For anyone expecting some news from GME about a plan for their $4B cash now other than just earning around 5% a year in interest income, don’t hold your breath. 5% with no risk at all would be the prudent way to go and doubt they’ll even consider an acquisition until interest rates drop substantially, which may take at least a couple years.
Problem is, that’s around $150M a year after taxes and would only justify a market cap of $2.25B with a proper pe of 15 for a company like this, or max $4B cash value and that’s only if they breakeven on normal business operations.
Many companies trade “below cash” on hand and GME should be one of them based on fundamental reasons.
Comments