TLDR:

  • When GameStop quarterly report says retails DRS’d 75.4M shares, in reality retails could have already DRS’d up to 105.77M.
  • Retails might need to DRS between 305.51 - 429.7m shares to lock the float depends on how many DSPP shares are held by DTCC.
  • If everyone terminates DirectStock, GameStop official number will be the same as retails DRS’d number.

Direct registering the shares they own under their name through the transfer agent has become a trend among GameStop retail investors. They are doing this because they think if they lock the float, the short hedge fund won’t be able to locate the stock to short it, hence the stock price would go up.

They might think that if the number of shares DRS’d exceeds the float (305,514,315), GameStop would be able to declare the float has been locked and they would win the race, but unfortunately, that might not be the case because they might need to DRS more than the float if some of them have enrolled DirectStock plan.

The Reality

The reason is that not all of retail investors DRS’d shares will be counted in the GameStop’s quarterly reports.

If user has enrolled in Computershare’s DirectStock plan, their shares will become DSPP shares which could be held by DTCC. If Computershare decided to move these shares into DTCC for operational efficiency, these shares won’t be counted into GameStop report.

In essence, GameStop Report Retail Number = DRS + ( DSPP - shares for operational efficiency).

At the moment, GameStop reported 75.4M direct registered shares, if 29% of all DRS sahres become DSPP, retail investor could have already DRS’d 75.4 - 105.8M shares depends on how many DSPP shares moved to DTCC.

So how many shares do GameStop retail investors need to DRS in order for the company to declare the float being locked?

The answer depends on two factors:

  • The percentage of all shares become DSPP.
  • The percentage of DSPP shares moved to DTCC.

Below are the chart to show how many actual retail DRS’d shares at different DSPP rates when GameStop report 75.4m:

  • ~ ~ ~ X-axis: Actual Retail Drs Shares Number (million) ~ ~ ~

  • ~ ~ ~ Y-axis: Percentage of DSPP shares moved to DTCC for Operational Efficiency ~ ~ ~

So when GameStop published quarterly report on Nov. 30, 2023, retail investors could have already DRS’d 105.77M if 29% of all their shares enrolled into DireckStock plan.

Why the discrepancy between two numbers and how it happened?

Let’s check the language changed over multiple quarters in GameStop’s reports:

  • ~ ~ ~ 2022-10-29 ~ ~ ~

  • ~ ~ ~ 2023-03-22 ~ ~ ~

  • ~ ~ ~ 2023-11-30 ~ ~ ~

  • ~ ~ ~ Highlights of language changes ( credit to 6days1week ) ~ ~ ~

From the latest quarterly report, GameStop indicated that 230.1 million shares were held by Cede & Co on behalf of the DTCC, while the rest (approximately 75.4m) were held by registered holders.

But here is the caveat: a portion of retail’s registered DSPP shares are “held by Cede” too.

Is it true that a portion of registered DSPP shares are “held by Cede”?

In the short interview below Paul Conn – a President at Computershare – says directly that 10-20% of plan shares are kept with DTC for operational efficiency. ( right click to open the video in new tab )

watch

In addition, below you can find information from Computershare FAQ:

Computershare holds a portion of the aggregate DSPP book-entry shares via its broker in DTC for operational efficiency, i.e. to enable any sales to be settled efficiently (and Computershare determines the portion needed for operational efficiency reasons. Such shares are not available for lending. These shares are eligible to be withdrawn from DTC).

How many registered shares were enrolled in DSPP?

It isn’t public information.

A group of individuals from DRSGME.org travelled to GameStop HQ at Grapevine in June 2023, below is what they found:

  • ~ ~ ~ In June 2023, 28.9% of all registered shares were enrolled in DSPP (credit to lawsondt) ~ ~ ~

So How Many Shares Do GameStop Retail Investors need to DRS In Order For the Company to Declare The Float Has Been Locked?

As of Nov 30,2023, GameStop share outstanding is 305,514,315. If the percentage of all registered shares enrolled in DSPP keeps tha same at 28.9%, in order to lock the float retail investors need to DRS:

  • ~ ~ ~ As it shows, the number is between 305.51 - 429.7 million depends on how many DSPP held by DTCC~ ~ ~

If all of retail investors terminate enrollment in DirectStock, then they only need to DRS the float(305m) to lock the float.

How to determine if individual’s DRS’d shares are DSPP?

(from Computershare website:)

“Book” and “Plan” shares in accounts that are enrolled in DirectStock plan (all of which are book-entry because both are electronic) are not DRS. DirectStock accounts are either all DSPP shares, or all shares are out of the plan where they are DRS:

  • DRS : shares held via the Direct Registration System (DRS)
  • DSPP: shares held in book-entry via a Direct Stock Purchase Plan

If any of below is presented in Computershare account, all the DRS’d shares automatically become DSPP:

  • enrolled in DirectStock plan.
  • have plan shares.
  • have DRIP enabled.
  • have a limit sell set.
  • have fractional shares.

How to Terminate enrollment in DirectStock?

  • follow the guide here.