they have some sentiment for be destroyed by Wall Street. I think of this like a last-ditch public offering or a Kickstarter Hail Mary. They have an opportunity to raise the capital they need to reimagine the company and become worthy of their new valuation and continued existence.

[thaumasiotes]

> a company they have some sentiment for

Really? I saw a local Software Etc. and Funcoland both get replaced by GameStops. Both times, it was a straight downgrade in terms of customer experience.

[XargonEnder]

I think raising capital by issuing more shares would provide incredible shareholder value if they leverage that money to pivot into a better business model

[stickfigure]

> a huge amount of SEC scrutiny

A couple billion dollars in the bank buys you a lot of lawyers.

As Matt pointed out, AMC is doing it. I agree with dougmwne, this is the corporate kickstarter opportunity of a lifetime. They should take it.

It's also a negative feedback mechanism in a market full of positive feedback mechanisms (ie, the short squeeze). Creating more stock makes the market more stable.

[marvin]

> Nothing is tied to any kind of fundamentals. It's all about "we like the stock".

Now, if many peiple start believing that, it will cause an actual bubble. When interest rates are taken into consideration, the global stock market valuation in terms of average P/E rates is about where you’d expect it to be.

Which is higher than but a few times before, to be sure. But still in the realm of plausible fundamentals.

[T-A]

https://www.hussmanfunds.com/comment/mc210118/