When the price is, let's say, 10k or more, then the poor sod having a short position now has a really huge problem. And the WSB people are attempting to do force exactly this - basically, a distributed game of chicken at a world-wide scale with many billions of dollars at stake.
> The company can create stock and sell it if the current holders don't.
That process takes time to set up and exposes the company doing this to image and legal liability - if enough people shout "market manipulation" and file lawsuits, something may stick in the end. Gamestop, AMC etc. will avoid such a drastic step, I believe. Also, there's a side risk of stochastic terrorism in that case, aka one person gambling their life savings away and now going on a "revenge", which is not to be underestimated given how riled up the situation is.
Hertz was within a day of issuing more shares before the SEC told them to fuck off because it was bankrupt and the prospectus was literally “you will likely lose all of your money immediately”.
GameStop has had enough time to do an additional offering. It can happen in a couple of days.
> Hertz was within a day of issuing more shares before the SEC told them to fuck off
Your timing is off, Hertz was selling shares in the morning, and stopped when SEC called them. They stopped selling promptly, but not before "Hertz Global issued 13,912,368 shares under the ATM Program for net proceeds of approximately $29 million"
Their boards authorize it. It takes a phone call to have a board meeting. A company could do a board meeting by tweeting each other if they wanted. Filing that a private placement (to the short holders) has occurred is followup paperwork. A company that gets immensely overvalued is doing their shareholders a disservice by not capturing that valuation.
The articles of incorporation dictate what a company needs to do to issue shares. GameStop, for example, requires a vote of the majority of voting shares (of which there are 50 billion votes among the preferred shareholders and 300 million votes among the common shareholders).
That said GameStop is authorized for 300 million common shares and there are only 70 million outstanding according to this table so if their corporate treasury has been at all competent they might be sitting on a huge pile of cash right now.
Having a high stock price does altogether nothing for the company if they can't sell stock. Similarly, having a low stock price doesn't bankrupt a company.
Low stock price wont make a company bankrupt, agree.
But if in the process of doing so, you stole value from your own 19yr old stockholders.... then its pretty certain you just painted a bulleye on you. And... They are also your targer demographic customer base. Woops! Lets see how quickly your revenues dip to $0 after that.
If you have $0 revenue you dont have a business. Period.
It's GameStop... They already have garbage revenue. They don't have a business. They're failing. Hence the short. Issuing shares while the stock price is high is not only an everyday business move but it's also the correct thing for them to do here. AMC has already done it.
