GameStop’s Shakeup Will Do Little to Alleviate Its Woes

InvestorPlace2021-04-15

GME stock's new leadership needs to get its priorities straight if it hopes to turn things around.GameStoop fell about 7.5% in morning trading.Video game retailer GameStop(NYSE:GME) is the most ...

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Comments

WenJieRusty
2021-04-19
WenJieRusty
Lolol tldr
Lewtx
2021-04-19
Lewtx
Another bs article.
sk8mery
2021-04-16
sk8mery
memes
Ccl2
2021-04-16
Ccl2
Pls like, txs in advance.
Henryee18
2021-04-16
Henryee18
這股有一點奇怪的感覺，是不是會爆發出來了……？
Kenny77
2021-04-16
Kenny77
Buy the dip
- Jovin82:
  yup

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Thanks to a Reddit-induced short squeeze, it is one of the best-performing stocks in the past 12 months, with hardly any fundamentals to back that up. Despite a 40% drop in its price this month, it still trades more than 89 times its cash flows. What’s next for GME stock is anybody’s guess, but one thing is clear: the odds are heavily stacked against Gamestop in transforming its business.A lot is riding on the induction ofChewy co-founder Ryan Cohenfor the company’s big e-commerce pivot. Under Cohen, the newly revamped board of directors is transforming the company from a retailer to a technology company. Global E-commerce saleshave shot up 191% in fiscal 2020, which shows its initiatives’ potential. However, nothing is a given with GameStop, considering its spotty track record. There are many holes in the company’s strategic plans, which should continue to impact its long-term outlook.Cohen’s Transformative PlansIn an executive shakeup, GameStop named Ryan Cohen as its chairman. Cohen is known as an activist investor and the co-founder of pet supplies retailer Chewy.  Hehad purchased a 10% stakein GameStop back in August last year and later increased it to 13%. In an SEC feeling in November, he talked about how the company needed to transform itself from a retailer to a tech company.Naturally, Cohen has brought new leadership in executing his plans. However, to everyone’s surprise, the new appointments include marketers, customer care experts, web designers, and other IT professionals with little hands-on knowledge in the gaming industry. One would expect Cohen to introduce individuals with practical experience of the industry and well-versed with its developments.More importantly, he seems to be missing the plot about how GameStop’s competition is incidentally its vendors. With the rising popularity of digital purchases, original equipment manufacturers (OEMs) are becoming less reliant on intermediary businesses.  Therefore in many ways, the latest console upgrade cycle is likely to be significantly less profitable.The last console upgrade cycle was back in 2013, where total global sales for its holiday periodwere at $3.15 billion. On the flip side, the holiday results for 2020 were at $1.7 billion, whichdecreased 3.1% compared to 2019. Hence, OEMs will continue to offer their content through their digital platforms, limiting GameStop and other related companies’ market share.The Bottom Line on GME StockSo where will the company go from here? I have no idea. The GameStop saga has arguably been one of the weirdest stock market stories in recent memory. It’s clear from a fundamental standpoint, though, that the stock is grossly overvalued.  For example, its enterprise value to EBITDA ratio is more than 3,600% higher than the sector average. Moreover, its forward price to book ratio is also more than 375% higher than the sector average.Many price targets for the stock are more than 70% lower than its current stock price. Moreover, the dispersal between its high and low estimates is more than $150 at this time. The reality is that if you factor in the risks associated with its business, its value is not even close to where it’s trading at this time.GME stock has had a rollercoaster of a ride this year. However, it appears that it’s not exactly the mother of all short stocks at this point. Short interest as a % of the float was roughly 18% when it exceeded 100% in January. Moreover, its new chairman in Ryan Cohen seems to be missing the trick in understanding the company’s underlying problems. Therefore, it would be best for long and short sellers to steer clear of GME Stock.","kind":"news","is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":373359826,"gmtCreate":1618824052765,"gmtModify":1704715391950,"author":{"id":"3575125355414670","authorId":"3575125355414670","name":"WenJieRusty","avatar":"https://static.tigerbbs.com/753860602694d368820ebf87f16ee59d","vip":1,"crmLevel":1,"crmLevelSwitch":0,"idStr":"3575125355414670","authorIdStr":"3575125355414670"},"htmlText":"Lolol tldr","listText":"Lolol tldr","text":"Lolol tldr","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/373359826","repostId":1153108819,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":379528104,"gmtCreate":1618778967408,"gmtModify":1704714695198,"author":{"id":"3574826695906072","authorId":"3574826695906072","name":"Lewtx","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":1,"crmLevelSwitch":0,"idStr":"3574826695906072","authorIdStr":"3574826695906072"},"htmlText":"Another bs article.","listText":"Another bs article.","text":"Another bs article.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/379528104","repostId":1153108819,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":347741059,"gmtCreate":1618533035071,"gmtModify":1704712275227,"author":{"id":"3581245164607413","authorId":"3581245164607413","name":"sk8mery","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":6,"crmLevelSwitch":0,"idStr":"3581245164607413","authorIdStr":"3581245164607413"},"htmlText":"memes","listText":"memes","text":"memes","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/347741059","repostId":1153108819,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":347728004,"gmtCreate":1618532180908,"gmtModify":1704712247874,"author":{"id":"3581493206135613","authorId":"3581493206135613","name":"Ccl2","avatar":"https://static.tigerbbs.com/d42f34da4e87e15b0fca1740d5c0310a","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3581493206135613","authorIdStr":"3581493206135613"},"htmlText":"Pls like, txs in advance.","listText":"Pls like, txs in advance.","text":"Pls like, txs in advance.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/347728004","repostId":1153108819,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":347765186,"gmtCreate":1618531835345,"gmtModify":1704712238664,"author":{"id":"3561088065415396","authorId":"3561088065415396","name":"Henryee18","avatar":"https://static.tigerbbs.com/68e1124a4989ce380d6aa143a07b2620","vip":1,"hat":"https://static.tigerbbs.com/3b7820dfed76481d8dc4de6ac5a7a136","crmLevel":9,"crmLevelSwitch":1,"idStr":"3561088065415396","authorIdStr":"3561088065415396"},"htmlText":"這股有一點奇怪的感覺，是不是會爆發出來了……？","listText":"這股有一點奇怪的感覺，是不是會爆發出來了……？","text":"這股有一點奇怪的感覺，是不是會爆發出來了……？","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/347765186","repostId":1153108819,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"CN"},{"id":347736550,"gmtCreate":1618530104370,"gmtModify":1704712196824,"author":{"id":"3553679778150469","authorId":"3553679778150469","name":"Kenny77","avatar":"https://static.tigerbbs.com/77c5e512c4b7983d3f3075d8ec4c2f2d","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3553679778150469","authorIdStr":"3553679778150469"},"htmlText":"Buy the dip&nbsp;","listText":"Buy the dip&nbsp;","text":"Buy the dip","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/347736550","repostId":1153108819,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":4047643,"gmtCreate":1618530323590,"gmtModify":1680784242432,"authorId":3576981890239678,"author":{"id":3576981890239678,"idStr":"3576981890239678","authorId":3576981890239678,"name":"Jovin82","avatar":"https://static.tigerbbs.com/752a4c83d93acf209829577d533a6593","vip":1,"crmLevel":2,"crmLevelSwitch":1,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":347736550,"type":1,"supId":0,"prevId":0,"content":"<u>yup</u>","text":"<u>yup</u>","html":"<u>yup</u>"}],"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":188,"commentSize":50,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like 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