GME - Game Stop Corp

[RadMan24]

Q3 earning look quite bad, no real surprises there.

 

I am not impressed by the +16.5% November comps as trivially easy to drive traffic due to (a) the start of the new console cycle, (b) GME making it known that each store would have at least a few new consoles in stock on Black Friday, and © this year's Call of Duty launching in Nov instead of Oct.

 

December could also be strong if Cyberpunk 2077 becomes this year's Red Dead Redemption 2.

 

Management is smart to want to sell stock into the market. The stock is overvalued and the company could definitely use more cash.

 

I was briefly short this when it spiked to $19 late last month. Maybe I will get another bite at the apple?

 

Short if you want. But keep in mind, the console sales have been limited due to supply chain disruptions, those will abate in the Spring. Further, a lot more people are playing video games on consoles and folks will be buying the new generation hands over fists for the foreseeable future. The long term impact of this will be hugely positive for GME, unless we say a high uptake in the digital only consoles. 

 

5xEBITDA mentioned this, but I still don't quite see the bull case, but shorting this stock offers very little reward, high risk, and high stress. We've seen it all this year.

 

The other thing, GME has resources to adapt. Prior management failed, but that's not to say this one will too.

 

I don't mean for this to come off as insulting or dismissive, but everything you mention is very superficial. You need look at what kinds of gross margins GME earns on the different categories of items it sells.

 

You should also look at how quickly digital software sales are gaining share on console. A good place to start would be the comments Strauss Zelnick made just two or three days ago, as well as EA's most recent earnings call.

 

Ah yes, how superficial! I think everyone knows new consoles are low margin, new game sales are about double, accessories are about double new game margins, and used games margins are around 40-50%. Who cares what EA says? Anyone paying attention knows that TakeTwo, Epic, Activision/Blizzard are crushing it and that's where the money is. The funny thing is Red Dead Redemption is no where near as popular as GTA5.  Cyberpunk 2077? Man, when you have a game that takes 8 years to make, it ends up being like Last of Us Part II - its a good game, but its probably got too much hype and falls back to earth real quick.

[deleuze68]

WSB has done it. 5 year high. Remember when this company was pivoting into collectables?

[thepupil]

to be short the stock or long the bonds makes little sense to me. they are both short volatility positions in an fundamental situation of extreme volatility (collapsing sales and share count).

 

I think the above still applies (with the twist that sharecount is now growing)

 

there are 67mm shares short, there are 69mm shares, maybe they raise 8mm more. nevertheless, the fact that a very large percentage of shares is short, in my view, is reason enough to avoid shorting this. the 10's of 2023 only yield 8% which is not enough to lend to GME.

 

in this market, basically anything that's very risky to short, one should go long. I haven't really done this in size as I'm allergic to making money.

 

 

[Foreign Tuffett]

to be short the stock or long the bonds makes little sense to me. they are both short volatility positions in an fundamental situation of extreme volatility (collapsing sales and share count).

 

I think the above still applies (with the twist that sharecount is now growing)

 

there are 67mm shares short, there are 69mm shares, maybe they raise 8mm more. nevertheless, the fact that a very large percentage of shares is short, in my view, is reason enough to avoid shorting this. the 10's of 2023 only yield 8% which is not enough to lend to GME.

 

in this market, basically anything that's very risky to short, one should go long. I haven't really done this in size as I'm allergic to making money.

 

Yeah, just a mega short squeeze today. This is a fascinating situation in which longs are wrong on the fundamentals, but the shorts are wrong on the trading dynamics. At times today -- including as I post this -- there have been zero shares available to borrow on IB.

[Pauly]

This guy's having a hell of a day:

 

https://www.reddit.com/user/DeepFuckingValue/

 

 

[lnofeisone]

to be short the stock or long the bonds makes little sense to me. they are both short volatility positions in an fundamental situation of extreme volatility (collapsing sales and share count).

