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Stock Thread (16 Viewers)
- Thread starter St. Louis Bob
- Start date
Bossman
Footballguy
Nick Vermeil
Footballguy
Averaged down on RIOT at the open so it turned out to be pretty good day.
Bob Sacamano
Footballguy
"Bezos Burnt Umber" ...
would be a great name for a craft beer.
I would buy it.
Greatjon Umber Likes This
GROOT
Footballguy
Here's my take on GME/AMC. They aren't going away. The reason is they have a short-interest dangling carrot. The Ape-hedge war has begun just when you think it's over they will be back in the morning cooking bananna pancakes in your kitchen. IMO, This will ping-pong for a long time. After a while people will see the hedge manipulation and won't sell the bad dips as much. Get used to it. Someday there will be a movie about it called "The Squeeze"
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Bob Sacamano
Footballguy
The bolded, incidentally, is NOT what George Sherman said in the Q4 earnings call. I pulled that from the Macy's quarterly report to illustrate the point.
Sherman: "Our emphasis in 2021 will be on improving our E-Commerce and customer experience, increasing our speed of delivery, providing superior customer service and expanding our catalogue."
Yay?
Nick Vermeil
Footballguy
Bob Sacamano
Footballguy
I wish I bought a year ago and sold almost any time this year. I'm not saying I think people shouldn't be trading the stock. I'm not even saying I think Dodds is patently wrong. I just don't know how anyone can feel like they have enough information to have any idea what this company is going to be in 1 year, much less any longer time horizon.
Nick Vermeil
Footballguy
NY state lawmakers have reached a deal on legalizing recreational marijuana. I don’t know what the impact will be on the weed stocks tomorrow because the timeline is unclear. But I still like the space.
dkp993
Footballguy
Fair points. I bought in because I was sold on the gamma squeeze angle. As that has clearly (likely?) not come to fruition I’m not as bullish on the stock overall. Though on the other hand the talent that’s coming to the company is not something to be overlooked.
David Dodds
Administrator
I am not willing to write out all my due diligence, but here is the abbreviated rationale.
1. The old GameStop company is done. Ryan Cohen aggressively bought enough shares to be the major stock holder. He (along with hedge funds that support him) are ousting the old board members. I doubt Sherman survives much longer either. Cohen has brought in talent from Chewy, Amazon, Google, etc. He is hyper focused on creating a great Omni-Channel and is heading up the turn-around strategy. As the founder of Chewy.com and just 36 years old, that is BIG news.
2. GameStop has only 70 million shares of stock. At $200/share, that's a valuation of just $14B. Chewy.com with less sales (and no profit) is worth $35-40B. Gaming is bigger than pet food. It does not take much speculation to imagine a GameStop with a market cap greater than Chewy.
3. Take 15 minutes to browse the new website. They are selling everything now. PCs, laptops, video cards, motherboards, etc. This is not used games of Zelda. This is Ryan's Cohen vision of what a gaming omni-channel will be. Of course none of the numbers from the Sherman led effort support a giant market cap. Sherman is old school and has been CEO of other brick franchises. These hires coming to GameStop aren't forgoing 2-3M bonuses at Amazon to work with Boomer Sherman. They are jumping to a company that will be led by Ryan Cohen (even if it is unofficial).
4. A bunch of dumb people thought they knew everything and have been shorting GameStop forever. They expected this was Blockbuster all over again. They weren't afraid to naked short as they really expected the company to go bankrupt during the pandemic and their naked position would go unnoticed. With GameStop trading at ridiculously low levels a year ago, some smart people loaded up on options betting on this exact turnaround happening now. These options have been triggering a gamma squeeze since January. Every Friday more shares are needed as the calls hit. Different estimates peg the synthetic shares to be 4-10X the real shares. With institutions owning 115-200%, it does not take much for retail to hold and force the stock to go higher.
5. Lots of shenanigans have been done to keep the squeeze from happening. These include borrowing shares in ETFS that include GameStop and creation of massive synthetic shares. The failure to deliver (FTD) log has had GameStop as the most prominent entity for months. The efforts to suppress the price have only resulted in more people owning the stock with diamond hands. There is no out. This stock is going to squeeze.
6. Tons of cryptic messages from Roaring Kitty, Ryan Cohen, GameStop social media, etc all pointing to the squeeze and moon launch.
