Has just announced a full for one stock split in the form of a dividend dividend today. I want to talk about the difference between a stock split and a dividend. I want to talk about what's going to happen to the gamestop price. The market cap and the number of shares.

An issue and also talk about how this could cause the short squeeze. And what i think is likely to happen so stay tuned. And let's make some money and i want to dive. Straight in with the key.

Information so. Gmeddcom. Has tweeted. Saying.

Gamestop's four for one. Stock split has been approved by the board. He said stockholders at the close of business on july. The 18th 2022 will receive a dividend of three additional shares for each.

Then held share of stock. The dividend will actually be distributed after the close of trading on july 21st 2022. So actually a stockholder account takes place on july the 18th that's then collated and reviewed over the course of a few days and the shares are actually distributed at the close of play on july 21st. So you'll have the additional shares in your account.

The morning of the 22nd. The official announcement says that gamestop today announced that its board of directors have approved and declared a fourth one split on the company's class. A common stock in the form of a stock dividend. Now that part there is really important and i'll explain why in a few minutes.

They said stockholders of record at the close of business on july 18th will receive a dividend of three additional shares of class. A common stock for each. Then held share of class. A common stock that they were holding on july 18th.

The dividend is actually distributed after the close of trading on july 21st and trading will begin on a stock split adjusted basis ak. You actually see the additional shares in your account on july. The 22nd so to break that down you've actually got a stockholder account taking place on july 18th. And the shares are actually distributed after the close of play on the 21st.

So you actually see your additional shares on the morning of the 22nd. But so why is differentiating between a stock split and a stock dividend actually important well a stock split is an event that increases. The number of shares currently outstanding or the number of shares currently issued and reduces the par or stated value per share. So a stock split actually splits.

The current number of shares issued or the current number of shares outstanding that are in there in the universe right now so that means all of the legit shares are split. But also all of the synthetic shares are split as well but with a stock dividend. It involves the issuance of additional new shares of stock to existing shareholders on a proportional basis. So a stock dividend is recorded.

When gamestop actually moves amounts from retained earnings to paid in capital aka. Gamestop issues new shares from their authorised collection of shares. So these shares haven't actually been previously issued. They haven't been previously outstanding they were authorized.

But hadn't yet been issued so gamestop is choosing the exact number of shares to issue to the public. They're not just saying we'll split all available shares or all outstanding shares regardless of how many outstanding shares. There actually are they're saying we're going to issue this many shares so to put that in picture format in case. You're more of a visual learner a stock split only increases the number of currently issued shares whereas on the other hand a stock dividend issues new shares from the free reserves.

Ak from the authorized share total with a stock split already held shares aka including the synthetics are divided but with a stock dividend additional shares are allotted to existing shareholders buy gamestop and buy computer share so in terms of what actually happens to the market cap. The shares and the price. It is quite easy to explain. But also very easy to over complicate so right now gamestop has a market cap of 89.

Billion dollars. They have outstanding shares of 76 million shares now some of these shares are shorted and that's why the free flow is slightly higher and gamestop has a price right now today of 123 per. Share so post split the market cap. Stays 89.

Billion dollars. Because this is the perceived value of the overall company the number of shares outstanding increases and i expect that to increase. Obviously by 4 to 304 million shares or to multiply by 4 to 304 million. So then the only variable in this equation is the price which obviously reduces to around 3075.

The number of shares are being increased the market cap stays. The same because the perceived value of the overall company doesn't change and therefore. The only thing that changes is the price now again the outstanding shares right now are 76 million shares. But the actual flow is slightly higher when you include all of the shares they're shorted and therefore i would expect the outstanding shares to increase to 304 million.

But again the float will likely increase as well because the total number of shortage shares will also increase as well as admiral up boat. Says in a normal four for one stock split after hours on a split day. All the brokers just times your shares by four and divide your share price by four as well at the same time and boom. The stock is split.

But with a stock split via dividend. All the brokers essentially have to line up to computer share with their hands out and hope there's some shares left when they get to the front of the line gamestop is going to issue all of these additional shares and gamestop is giving these shares to computer share not to the dtcc not to the hedge funds and not to the brokers. Themselves gamestop is giving the shares to computer share all the brokers then have to go to computer share and ask for some additional shares depending on how many shares of gamestop. They're currently holding and therefore when each broker gets to the front of the line.

