Hertz, the original meme stock, is turning out to be worthless • Hacker News Board

Re: Hertz, the original meme stock, is turning out to be worthless

#301

Post by UncleMeat » Wed, Mar 10, 2021, 12:29 PM UTC

Judgmentality wrote: post #116

candybar wrote: post #113

Earlier quoted context omitted.

What in particular do they hate about twitch and what type of streamers are they? (top, emerging, casual, etc). I too hear a lot of complaints about Twitch too but I feel that most of them have nothing to do with the product, but the zero-sum and competitive nature of gaming streaming. It's just difficult to succeed as a gaming streamer (or content creator more generally) and the vast majority of people who try will…

> What in particular do they hate about twitch and what type of streamers are they? (top, emerging, casual, etc). Everything and everyone. Seriously, even the people making literally millions on twitch hate the DMCA takedowns, the completely capricious bans, the ridiculous barrage of forced ads which twitch has straight up lied about, the fact that Amazon streamed anti-union ads on twitch and then pretended it was an…

> even the people making literally millions on twitch hate the DMCA takedowns, the completely capricious bans, the ridiculous barrage of forced ads which twitch has straight up lied about, the fact that Amazon streamed anti-union ads on twitch and then pretended it was an accident, the fact that titty streamers get special priveleges..

Why would GameStop not do these things? They wouldn't be immune to copyright problems. They'd surely need to implement automated ban systems. They'd surely need to advertise. They'd surely want to make money on "titty streamers".

Re: Hertz, the original meme stock, is turning out to be worthless

#302

Post by rsynnott » Wed, Mar 10, 2021, 12:58 PM UTC

chii wrote: post #295

rsynnott wrote: post #130

Earlier quoted context omitted.

> There are many things I dislike about Tesla. But I genuinely believe they are responsible for bringing EVs to market ~3 years before it would have happened without them. This feels vaguely ahistorical. The best-selling electric car platform in Europe today is the Renault Z-E platform (or at least it was; VW may have overtaken by now). That platform was announced in 2009 or so, with the first cars in 2011, and the f…

And the nokia phones were much more popular, before apple made the iphone. The disruptive product doesn't have to be the first.

I don't see how that works as an analogy _at all_. The iPhone lead to a complete change in what a phone _was_, with the Nokia view of a phone (and even of a smartphone) fading out.

By contrast, a Leaf or Zoe that you buy today is just a better version of the Leaf or Zoe you could have bought before the Model S came out.

Re: Hertz, the original meme stock, is turning out to be worthless

#303

Post by gpapilion » Wed, Mar 10, 2021, 1:19 PM UTC

vkou wrote: post #189

brandmeyer wrote: post #78

Hol' up. While in bankruptcy, some fools ran up the price of Hertz stock. Then, while the price was up in the middle of bankruptcy proceedings , Hertz sold some new shares to the same fools. The final result of the bankruptcy wiped out all of the shareholders. While the buyers were obviously fools, Hertz should have known that zero shareholder value was a likely outcome. How was selling more stock in that situation l…

> How was selling more stock in that situation legal? Why should it not be? Consider the following situation: 1. Alice owns 5 shares of Hertz. 2. Hertz owns 5 shares of Hertz. 3. Bob is an ape. For some stupid reason, Bob wants to buy 5 shares of Hertz. Is it immoral or illegal for Alice to sell her 5 shares to Bob? If not, why should it be immoral or illegal for Hertz to do so? Especially if they are up front about…

The key difference is Hertz created the five shares out of thin air. So Alice now has a diluted position.

Re: Hertz, the original meme stock, is turning out to be worthless

#304

Post by lotsofpulp » Wed, Mar 10, 2021, 1:22 PM UTC

TomSwirly wrote: post #160

lotsofpulp wrote: post #95

Earlier quoted context omitted.

> Looks to me like the executives saw an opportunity to part some people from their money and took it. AKA business. > That's wildly different from issuing new shares when you have inside information which prices them at zero. That’s wildly different from Hertz’s bankruptcy being public information. If people want to gamble on unlikely outcomes, that’s their business.

