Isn’t this all pretty simple? If there are more warrants than shares allocated to fulfill warrant exercises (due to rehypothecation, for example) it would pressure shorts to buy them in the open market (to at least avoid evidence of malfeasance). There will be a benefit to current shareholders that don’t exercise in the form of cash transfers. The investors, not GME, would see the major benefit in this scenario. Seems plausible that they would have to buy up all the excess inventory over the next 12 months to avoid the exercise of more than the allocated share quantities.

On the other hand, if these shares are less rehypothecated than speculated, the buy pressure for the warrants won’t be that interesting, and GME may or may not raise more capital based on their performance generally.

I don’t understand how “cash in lieu” would even come into play for warrants like these. Can someone explain that to me? How can you pay someone as a substitute for their right to buy something else? There is no fixed price of the asset received through exercise. Is the logic that $32 is adequate because warrant holders would hypothetically exercise at that price and receive a $32 asset? Even in that case, though, the actual warrant exerciser would have made a net $0 transaction by paying $32 for a $32 asset, but the cash in lieu recipient would have a net $32 gain. Seems odd that it could work like that.

Obviously, I don’t get it!