There is a whole Reddit subgroup that goes into massive amount of due diligence. Here is a good thread if you truly are curious:
https://www.reddit.com/r/GME/comments/lj1wqv/a_comprehensive_compilation_of_all_due_diligence/
I am done trying to convince people. Outside of guaranteeing a moon shot, I am not sure what else to say. The reddit thread that discusses the due diligence is excellent. In short, I like the stock.
Bob Sacamano
Footballguy
So, faith in Ryan Cohen.
Charlie Harper
Footballguy
Just a question Dodds, but do you validate what you've read on Reddit and/or come up with the same conclusions independently? I read most of the same stuff you're reading, but I'm too dumb to really form my own opinion. I'm just along for the ride. Just curious if your your confidence is all Reddit based or come internally.
David Dodds
Administrator
and the team he is acquiring, and the squeeze potential, and the low float (with many synthetic shares), and the market eventually evaluating the stock as an ecommerce stock where price equals 2-5X sales (instead of as a brick and mortar hasbeen), and the new gaming consoles + corresponding games, and the fact that Ryan Cohen has already demonstrated he can beat Amazon in a carved out space.Bob Sacamano said:
David Dodds
Administrator
I think the memes are funny so I am Yoloing most of my life savings for the joy ride only. Who has time to verify anything? Stonks only go up.Charlie Harper said:
Bob Sacamano
Footballguy
I get all the trading reasons for the stock. I'm talking strictly, "this is the next great e-commerce company". It boils down to faith that Ryan Cohen will do... something.
David Dodds
Administrator
That's a given isn't it? The guy who created Chewy taking on gaming. His blueprint is all over the newly deployed website. Do you expect him to fail to deliver a great gamer's channel using what he learned doing Chewy?
I put his chance of success somewhere near 99%. I can't even think of a better person I would want leading this transformation. Chewy's customer service reputation is second to none.
With that said, I would have loved to hear his blueprint for the future, but I think there are some technical reasons they chose not to do that at the earnings call. The CFO leaves March 31st and a few others leave shortly after that. I expect we hear the vision and leadership team sometime in April.
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David Dodds
Administrator
This is an interesting conspiracy theory regarding Hedge Fund Wars and how GameStop is now in the center of it.
https://www.reddit.com/r/GME/comments/md89wg/king_kong_magnum_opus_dd_posted_on_behalf_of_wuz/
https://www.reddit.com/r/GME/comments/md89wg/king_kong_magnum_opus_dd_posted_on_behalf_of_wuz/
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Desert_Power
Footballguy
It was more PizzaGate, but I agree with TunaNTruly. We're all here to help each other make money, the other biases we have hardly matter. No point in bringing up politics/grudges, let's make l00t together!Dwayne Hoover said:
Judge Smails
Footballguy
Amazon is a great e-commerce company. Shopify is a great e-commerce company. Why is GameStop? Just because Chewy Cohen is there?David Dodds said:
Desert_Power
Footballguy
Not sure how you put the genie back in the bottle with video games. The manufacturers are putting very strong, direct subscription services around their consoles. Something like Microsoft Gamepass charges a good fee for basically unlimited games on Xbox and PC. I wouldn't be surprised if someone extends the SaaS model to having consoles given out with a certain subscription. MSFT and Sony have long "lost" money on consoles.
I did buy some Nintendo stock earlier this week as it is closer to a pure play. Ironically, the Switch is the only console I still buy physical media on.
Charlie Harper
Footballguy
I think people are missing the culture, loyalty, and devotion of the gamer crowd.
Chewy exists because people love the hell out of their pets. They love the personal touch that Chewy has.
If Cohen is able to tap into the passion of gamers that's what will separate it from Amazon, etc.
Chewy exists because people love the hell out of their pets. They love the personal touch that Chewy has.
If Cohen is able to tap into the passion of gamers that's what will separate it from Amazon, etc.
Desert_Power
Footballguy
The real gamers follow Gaben....as we have for years. Good luck taking share from Steam.
Charlie Harper
Footballguy
Steam is just games.The real gamers follow Gaben....as we have for years. Good luck taking share from Steam.
Gamestop.com can have game related memorabilia, collectibles, gamer furniture, components, etc. Basically if a gamer wanted to kit out their mancave Gamestop could be the place they shop. Throw a few member only streams, maybe a convention, or online tournament. Who knows. Video games doesn't have to be the only thing they sell.