 

I think the above still applies (with the twist that sharecount is now growing)

 

there are 67mm shares short, there are 69mm shares, maybe they raise 8mm more. nevertheless, the fact that a very large percentage of shares is short, in my view, is reason enough to avoid shorting this. the 10's of 2023 only yield 8% which is not enough to lend to GME.

 

in this market, basically anything that's very risky to short, one should go long. I haven't really done this in size as I'm allergic to making money.

 

Yeah, just a mega short squeeze today. This is a fascinating situation in which longs are wrong on the fundamentals, but the shorts are wrong on the trading dynamics. At times today -- including as I post this -- there have been zero shares available to borrow on IB.

 

I was short here a few months back. Very glad I was sizing the short and walked away when I did. I still think fundamentals are terrible and this will be a good short at some point in the future.

[stahleyp]

This guy's having a hell of a day:

 

https://www.reddit.com/user/DeepFuckingValue/

 

This was posted on the 11th...man, pretty ballsy but good for him. Pretty cool seeing his updates.

[Pauly]

Whatever meme stock he posts about next, every WSB 'autist' is going to pile into.

 

This guy's having a hell of a day:

 

https://www.reddit.com/user/DeepFuckingValue/

 

This was posted on the 11th...man, pretty ballsy but good for him. Pretty cool seeing his updates.

[Pelagic]

I've been following this on WSB and it's as entertaining as anything else out there. But for a company that is trying to shift itself toward online sales and become less dependent on its retail stores, its website looks like the web equivalent of a Gamestop from the '00s. It's like they took the small retail footprint and said we want this, but online.

 

As a lifelong gamer I think I've been into a Gamestop store twice and really see no reason to go to one or buy a physical game copy in the near future. Sure it's possible GME might have the best price on an accessory I want to buy and I wouldn't hesitate to buy from them online if that were the case but it seems like a tough way to make money given the competition. 

 

Honestly I'm surprised Gamestop hasn't capitalized on eSports more. Online gaming is broadly speaking local due to matchmaking processes factoring in ping to host servers. Gamestop has hundreds of locations scattered around the country, it seems like a low hanging fruit for them to organize local tournaments through their physical locations. Entry fees, sponsorships, additional foot traffic to the store, wins all around. Could easily see them developing quality local amateur tournaments that have the potential for progression.

 

 

[kab60]

Is anyone playing this game? Looking into WSB, and it seems like people are getting ready to pile into GME again. Clearly, this has nothing to do with fundamentals, but it's a very really real phenomenon - which probably lasts until it doesn't. Anyone along for the ride?

 

I like to buy good businesses on the cheap, but it's also pretty clear that there's a ton of money being made in these situations.

[TwoCitiesCapital]

Is anyone playing this game? Looking into WSB, and it seems like people are getting ready to pile into GME again. Clearly, this has nothing to do with fundamentals, but it's a very really real phenomenon - which probably lasts until it doesn't. Anyone along for the ride?

 

I like to buy good businesses on the cheap, but it's also pretty clear that there's a ton of money being made in these situations.

 

If you can time it right, there's probably more money to be made on the downside as opposed to trying to ride the wave higher. I've begun watching this myself.

[BG2008]

Is anyone playing this game? Looking into WSB, and it seems like people are getting ready to pile into GME again. Clearly, this has nothing to do with fundamentals, but it's a very really real phenomenon - which probably lasts until it doesn't. Anyone along for the ride?

 

I like to buy good businesses on the cheap, but it's also pretty clear that there's a ton of money being made in these situations.

 

Can someone here pony up $299 and ask Carole Baskins to make a cameo appearance for INDT (formerly GRIF)?  I'll chip in $1

[lnofeisone]

Is anyone playing this game? Looking into WSB, and it seems like people are getting ready to pile into GME again. Clearly, this has nothing to do with fundamentals, but it's a very really real phenomenon - which probably lasts until it doesn't. Anyone along for the ride?