Selling something that you know will end up worthless because you know suckers will buy it is wrong. It's morally and ethically theft. Gross, filthy, self-conscious theft. The fact that people just laugh and say, "That's business!" is an indication of how morally bankrupt the business world is.

> Selling something that you know will end up worthless because you know suckers will buy it is wrong.

This is a discussion about informed buyers who want to gamble on minute probabilities, not suckers.

Re: Hertz, the original meme stock, is turning out to be worthless

#305

Post by cwhiz » Wed, Mar 10, 2021, 1:46 PM UTC

chii wrote: post #293

cwhiz wrote: post #263

Earlier quoted context omitted.

>Cynical because it doesn't acknowledge the value that a well functioning and regulated financial system can create. You don’t need gambling to have a well functioning financial system. The price of goods at Walmart is not based on what uninterested bettors think the price should. It’s just based on supply and demand. We don’t need gambling to have a functioning financial market.

The reason walmart's prices are stable is _because_ of the gambling of the market! The financial engineering of modern day has managed to separate risk (which is what causes price fluctuations) from their underlying commodity/goods/etc, and sell that risk away to people who want to take it. This allows those who want to not have risk (and thus stable prices) to have it - albeit yes, they pay a small premium for that.…

Nonsense. We had stable prices before the gambling functions were possible. The gambling functions of the market add nothing of value, and produce no economic output.

Re: Hertz, the original meme stock, is turning out to be worthless

#306

Post by sterlinm » Wed, Mar 10, 2021, 2:16 PM UTC

dragontamer wrote: post #180

thaumasiotes wrote: post #176

Earlier quoted context omitted.

What I don't understand is that Hertz specifically wanted to sell an amount of shares that wouldn't raise enough money to pay off their debts. Their prospectus noted that shares sold would automatically become worthless unless their debt was paid off , which they didn't anticipate. But why not try? What if they sold so much stock that the bondholders could just be paid back? Why do the stock sale specifically plannin…

Many would suggest that such an action you propose is fundamentally immoral. Lets say a hypothetical company is overall $-4 Billion in debt (total assets - liabilities). You successfully raise $5 Billion from some means. Now you're in a position where you sold $5 Billion worth of shares on a company that (by all fair evaluations) is only worth $1 Billion after the capital raise.

I'm going to start by saying that I pretty much agree with you that it's immoral to knowingly screw people over.

Now with that out of the way, I think there's more of a gray area here than you might think. While there are many situations where people enter into a transaction with the belief that it's a win-win for everybody involved, I think there are legitimate situations where you can trade with people ethically while also believing that the other person is making a huge mistake.

Bitcoin is a pretty great example of this. Suppose I'd been gifted a bitcoin in December of 2017. That was right around the peak of a huge rally for Bitcoin. If I'd sold it to someone for $15k I would have thought that the person buying it from me was an idiot. They may have thought the same of me. As long as we were honest with one another, that seems okay to me.

The situation with Hertz was just kind of weird. It's as though I was taking out the trash one day and someone walked up to me and offered me $1000 for my trash. I don't really have any strong moral intuitions about whether taking their money is okay because it's such a goofy and unexpected thing to do.

Re: Hertz, the original meme stock, is turning out to be worthless

#307

Post by ineedasername » Wed, Mar 10, 2021, 2:17 PM UTC

dragontamer wrote: post #266

ineedasername wrote: post #228

Earlier quoted context omitted.

Plenty of companies are valued at more than 5x their assets. Tesla for example is valued at more than 10x their assets. Besides, immorality doesn't really enter into it. The SEC requires public filings to ensure investors can make informed decisions. The rest is up to the investor who presumably would be betting that the company's prospects will increase, at least partly as a result of avoiding bankruptcy an having e…

A more logical option is to wait for Hertz to inevitably go bankrupt, and THEN invest $5 billion into them. Under no circumstances is it better for the new investors to pay billions before the bankruptcy.

If you mean waiting until the bankruptcy proceedings are over, then waiting isn't always necessary. Lots of investors make high risk investments to companies in bankruptcy with bridge funds to carry them through the process.

