About five months ago, Dan Olson AKA @foldablehuman AKA Folding Ideas, posted a two-and-a-half hour video about the meme stock movement with the catchy title, "This Is Financial Advice." I won't try to recap the entire thing (although you should definitely watch it if you haven't), but I do want to draw attention to the portion about Bed Bath and Beyond's desperate last-ditch attempt to stay afloat: a financing arrangement known as "death spiral financing."
Very quickly, the arrangement involves a company with more debt than they can repay, not enough revenue to meet operating expenses, and no fat remaining to trim from their operation. This company, BBBY, accepted a financing deal from a private equity firm, with the understanding that they would release shares to the market in order to raise the funds needed to repay them.
The simple fact of such a deal is enough to drive down share prices on its own, and a flood of new shares will also depress the share value, which means that the number of shares needed to repay their PE financiers keeps increasing, in an ever-increasing spiral of share dilution and devaluation that ultimately failed to repay all of their debts, let alone raise enough money to continue operating.
BBBY was forced to file for bankruptcy, was de-listed from NYSE and NASDAQ, and no longer exists. And this was the model that immediately came to mind when I learned of Embracer Group's latest galaxy-brained plan to save themselves from a very similar situation, using a very similar-sounding financing scheme.