They effectively have to hope there's some legit shares left because of all of the synthetics in existence. He says gamestop will only issue the current shares outstanding multiplied by three in the new shares the rs shares insiders and institutions will get their shares first and then brokers get them later. But when the newly minted shares run out that's it and then brokers. And short hedge funds are scrambling to buy additional shares to fulfill their dividend obligations aka as roy jenkins says shorts i'd have to provide four shares for every one they shorted or an additional three shares on top of what they've already provided or pay the dollar amount to buy the additional shares for those shares to the lender.

So even if this doesn't instantly expose synthetic shares or doesn't instantly cause the squeeze. What it will do is cause the hedges. A ton of money. The hedges will have to spend billions of dollars to buy up hundreds of millions of legit shares to give those shares to the people that are currently hauling synthetics even.

If you're holding a synthetic share. You still expect that dividend and therefore. The hedge funds have to go out. There buy.

The legit shares and give them to the people that are holding synthetics. But on top of that as the gamestop ecosystem has tweeted. He said. Tesla could be a great case for gamestop on august 11.

2020. Tesla announced a five for one stock split that would be in effect on august 31st. 2020.'s trading day. What happened between those three weeks tesla ran by 80 and therefore even if the stock split doesn't cause the squeeze.

It could cause gamestop to run by an additional 80. Which would mean those hedge funds are further. And further. Underwater and closer and closer to that margin call effectively these hedges are gonna have to spend billions buying up additional shares to give to those shareholders holding synthetics and the price of gamestop will likely increase as well the hedges spending billions of dollars here and losing billions of dollars here as well again just brings them closer and closer to that margin call.

So even if a squeeze isn't caused on the split day again. It just brings those hedges. Closer and closer to that margin call point. Where they will be forced to sell off all their long positions and close all of their shorts.

Now something i think is very very interesting is this tweet from hang loose. He said are you reading this and are the shorts reading this when the gamestop dividend is approved. All brokers across the world will have to provide gamestop their total shareholding. Information.

Aka. Ryan cohen gets to see the entire amount of shares that exist on the market for his company on the record date. Which is the 18th of july. That's the date.

When the company compiles an entire list of shareholders. How many shares are held in which brokerage for the keemstop stock. Which is declared its dividend. This list is used to determine the shareholders in total to receive the dividend and into which account the shares need to be put and therefore if this number of shares is higher than 107 million shares market participants will be facing a legal nightmare.

Now again i don't think the hedges are stupid enough to leave the number of synthetic shares out on show these synthetics are likely hidden in swaps and other forms of derivatives and therefore we may see the number of shares reported being in line with the outstanding shares. Only because the synthetic shares are obviously hidden. Now obviously. There aren't going to be enough shares issued to go to those synthetic shareholders and that's why the hedges are gonna have to buy up these legally issued shares and give them to the synthetic shareholders.

But something that is very important is that if you have a margin account with your broker you effectively lose the right to receive the dividend and therefore. You should switch to a cash account. Immediately a number of brokers. Like fidelity.

Recently updated their terms of service to include this paragraph. Here it says fidelity can loan out to itself or others the securities that collateralize your margin borrowing if it does you may not be entitled to receive with respect to securities that are lent certain benefits that normally accrue to a securities owner such as the ability to exercise voting. Rights or to receive interest dividends or other distributions and therefore you need to make sure you're not on a margin account with fidelity with weibull with robin hood and a number of other brokers. And instead you're on a cash account to ensure that you receive this dividend.

And as jan. Jack said. I don't know what the shorts are waiting for at this point. He said.

It's clear that amc and gamestop aren't going bankrupt and nobody is selling. He said. They've built up a massive debt bubble over the two year period in the stock. They're trapped now with a toxic asset in their portfolio and hang.

Lu. Said it smells like a layman and bear moment. But instead of just two going down. He thinks there'll be at least 20 major institutions.

And as jan. Jack said. I longed to see which of the heavyweights are going to go down. He said.

It's a perfect storm of hyperinflation financial meltdown and economic collapse at any moment when they've run out of options to get out of those positions without being subject to bankruptcy and or prison. He said we'll see the criminals soon as i said even if the game stops splitting doesn't instantly cause the squeeze. It will cause. These hedge funds to pay out billions and billions of dollars buying up legit shares and they will lose even more money as the gamestop price increases.

But as always guys be sure to let me know what you think down in the comments below and as always guys be sure to bring that notification bell. Because that way you'll be alerted when i upload a new video cheers.