 

I like to buy good businesses on the cheap, but it's also pretty clear that there's a ton of money being made in these situations.

 

If you can time it right, there's probably more money to be made on the downside as opposed to trying to ride the wave higher. I've begun watching this myself.

 

Puts here have such insane IV. I'm figuring out how to short vol without getting crushed. Weekly 40 strangles are trading at $14...

[Patmo]

Very cool dynamic but hard to play for a guy like me. I mean, we all know where this is going long term but in the near term nothing in this "special situation" screams easy money. Seems like whoever ends up winner is the guy who rolled the better dice.

 

Didn't Michael Burry's fund have a long position in this a year or 2 back? Wonder if they held on.

[kab60]

Still had a large stake per his last 13-F.

[Patmo]

I've been following this on WSB and it's as entertaining as anything else out there. But for a company that is trying to shift itself toward online sales and become less dependent on its retail stores, its website looks like the web equivalent of a Gamestop from the '00s. It's like they took the small retail footprint and said we want this, but online.

 

As a lifelong gamer I think I've been into a Gamestop store twice and really see no reason to go to one or buy a physical game copy in the near future. Sure it's possible GME might have the best price on an accessory I want to buy and I wouldn't hesitate to buy from them online if that were the case but it seems like a tough way to make money given the competition. 

 

Honestly I'm surprised Gamestop hasn't capitalized on eSports more. Online gaming is broadly speaking local due to matchmaking processes factoring in ping to host servers. Gamestop has hundreds of locations scattered around the country, it seems like a low hanging fruit for them to organize local tournaments through their physical locations. Entry fees, sponsorships, additional foot traffic to the store, wins all around. Could easily see them developing quality local amateur tournaments that have the potential for progression.

 

Local tournies are tough. You're competing with online matchmaking/tournies/leagues which are more prestigious and much higher competing population, never mind that they're usually free, occasionally low cost like ESEA. It doesn't help that NA is relatively spread out AND while gaming is super popular, esports generally lags behind especially compared to Asia or Europe.

 

Tournies are hard to execute from a technical standpoint, local turnout is very low and spectatorship nonexistant. These tournies are usually labors of love. It's not too dissimilar to LAN centers which didn't work out as a business in NA. And to make things worse, there are already established TO's that would likely throw their hat in the ring if local level events were meaningfully profitable.

 

Gamestop is not really the guy I see entering the esports space successfully. They don't even have real gaming industry experience like actual gaming companies would, in my opinion it's really a run of the mill retail/used sales business, there was already a used car lot down the street so they chose to trade games. I've competed/practiced/played games for maybe 100k hours of my life (not even kidding but that's another issue lol...) and I never walked into a gamestop once, not ever. That gives you an idea of their footprint in gaming, never mind esports.

[Foreign Tuffett]

Citron going public with a short case today.

 

https://twitter.com/CitronResearch/status/1351544479547760642

[Pelagic]

I've been following this on WSB and it's as entertaining as anything else out there. But for a company that is trying to shift itself toward online sales and become less dependent on its retail stores, its website looks like the web equivalent of a Gamestop from the '00s. It's like they took the small retail footprint and said we want this, but online.

 

As a lifelong gamer I think I've been into a Gamestop store twice and really see no reason to go to one or buy a physical game copy in the near future. Sure it's possible GME might have the best price on an accessory I want to buy and I wouldn't hesitate to buy from them online if that were the case but it seems like a tough way to make money given the competition. 

 

Honestly I'm surprised Gamestop hasn't capitalized on eSports more. Online gaming is broadly speaking local due to matchmaking processes factoring in ping to host servers. Gamestop has hundreds of locations scattered around the country, it seems like a low hanging fruit for them to organize local tournaments through their physical locations. Entry fees, sponsorships, additional foot traffic to the store, wins all around. Could easily see them developing quality local amateur tournaments that have the potential for progression.

