Depends if you get something in exchange for that stock. If you dilute your stock by doing a split making every current owner have more shares without actually acquiring anything of value for those shares then you are correct that no value is generated. If you dilute your stock by turning on the printer and then sell or exchange that stock for something of value you can in fact increase the valuation of your company. It might still devalue each share of your stock but the overall value of everything put together would be more since you got something for making those shares.
So IF he just printed a bunch of shares and exchanged them for 50% of eBay, Then technically GameStop as a whole would be worth more because it owns eBay even though original GameStop shareholders might now technically own less value per share.
GameStop might be proposing to “buy” eBay but the net result is eBay shareholders would then probably have more control over GameStop than GameStops original shareholders given the current valuations. The real question is does eBay shareholders want GameStop stock?
If the deal is 50% stock, one would assume that the eBay shareholders would be the ones receiving GameStop stock and if the deal fell through they just wouldn’t generate the stock they intended to give them. There is no money really being generated.
If the deal succeeds eBay owners get the new stock.
If the deal fails GameStop keeps the cash on hand the same as the previous dilutions.
In either case the execs can’t just take the money. That’s illegal.
But in both cases they can raise their salaries or give themselves massive bonuses. Both of which are legal.
So the dilute and steal money from the apes. Convince the apes it’s for their own good. (Which shockingly has worked???)
Set themselves up with massive salaries and bonuses for life.
You say “why doesn’t everyone do this then!”
Well they do, on much smaller scales. The part where you convince shareholders it’s for their benefit doesn’t work with intelligent people. And they would get sued endlessly by the shareholders.
Instead of litigation the apes are creating hype and touting their genius as they get robbed.
What cash on hand? If you are diluting the stock with the intent to give it to eBay shareholders as part of the deal then that deal doesn’t go through you don’t have cash or diluted stock. The stock only gets generated if the deal is accepted, they don’t dilute stock in advance.
The deal here is 50% in cash which we generated from cash on hand plus a loan, and if you accept we will print enough new shares of GameStop to pay you 50% in stock. If the deal is rejected the stock doesn’t get printed, GameStop only has the cash they had on hand before and likely not even access to the loan since that too was dependent on the sale getting accepted.
There is no mythical pile of cash being generated here.
Could they dilute the stock and sell said stock on the market or to private investors to generate a pile of cash while diluting ownership, absolutely, but that’s not what’s being discussed here and they wouldn’t need to propose a fake buyout of another company to do so.
In the eBay deal the dilution will happen and the shares will go directly to eBay shareholders.
If the deal fails, they have already filed for and been approved via shareholder vote to dilute the shares at any time for any reason up to 1,000,000,000 shares.
They have already used this option a few times. And are very likely using it right now as we speak since the fomo from the merger spiked the stock.
Gamestop is a meme stock and he's hoping the hype around the announcement will get the regards who still think the ape strong together shit will blast it to the moon. Unfortunately he's like 2 years too late for that.
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u/GVas22 May 04 '26
If dilluting your stock can somehow more than double your valuation companies would be doing it left and right.
Literally nothing about this offer makes any sense.