Gaming the System: How GameStop Stock Surged 1,500% In Nine Months (arstechnica.com) 39
An anonymous reader quotes a report from Ars Technica: Nine months ago, GameStop stock bottomed out at $2.80 a share, a reflection of the myriad problems facing the retailer specifically and brick-and-mortar game retail as a whole. As of Tuesday morning, though, that stock price is hovering around $40 a share (peaking at $44.74 as of this writing), with the vast majority of those gains coming in the last couple of weeks.
Is GameStop really worth up to 16 times as much as it was back in April? Is the company's ambitious turnaround plan finally (and suddenly) turning things around? Is GameStop roaring its way back to the nearly $10 billion market cap it enjoyed at the height of the Wii phenomenon? Probably not. Analysts suggest the recent surge in GameStop's stock price is the result of a massive short squeeze bubble that will pop eventually. But beyond the sky-high valuations of recent weeks, analysts also suggest there's some reason to believe GameStop's long-term health is more robust than last year's stock doldrums suggest. Investor Ryan Cohen, best known as the founder of pet food superstore Chewy.com, bought in to a roughly 10 percent ownership stake in the retailer back in August. "Since August, Cohen has bought even more GameStop shares, and he and two former Chewy executives have been named to the company's board of directors," reports Ars. "That gives Cohen, along with fellow activist investors from Hestia, the potential capability to steer the company in a new direction."
"There's nothing wrong with GameStop," says Wedbush Morgan analyst Michael Pachter, who has a target price of $16 for GameStop stock. "I'm absolutely convinced they're going to thrive and survive. They don't have net debt, so they're not going bankrupt or anything. And with the new console launch, they're probably going to sell a lot of consoles and be fine." As long as there's demand for new and used physical games, there will be demand for GameStop, suggests Pachter.
Is GameStop really worth up to 16 times as much as it was back in April? Is the company's ambitious turnaround plan finally (and suddenly) turning things around? Is GameStop roaring its way back to the nearly $10 billion market cap it enjoyed at the height of the Wii phenomenon? Probably not. Analysts suggest the recent surge in GameStop's stock price is the result of a massive short squeeze bubble that will pop eventually. But beyond the sky-high valuations of recent weeks, analysts also suggest there's some reason to believe GameStop's long-term health is more robust than last year's stock doldrums suggest. Investor Ryan Cohen, best known as the founder of pet food superstore Chewy.com, bought in to a roughly 10 percent ownership stake in the retailer back in August. "Since August, Cohen has bought even more GameStop shares, and he and two former Chewy executives have been named to the company's board of directors," reports Ars. "That gives Cohen, along with fellow activist investors from Hestia, the potential capability to steer the company in a new direction."
"There's nothing wrong with GameStop," says Wedbush Morgan analyst Michael Pachter, who has a target price of $16 for GameStop stock. "I'm absolutely convinced they're going to thrive and survive. They don't have net debt, so they're not going bankrupt or anything. And with the new console launch, they're probably going to sell a lot of consoles and be fine." As long as there's demand for new and used physical games, there will be demand for GameStop, suggests Pachter.
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I heard (Score:4, Funny)
Somebody read in Forbes, "Video game sales are rocketing up to new heights",
But then! "Cyberpunk 2077 - Star AAA game developer falls flat on its face",
Hmm... where can I invest in "Games" but not one game?
G a m e s t o p
NTDOY (Score:3)
The other option is to buy NTDOY, which is both a publisher of games with consistent quality and a manufacturer of game consoles. Its closest competitors are Sony (SNE) and Microsoft (MSFT), both of which are heavily diluted with non-video-game lines of business, and Valve, which is privately held.
Re: NTDOY (Score:1)
Value investing is for suckers. Leveraged penny stocks are for investors with balls. Go for the kill.
Physical Games are Dead (Score:2)
Even if you go and buy the latest game on disc, the first thing you are forced to do is connect to the internet and update your system and the game with a huge download update. At that point you are better off buying game online and just downloading it and not having to swap disc between games.