 

Local tournies are tough. You're competing with online matchmaking/tournies/leagues which are more prestigious and much higher competing population, never mind that they're usually free, occasionally low cost like ESEA. It doesn't help that NA is relatively spread out AND while gaming is super popular, esports generally lags behind especially compared to Asia or Europe.

 

Tournies are hard to execute from a technical standpoint, local turnout is very low and spectatorship nonexistant. These tournies are usually labors of love. It's not too dissimilar to LAN centers which didn't work out as a business in NA. And to make things worse, there are already established TO's that would likely throw their hat in the ring if local level events were meaningfully profitable.

 

Gamestop is not really the guy I see entering the esports space successfully. They don't even have real gaming industry experience like actual gaming companies would, in my opinion it's really a run of the mill retail/used sales business, there was already a used car lot down the street so they chose to trade games. I've competed/practiced/played games for maybe 100k hours of my life (not even kidding but that's another issue lol...) and I never walked into a gamestop once, not ever. That gives you an idea of their footprint in gaming, never mind esports.

 

All valid points. I still think there's a place for tournaments that answer who's the best Fortnite/CoD player in the neighborhood/highschool etc. And GME has the physical footprint to make it happen or just license the rights to it to someone else. Golfers like watching the PGA tour, they also like playing in tournaments at their local club. Gamers are a huge subset of the population and there has to be a higher margin business that can capitalize on GME's existing real estate than just selling used games and accessories.

 

I see they're rolling out a build your own PC kiosk, maybe that will get me into a store if one near me has it.

[stahleyp]

Whhhhhhhat?

 

On multiple sources I'm seeing $70+??????

[Spekulatius]

Whhhhhhhat?

 

On multiple sources I'm seeing $70+??????

Citron messed with the wrong people.

 

Edit - PLTR is also up ~15% today.

 

Meme investing beats value investing.

[Jurgis]

Whhhhhhhat?

 

On multiple sources I'm seeing $70+??????

Citron messed with the wrong people.

 

Edit - PLTR is also up ~15% today.

 

Meme investing beats value investing.

 

We are Borg, we're men in tights. You killed our stonk, prepare to die!

[Castanza]

Whhhhhhhat?

 

On multiple sources I'm seeing $70+??????

Citron messed with the wrong people.

 

Edit - PLTR is also up ~15% today.

 

Meme investing beats value investing.

 

Pure insanity....Does Burry still hold a position in this?

[MattR]

Whhhhhhhat?

 

On multiple sources I'm seeing $70+??????

Citron messed with the wrong people.

 

Edit - PLTR is also up ~15% today.

 

Meme investing beats value investing.

 

Pure insanity....Does Burry still hold a position in this?

In Q3 2020 he still had 1.7 Million shares which is estimated to be at 10.2$ pricepoint. He reduced it by 38% in Q3, so maybe he completly sold out before the frenzy

[Longnose]

Meme investing beats value investing.

 

Only if you are into gambling. No margin of safety and no way to value a meme.

 

I will say I looked really hard at GME and TLRD when they first showed up on Burrys 13f last year. I almost pulled the trigger to follow him on GME but didn't feel like the MOS at the time was great enough. I'm ok that I sat this one out but it is quite a show to watch! Also glad I dodged his losses on TLRD. GME should put him back in the black though.

[Read the Footnotes]

Only if you are into gambling. No margin of safety and no way to value a meme.

 

I will say I looked really hard at GME and TLRD when they first showed up on Burrys 13f last year. I almost pulled the trigger to follow him on GME but didn't feel like the MOS at the time was great enough. I'm ok that I sat this one out but it is quite a show to watch! Also glad I dodged his losses on TLRD. GME should put him back in the black though.

Agree. Seems like a stupid game that no one is forced to play.

 

I think I will stick to something where the fundamentals are much more understandable, and the market more rational, Like ARKK. Plus since it's a diversified fund, and the companies are changing the world, I can't lose money.

;)