The duplicity of the media here is funny!
Melvin has not closed out of its short position.
Melvin has not closed out of its short position.
Hedge funds have "asked" companies to PURPOSELY DEFAULT on their debt before.
Great Matt Levine piece on this: https://www.bloombergquint.com/view/blackstone-may-do-its-cl...
Suppose lower. Unlikely. Because a better price for GME to raise capital exists -- the current stock price.
Suppose at (approx.) current stock price. Possible. But what's in it for GME to offer such a deal to shorts instead of offering it to stockholders? Suppose offer to stockholders, then shorts still have to cover and thus potential of short squeeze remains (which is beneficial to future capital raises). Now, suppose GME offered it to shorts, squeeze is extinguished, the rally fizzles, stockholders who propped up GME's price feel betrayed. At offer to raise capital at current stock prices seem better placed with stockholders than shorts.
Suppose higher. Now we might be on to something. Without GME's offer, the shorts have to close out huge positions by buying from the secondary mkt -- short squeezing the price up and making future purchases to close remaining short positions increasingly costly. Shorts don't want this. Shorts would rather close by buying shares at a higher, _constant_ price (constant means not subject to squeeze). GME, if desperate for capital, could extend an olive branch to shorts with a deal that says, hey, I'm offering n stocks at a 75% premium to the current price of $400, wanna take it?
But there are ways to gain some insight based on how hard GME is to borrow and the shorting interest, and that hasn't changed much from yesterday.
If Melvin did manage to get out of their short, they handed that short to another party almost share for share, or they found a way to hedge their position. At any rate, GME remains the most shorted stock on the market, which means another short squeeze is possible.
This Friday when options expire is going to be an absolute circus.