$(GME)$ I never post anything on these discussion boards because 99.5% of what you see is just not typically worth reading. But now, after listening to the earnings call and going through the quarterly report, I've decided to post a few thoughts.
1. Sales were actually pretty good, beating their numbers from a year ago - and of course they did point that out in the (short) conference call.
2. They're investing in the future with some things that could be profitable in the future. Also good.
But unfortunately there's some negatives.
1. I watch Gamestop stores (physical stores when traveling around), and foot traffic is not good. Obviously you can say I was just at the ones not busy at the time I was there, but the issue - is that I've yet to see one that's truly busy. Go to a Costco, a Wallmart, a Great Clips, or a McDonalds - there's foot traffic. And it's super easy to see. Try it yourself. Go watch a store sometime. My guess is that you'll count the customers, especially ones with walk out with merchandise, on one hand (in one hours time).
2. Yeah, but they're selling on-line! Who cares about their old stores? So... I picked 5 different things from their website from a gaming laptop to a monitor to some accessories, etc. In every case, I could buy the same thing from a competitor on-line and save a few bucks. Especially in cases where I could buy from Amazon and benefit from my Prime membership. And arguably get it quicker with a great return policy, etc. For now sales seem to be holding up, but... it won't be easy, and... it would have to grow like wild to support their present negative earnings situation.
3. Next comes earnings... They're blaming their huge earnings miss on transforming their business. You could *almost* buy that, but... zero guidance earlier in the year that they were well below analyst estimates, and now not a single word about guidance and what a more detailed business plan looks like. Listen to the report - hear it straight from the leadership and don't trust what is said on-line! The fact that they will offer zero guidance on anything substantial like earnings projections, revenue growth projections, exactly how they'll differentiate from their competition in the NFT space, etc. That is a huge red flag to me.
4. At the end of the day, if you're going to lose money, the story you tell people needs to be compelling, as everyone can say they're doing what is best for their customers, adopting the latest technology, etc. But... it has to be detailed. If you went to buy a car and the dealer just said, "we've really done some nice things with this model. That's pretty much all we can tell you. " Would you buy that car? So, would you buy this company (stock)?
5. Other people will say it simply doesn't matter - the share price is about supply and demand, and as long as there are more buyers than sellers, the price will go to the moon! It's very true. Some big hedge funds learned that lesson the hard way on this very stock! So can demand now hold up? Well... for many younger investors, those government stimulus checks are long gone... And now we're all paying considerable more for everything we buy - ask yourself how many people have a lot of money left each month to invest in a highly speculative thing like Gamestop (ie., gamble). If money is running tight, perhaps borrow a little from your brokerage? Current Fidelity margin interest rates for small investors is now over 8%. How many small investors can afford to pay 8% on another loan?
6. Ah... but the short squeeze - all the Gamestop shares are being held short, and it will only take a little demand to create another short squeeze right? As of Feb 28, at least per Yahoo, 15.34% of the shares outstanding are held short. Perhaps the big hedge funds and other players just don't want any negative publicity (again) when it comes to shorting GME, and they're staying away. But, end of the day, trying to squeeze something like GME would now take - literally - billions of dollars.
So why did I spend time to write this up? Because it feels right. If it helps anyone decide what to do, then I guess it's worth it. Feel free to buy more shares on the dip. Just think about how many other things you would buy in light of knowing so very little about what it really is....
Full disclosure. I'm short a few shares, and shorted a few more as soon as I saw the earnings numbers and listened to the leadership team on the earnings call.
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