Re:Wall Street was the real winner of the GameStop saga
by nradov on Monday February 07, 2022 @08:53AM
(#30244840)
The stock market can't cut a company short. Even if the stock price goes to $0, the company still exists with all of it's assets, contracts, and employees. The stock price only matters if they do a secondary offering, and to a lesser extent for equity based employee compensation.
[ Parent
| on HN ]
Re:Wall Street was the real winner of the GameStop saga
by whatshisface on Monday February 07, 2022 @02:08PM
(#30249486)
There is this thing called a "hostile takeover," where you buy voting shares and then liquidate the company, which becomes very easy when the share price is $0.
Re:Wall Street was the real winner of the GameStop saga
by NovemberWhiskey on Monday February 07, 2022 @02:54PM
(#30250104)
I mean look at Citigroup.
C was $564.10 at the end of 2006. By early 2009 it was $10.20 - that's about a 98.2% reduction in the stock price. That's a much larger destruction of capital than GME ever was.
Re:Wall Street was the real winner of the GameStop saga
by WJW on Tuesday February 08, 2022 @05:00AM
(#30256638)
Do you imply that it was excessive short selling between 2006 and 2009 that lowered the price of Citigroup? It seems much more likely that the 2008 financial crisis had a lot to do with it and that Citigroup (which famously only escaped bankruptcy due to a government bailout) indeed lost 98.2% of its equity value.
So it wasn't the stock price falling that brought the company low, it was the company failing that brought the stock price low.
Re:Wall Street was the real winner of the GameStop saga
by NovemberWhiskey on Tuesday February 08, 2022 @07:49AM
(#30257774)
No; not suggesting this has to with excessive short selling. I’m just supplying a data point to support the point that a large decrease in stock price needn’t have a material affect on the ability of a firm to operate.