The "under no circumstances" clause is not necessarily the case. If it's a large enough company and investors can get their investments to be senior debt, then it can be a reasonable, if still high risk investment. If the bankruptcy occurs, they'll be first in line to get paid out of the remaining assets, even if they don't get everything back. If it doesn't occur, they've got a nice high yield bond. Basically there are ways for investors to make money investing in a company at any point, if done the right way. And probably equally many, or more, ways to lose money.

In the case of Hertz? Yeah, buying their stock when it went meme doesn't look like a very smart move right now. Of course the bankruptcy plan might be amended to slow redemption of old stock into new stock post-bankruptcy, but I'd say that's success by pure luck rather than anything else.

Re: Hertz, the original meme stock, is turning out to be worthless

#308

Post by sterlinm » Wed, Mar 10, 2021, 2:19 PM UTC

dragontamer wrote: post #180

thaumasiotes wrote: post #176

Earlier quoted context omitted.

What I don't understand is that Hertz specifically wanted to sell an amount of shares that wouldn't raise enough money to pay off their debts. Their prospectus noted that shares sold would automatically become worthless unless their debt was paid off , which they didn't anticipate. But why not try? What if they sold so much stock that the bondholders could just be paid back? Why do the stock sale specifically plannin…

Many would suggest that such an action you propose is fundamentally immoral. Lets say a hypothetical company is overall $-4 Billion in debt (total assets - liabilities). You successfully raise $5 Billion from some means. Now you're in a position where you sold $5 Billion worth of shares on a company that (by all fair evaluations) is only worth $1 Billion after the capital raise.

I'm also reminded of the time Stuart Butterfield explained why he felt compelled to sell shares of Slack at the generous valuations and terms people were offering to him.

> It’s pretty straightforward. I’ve been in this industry for 20 years. This is the best time to raise money ever. It might be the best time for any kind of business in any industry to raise money for all of history, like since the time of the ancient Egyptians. It’s certainly the best time for late-stage start-ups to raise money from venture capitalists since this dynamic has been around.

> And as a board member and a C.E.O., I have a responsibility to our employees, to our customers. And as a fiduciary, I think it would be almost imprudent for me not to accept $160 million bucks for 5-ish percent of the company when it’s offered on favorable terms.

Re: Hertz, the original meme stock, is turning out to be worthless

#309

Post by perardi » Wed, Mar 10, 2021, 2:39 PM UTC

ex3ndr wrote: post #290

perardi wrote: post #68

Earlier quoted context omitted.

OK, what does that even mean? They are a physical store that sells physical games. Physical stores are in dire straits. Some new game consoles don’t even use physical games , namely the base PlayStation and Xbox. What do you even transform into? A dedicated amiibo shop? The future is pretty obviously download-only for games.

Just random though - turn them to a gaming cafe. I could see how from time to time I will join with my friends to play something old school way. For younger it is also cool - escape parents home.

Not a bad idea.

Though, N=1, malls have pivoted (sorry) into that sort of live event space mode. When I was visiting family, the local mall had replaced a former anchor store with a really quite nice arcade.

Re: Hertz, the original meme stock, is turning out to be worthless

#310

Post by dragontamer » Wed, Mar 10, 2021, 2:50 PM UTC

nextaccountic wrote: post #287

dragontamer wrote: post #155

Earlier quoted context omitted.

> How was selling more stock in that situation legal? They asked the bankruptcy court, and the bankruptcy court's job is to maximize value for the bondholders. Turns out that selling worthless stock (for money) is really good for the bankruptcy proceedings (getting maybe 70% of the money back instead of 60%). Then the SEC came in (whose job is to protect retail investors), and the SEC told them to knock-it-off. Diffe…

> They asked the bankruptcy court, and the bankruptcy court's job is to maximize value for the bondholders. Perhaps the court can do this without violating the law? This is fraud.

That's not the bankruptcy court's job. That's the SEC's job.

Ever heard of the phrase "you cannot have two masters" ?? By splitting the job into two organizations, we ensure that both jobs are accomplished. Otherwise, only one job gets done (at the expense of the other).