▲ 5 r/CriticalState
Critical Debate: Police should have more powerful guns
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u/jaywalkingjew — 13 hours ago
▲ 753 r/Superstonk
TL;DR - We can all agree that stock price go up = good for all. Ryan's incentive package works the same way.
About me
I have been a member of this community for over 5 years. It inspired me to get a PhD in Finance, studying market microstructure. Fear, uncertainty, and doubt creep in left and right. The arguments are many. They throw shit at the wall until something sticks.
Burry's FUD
Most recently, the argument surrounds Ryan's incentive package, specifically tying it to the Ebay deal.
There is no question that Ryan is using the Ebay deal as a way to increase market capitalization and EBITDA. But is that really a selfish / bad thing. Dr. Burry, seems to think so. He talks about Ryan multiplying market cap and EBITDA while diluting shareholders, implying that this acquisition is good for him due to his incentives package and not due to the shares he owns... (See full post by Burry below)
The missing piece
This misses one key point about the incentives package. Ryan has to BUY the shares he is given at a price of $20.66 per share. That means that if the stock price doesnt go up, then he doesnt make money. He is NOT just given these shares.
Impacts of dilution
Combining the two entities, Gamestop and Ebay, will have some effect on GME share price, up or down. That has yet to be seen and likely has to do with the equity portion of the deal. But either way, Ryan's compensation package directly aligns him with us as shareholders. If this deal doesnt benefit stock price, then all his comp package does is allow him to buy more shares at the current price. If the price goes up however, he is compensated profiting the difference. If the price goes under $20.66, his comp package is worthless.
Dilution aside, Ryan's compensation package is not a gift. It is an opportunity for him to buy more GME at prices just below our current position. Good or bad, we as shareholders are beholden to share price. So is he. So is this comp package.
As always, Ryan has designed his incentive structure to align himself with us.
That is all. Have a good one!
u/jaywalkingjew — 2 months ago