So I bought some Gamestop(GME)

They’re set to have a big quarter with the launch of the Xbox x and the holiday season. They’ve already taken a pretty good bounce this year and I think a buck is to be made at the current prices.

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From someone who had Blockbuster at the end, good luck my friend.

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They may pivot like Amazon did.

People still like discs. I think it’s still another cycle before games go the way of Blockbuster. Look at the recent launch of PlayStation. Most preferred the disc at $100 more. People still like going to the game shop, looking and buying. And they like to wake up on a Saturday, decide they want a game and go get it. Game Exchange is always packed and their bread and butter is old/used stuff. Bricks and mortar is not quite dead in gaming. Similar to bicycle shops and gun stores. People that are into it just like going to the stores.

GameStop is trying to stay relevant and making the right moves by closing poor performing stores, investing in digital capabilities, and leveraging the loyalty program. They are also moving more into computer accessories. With so much short interest it won’t be hard to ride a squeeze to profits either.

I literally could not disagree more. GameStop either pivots to another business model or they will die. People love downloading games on the Xbox and not having to go to the store.

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You realize how rare that is, right? I certainly wouldn’t bet on any company to pull that off.

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Geez. I know GameStop is not going to be Amazon. It was based on the Chewy investor’s idea for the company. It’s 67 million shares short on 65 million shares. Of course I know how difficult that is to do. Netflix and Amazon are rare rare exceptions in this work. I do not think GameStop will be the next Amazon.

GameStop is my largest holding

The bull case is real. A turnaround is going to happen in the company very shortly, it’s already well within the process. Switching to primarily online, reducing retail to high value locations, paying down debt, changing their model to be a specialty retailer for gamers the same way as Chewy beat Amazon in pet supply. Those things are all currently happening. Now include that GameStop’s new deal with Microsoft gives them a share of all current and future revenue from every Xbox sold (including games downloaded from the Microsoft Store). GameStop is also generating a ton of cash flow, its cash value is worth a share price of $15 alone. It paid off $125M in debt last month before it was required to.

Now consider that Ryan Cohen, founder of Chewy, is a 10% owner in an activist position and is holding their feet to the fire to do a turn around quickly while the new console cycle is fresh. He’s already made a stake that he could force his way in more if the current management doesn’t speed things up. Other large investors include Michael Burry, the Big Short guy.

Adding to the bull case is the massive short interest. Short shares exceed total shares. Short shares are 3x the current float. A short squeeze is possible with the rest of the bull case. A Ryan Cohen attempted takeover of the company would result in a stockholder vote, which requires short shares to be returned. That in itself would trigger a massive short squeeze. There’s no comparison to the way that the short interest exceeds the total shares. And there are very few comparisons where the short shares have exceeded the float by so much, but in those few cases squeezes have been massive. That crook guy Martin Shkrelli started one and I believe the stock price 20x

There’s also a guy whos figured out how to project GME earnings based on their order numbers being sequential throughout the company, and his projections put the 4Q earnings as staggeringly larger than current estimates, about 2.5-3x

The bear case is also dead. GameStop is paying down debt rapidly, it’s heavily increasing its online presence, it’s getting long term revenue through Microsoft partnership, and it has some other high value revenue generators like its collectible toys that are crazy popular. The 55 million Power Up subscribers are a huge asset. Ryan Cohen’s activist stake and threats have also given legitimacy to GameStop competing with Amazon long term, since his company Chewy bested Amazon in pet supplies. Chewy is a good comparison to GameStop in a number of ways, similar revenue, similar client base. If GME traded at Chewy’s valuation it’d be $50 share price

I think I hit most of it but yea. GME has been nice to my account so far and I’m holding on

Edit: GameStop is also moving into PC and accessories sales, TV sales, etc. Plus brick and mortar is more successful in hardware sales for gaming. And I’m not saying GameStop is Amazon. I’m saying GameStop has the potential to beat Amazon in video game and accessories sales

Yes a turnaround of a company like this is crazy, but that’s the risk you take here. But everything I’m telling you is the evidence why the turnaround looks to be happening and could be successful

It’s up over 600% since the March/April lows. That’s a remarkable run that very, very few companies have had. Even Zoom and Peloton haven’t equaled that kind of run. How much more does it have to run?

It has a lot more to run, like I said cash value alone is $15 share price. We’re only slightly above that now. A comparable PE to something like Best Buy is $25-30. Comparable to Chewy is $50

Gamestop needs to pivot to esports/computer setups/internet optimization/specialty gaming.

Amazon is not my concern if I am a Gamestop shareholder. It's MSFT, Sony, Nintendo, Activision going straight to consumer. You have to make your services needed and right now its much easier to just download games directly to your console.

Hence why they need to shift to more services model / ancillary equipment.

Aren't all games going to be delivered online shortly?

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People love downloading games on the Xbox and not having to go to the store.

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I despise downloading games and updates.