![]() ![]() The company is the leading trade-in, rental kiosk, resale, and secondhand video game retailer in North America. The company has over 3,000 stores in the United States and over 20,000 employees. As the largest video game retailer, GameStop provides gamers with new and used video games, as well as video game accessories. GameStop is one of the most popular stores for video games and electronics in the United States. On the date of publication, Thomas Niel did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.Jump the Phone Queue for Any Company Get in Touch With GameStop Customer Service in No Time! Reach GameStop Customer Service Hassle-Free! ![]() The sum of these amounts could potentially produce a worthwhile total return.īut until GME stock gets near “cigar butt” prices, consider it best to keep staying away. Then by returning any additional positive cash flow to investors via dividends and share repurchases. If the company decides not to move out of a business that’s in terminal decline, at a low enough price, GME could be profitable as a “cigar butt” style investment.īetween now and when its business is no longer viable, GameStop could essentially liquidate itself.įirst, by distributing its $1.4 billion war chest as a special dividend. That was back when investors like Michael Burry, not meme traders on Reddit, were its biggest fans. If investors lose faith in the “digital transformation” bull case for GameStop, and shares tumble down to the single digits, GameStop could become the value stock it once was. Mostly, because a Blockbuster-esque “game over” moment is not necessarily inevitable. If GME gets back or near pre-meme prices, it could again become a buy. In fact, if investors concluding that putting GameStop’s e-commerce pivot on the back burner is bad for future growth, much as I have argued before, a move back to pre-meme prices could speed up. Shares have trend lower since the height of “meme stock mania” more than two years ago. However, additional temporary spikes will not take GME off a downward trajectory. This could have an outsized impact on not just GME, but other popular “ meme stocks” such as AMC Entertainment (NYSE: AMC). If there are positive macro developments, such as dovish statements from the Federal Reserve, “risk on” sentiment could again temporarily return to the market. For instance, another wave of “short squeeze mania” could help drive a brief, moderate spike in price. A similar take may become the majority view in the market.Īdmittedly, given how volatile GME stock can be, an unexpected near-term spike is not outside the realm of possibility. Second, while this plan works well in the near-term, it could turn GME into “ the next Blockbuster” (i.e. Some, such as myself, believed that this plan was bad news for the stock, in two ways.įirst, focusing on maximizing profits over growth (via “digital transformation”) called into question GameStop’s inflated valuation. However, this was not the view of everyone. To many, this renewed focus on profitability appeared to be something that could help sustain GME’s valuation and pave the way for a continued comeback. Namely, the disclosure of plans to put off the build-out of its e-commerce business in favor of maximizing the profitability of its legacy bricks-and-mortar retail business. Management’s updates to guidance also appeared to be positive for the future of GME stock. 31, 2022, the company reported net income of $48.2 million, a big swing from the $147.5 million net loss reported for Q4 2021. At the onset, it made sense why the market reacted positively to GameStop’s last quarterly earnings release. ![]()
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