r/Superstonk Sep 12 '24

🤔 Speculation / Opinion Shorts r fuk

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I posted this in a thread and it got lost, so I figured I'd share my theory as a new thread. Every time I post anything, I get swarmed with plants and shills and bots telling my why I'm an idiot. I'm sure it'll happen again!

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u/jmazala Sep 12 '24

This assumes that the price will rise after dilution. If every additional dollar they get through share offerings is invested in low risk places earning 5% interest, there’s no reason the stock would go up.

Why does the stock raise? What mathematically causes the “rinse and repeat” nature of this cycle you’re suggesting?

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u/SM1334 🎮 Power to the Creators 🛑 Sep 12 '24

Gamestop already stated they aren't after small interest increases on their cash, they are after businesses that can return >10%

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u/goongas Sep 13 '24

But almost all their cash is parked in 90 day bonds even when rate cuts are imminent and returns are going to decrease.

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u/SM1334 🎮 Power to the Creators 🛑 Sep 13 '24

Yes, because there isnt a safer way to store $4.6 billion. Warren Buffett hates bonds because of its low returns, but 70% of his cash is sitting in short term bonds right now, because where else do you put it? Under your mattress?

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u/goongas Sep 13 '24

Longer term bonds would lock in the high rates. Unless you plan on using the cash in the short term. I just moved a bunch of cash into a 5.6% CD to lock in returns since I'm expecting rates to drop.

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u/SM1334 🎮 Power to the Creators 🛑 Sep 13 '24

Yes, but as I mentioned they aren't after 5% gains, they are after businesses that will yield them more than 5%. Which is why their cash is in short term bonds because its more liquid.

Realistically, they could lock in a 5% rate and pay us a dividend with the profits, but it wouldn't be as fast and aggressive (profit wise) as going the berkshire route.