They'd have to change a lot (Score:2)
Record shops are doing OK, but instead of shifting large numbers of units they're now specialty shops with knowledgeable staff. Judging by how poorly GameStop treated their staff during the start of the pandemic, I don't think they can expect much loyalty from their staff or their customers.
To survive in the coming years, they have to attract the superfans, collectors etc. instead of people who are stuck without decent broadband, because their number is only going to decline. That's quite the transition to
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It's working now, but I'm not convinced optical discs is a stable long term market. It's hard for an online shop to sell things on emotion, while the practical reasons for buying physical video games aren't going to last. For music, vinyl sells on emotion and digital streaming sells on convenience, but in between the two CDs aren't selling well at all.
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But did they go to the store to buy a game?
Wallstreetbets (Score:5, Informative)
It's a /r/wallstreetbets pump and dump operation.
The execs have now cashed out. Who knows how long the bag holders will keep this up before it crashes.
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It's a /r/wallstreetbets pump and dump operation.
The execs have now cashed out. Who knows how long the bag holders will keep this up before it crashes.
They'll wait until the majority of shorters have lost their $$$
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Who knows how long the bag holders will keep this up before it crashes.
As long as the fed keeps stuffing Wall Street full of money. There's still a bit of time to play
Re:Wallstreetbets (Score:4, Interesting)
Well, so far it's only been a pump operation.
Accelerated by all the short sellers that had to cover their asses when the stock went up.
Also, read the comment at the bottom of the linked article.
Corporate BSpeak to English Translation.
"IF we eliminate almost all of our stores, and hire a bunch of IT people, we can create a website that competes with 1000 other websites in trying to get something out of selling you digital content, praying like hell we can get profits from volume at very low margins."
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"Hire" IT people? Bah, they'll probably be outsourcing that department as part of their cost-cutting as well.
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They are pumping a dump operation, it's plebs vs vulture capitalists, the scales of morality are on their side, regardless of whether they profit.
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Physical games? (Score:4, Insightful)
Does he know that both the Xbox Series X and PS5 are available without an optical drive? That means GameStop has, at best, until the next generation of consoles which probably won't have an optical drive at all.
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I don't know about PS4 but the Xbox One was available without a physical drive too. Don't get me wrong I'm sure it'll eventually happen, but there's a lot of stubborn people out there who want physical copies (myself included) who are going to delay that transition as long as possible.
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Cool (Score:3)
I mean, if you bought in at $2.80 per share then it's a good thing for you, but I'd personally sell soon. The stock might not have topped out - hell it might double what its worth now, but I think it'll eventually topple and I wouldn't want to risk it dropping to zero.
Even as somebody who buys physical games still, I usually will buy them off of Amazon (used or new). My trips to Gamestop have become for gaming themed t-shirts, collectibles, and other such knick-knacks. While they seem to be commendably focusing more on those items now, realistically I don't think that selling those is enough to keep the company afloat.
toys-r-us (Score:2)
...they don't have net debt...
yet
Gaming the System? (Score:1)
Shorting stock should be illegal (Score:2, Interesting)
We were sold the idea that the stock market would help businesses succeed. Try to tell me how betting a company will fail does that?
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"The main argument is that bears, who believe a stock's price will fall, have useful information to contribute. Short sellers can be particularly helpful in reducing the impact of financial bubbles. By short selling near the top, the short sellers reduce the maximum prices reached when asset prices go too high. Furthermore, short sellers must eventually buy back shares. That creates some buying later on when most investors are afraid to buy. As a result, short sellers can actually reduce losses after a mark
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Short sellers keep companies honest. If you are not doing nasty shenanigans with your business or otherwise driving it into the ground with monumentally stupid decisions, you are extremely unlikely to gain their attention. Short sellers provide a massive and valuable contribution to effective pricing of the stock market.
The SEC keeps companies honest (Score:2)
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The reason shorting stocks exists is so people will examine the stock market for problems, like fraud. If you find fraud and publicize it, the value will go down.
If a lot of people are shorting a company, others will start examining a company to see why.