which will force a share recall because borrowed shared need to be returned - and there are more shares borrowed than exists

Let's run through a scenario, because a lot of people seem to think this is gonna kill the shorts. Let me explain why it won't.

Theoretically, let's say I want to short 1,000 shares of GME at $120 per share, and you own those shares and want to lend them to me to short. You get a small interest rate for doing it. Let's look at how the math/accounting works:

Let's assume you have only 1,000 shares GME in your brokerage account, and I have only $120,000 cash in mine (anyone must have some cash in order to short).

Your account, both before and after my short --

• Stock: 1,000 GME long @ $120 = $120,000
• Cash: $0
• Total: $120,000

My account, before my short --

• Stock: $0
• Cash $120,000
• Total: $120,000

My account, after my short --

• Stock: -1,000 GME short @ $120 = -$120,000
• Cash: $240,000
• Total: $120,000

My cash went up because I sold stock (that I don't own), and added it to my cash account. At the same time, I borrowed 1,000 shares of GME, so I owe that back to you. Note: I do NOT owe you the cash; I owe you the shares, at whatever price they are when I buy them back to pay off my debt to you (this is how, as a short, I make or lose money).

Now ...

A stock split or a "stock split in the form of a dividend" happens.

Your 1,000 shares are now 4,000 shares, and the price that was $120 is now $30.

Your account --

• Stock: 4,000 GME long @ $30 = $120,000
• Cash: $0
• Total: $120,000

In my account, there are 2 possibilities. Either my short position is also split, or it is not.

If my position is also split, my account looks like this:

• Stock: -4,000 GME short @ $30 = -$120,000
• Cash: $240,000
• Total: $120,000

If my position is not split, my account looks like this:

• Stock: -1,000 GME short @ $30 = - $30,000
• Cash: $150,000 (broker took $90,000 out to account for the "extra" 3,000 shares @ $30, so $240,000 - $90,000 = $150,000)
• Total: $120,000

Note: I do NOT have to pay 3,000 shares at the OLD $120 price because the stock has already split. So, no real change.

The only real change would be that my short position has been diluted. But, there are now 4 times as many shares available to short.

I could short again.

Now, let's talk naked shorts.

How does it happen at all?

There must be someone who will lend shares that do not exist. Who could do that? A Wall Street investment banker/prime broker, such as Goldman Sachs, as an example.

I tell my prime broker, GS, that I want to short 1,000 shares GME. Goldman doesn't have the shares and can't find any, but they say, "Done!" anyway. I just naked shorted, and might not even know it. Only GS would really know.

GS would be "long" shares that do not exist, so they could lend them to me to short.

They are not legally allowed to do this, but they officially have 3 days to find those shares. If they cannot, they could theoretically enter into some side agreement with another Wall Street firm (maybe even one they own or control themselves), and the 2 companies could just trade positions back and forth forever.

Since GS makes MASSIVE profits from lending shares to short (regular or naked), they have plenty of funds to cover these positions for a long as they want. Plus, they can use much more leverage than anyone else can, other than the Federal Reserve. And because they are now also a bank, they can borrow directly from the Federal Reserve, which can just print money out of nothing (until they are taken down).

Back to the example, since GS does not really own those shares, they could be considered a "naked long." As such, they will not get the new stock from the split/dividend, because they are not official owners as of the ex-dividend date, based on the GME's stock ledger records.

Does GS care? I doubt it. Just like they created new shares to short from nothing, They will take the cash from my short position, as above, and use it to "retire" some of that position.

They will probably also buy and sell as a market maker and unwind their position, so it doesn't matter anyway.

Worst case scenario for GS, they use other funds to cover it, borrow from the FR, or get bailed out by their puppets in Congress.

Maybe GME management wants to squeeze the shorts, but I don't see it happening from a stock split. It doesn't change the game.

Besides, it's a bear market, and GS knows that. If it's a waiting game, time is on their side. They probably know what is REALLY going on at the New York Fed, which is where the money printing actually happens. This is why both GS and NYF people are ALWAYS in the White House administration. So, none of this stock splitting stuff will move the needle. It wont' change the game for GME.

Show us PROFITS for the company, and THAT could change the game. Until then, the shorts will not be too worried. This is all smoke and mirrors to cover for the fact that GME management cannot figure out how to turn a profit, IMO.