The GME dividend stock split and you.

Disclaimer: I do not currently hold ANY GameStop stock and haven’t for over a year.

Ok so by now you may know GME is considering a 3:1 stock split in the form of a dividend. We need to take a closer look at why the dividend matters.

In the case of a normal stock split, all shares and positions are split. Even split, no change in value. Essentially everybody gets a smaller slice of the pie but all their slices have the same value—this includes short positions.

Now in the case of a share dividend, let’s say
Person A – owns 10 shares of GME
Person B – shorts 10 shares of GME
Person C – counter-party that buys the 10 shorted shares from Person B

Person A and Person C technically own the same 10 shares simultaneously. In the case of a 3:1 dividend split, Person A’s shares will be split and they now own 30. However, Person C’s split shares already went to Person A. So it is Person B’s responsibility to BUY enough shares to make Person C whole. Essentially, this dividend will force shorts hands to cover their position prior to the ex-div date. Very smart by move by RC.

The dividend goes up for a vote by the board on 6/9 lol.

Special dividend have caused short squeezes in the past, see examples as $OSTK or $BGFV. If you believe that short interest in GME is still high, this could be an interesting play.

I have no plans to buy GME, but I will be watching closely in the coming months.