FreeBaGeL
Footballguy
Gamestop the mechanics play is all well and fine. Gamestop the fundamentals play is a stretch imo. It's like drafting Mike Davis in the 1st round of a fantasy draft. Yeah maybe it will work out, but you're buying at the upside price on the 10% chance he'll actually hit that upside.
Someone mentioned GME's e-commerce sales are up year over year. It's almost like the entire last year came during a pandemic where everyone's e-commerce sales were up year over year.
Maybe Cohen will turn them around but right now the website is still annoying and their online fulfillment is worst in class, so if we're supposed to be looking at that and be impressed I'm not sure why. The same gamer widget you can buy at Amazon and have in your hand in a day or two you can go to Gamestop's website and read the reviews and see a bunch of people complaining that they ordered it 4 weeks ago and still don't have it or even a tracking number and no one will answer their support requests.
The real hail marry is Gamestop somehow convincing Sony/MS/Nintendo to either A) allow gamers to trade in digital games or B) open up their own store via an app directly on the console where they can price compete on direct digital games sales. But I don't see how they could possibly convince Sony/MS/Nintendo to allow that.
Other than that, "look they have digital download cards now!" isn't really saying much since they, along with every other retailer of note, has had those for the last 5 years. And "maybe they'll start selling gamer chairs and videogame action figures" again rings a bit hollow when many of the other larger retailers have been selling those things for the last decade already.
I haven't seen a single idea pushed that is actually both feasible and something that isn't already being done by other better retailers than Gamestop. Betting on Gamestop the company right now is basically betting that Ryan Cohen will come up with some brilliant idea that no one else has even dreamed of yet. And again, much like the Mike Davis example if that meant paying fair market value to GME's current financials with the upside that home run would come along that would be one thing. But right now you're basically paying the price as if Cohen has already thought up that idea and put it into practice as a raging success.
Someone mentioned GME's e-commerce sales are up year over year. It's almost like the entire last year came during a pandemic where everyone's e-commerce sales were up year over year.
Maybe Cohen will turn them around but right now the website is still annoying and their online fulfillment is worst in class, so if we're supposed to be looking at that and be impressed I'm not sure why. The same gamer widget you can buy at Amazon and have in your hand in a day or two you can go to Gamestop's website and read the reviews and see a bunch of people complaining that they ordered it 4 weeks ago and still don't have it or even a tracking number and no one will answer their support requests.
The real hail marry is Gamestop somehow convincing Sony/MS/Nintendo to either A) allow gamers to trade in digital games or B) open up their own store via an app directly on the console where they can price compete on direct digital games sales. But I don't see how they could possibly convince Sony/MS/Nintendo to allow that.
Other than that, "look they have digital download cards now!" isn't really saying much since they, along with every other retailer of note, has had those for the last 5 years. And "maybe they'll start selling gamer chairs and videogame action figures" again rings a bit hollow when many of the other larger retailers have been selling those things for the last decade already.
I haven't seen a single idea pushed that is actually both feasible and something that isn't already being done by other better retailers than Gamestop. Betting on Gamestop the company right now is basically betting that Ryan Cohen will come up with some brilliant idea that no one else has even dreamed of yet. And again, much like the Mike Davis example if that meant paying fair market value to GME's current financials with the upside that home run would come along that would be one thing. But right now you're basically paying the price as if Cohen has already thought up that idea and put it into practice as a raging success.
JAA
Footballguy
Tell me about Stadia, how did that work out?
Tell me about the Nintendo Switch amiibo Character line, how did that work out?
JAA
Footballguy
No disrespect, but this post only shows to me that you do not understand the gaming industry nor its consumers.
How about this parallel - why does Best Buy exist? Why do we need a physical store to sell electronics?
JAA
Footballguy
JAA
Footballguy
JAA
Footballguy
McBokonon
Footballguy
JAA
Footballguy
Do you consider WMT, TGT, and BB to be retail?
WIth respect to brand loyalty, I think TGT is an excellent parallel to GME. Ill rephrase - how is it possible TGT exists? Someone unpack that one for me.
JAA
Footballguy
I take it you have been in a Best Buy lately. Which % of floor space is "large appliances" vs "I can buy the same thing on Amazon for the same price"?
Steeler
Footballguy
I was originally against the idea of the CYDY individual thread but it was the right call. So I'm throwing my hat into the ring in favor of a meme stock thread (GME, AMC, whatever). I don't mind the discussion but it's cluttering/overtaking this thread - so a separate thread is now warranted.
JAA
Footballguy
Ill go with the team on this, but it would make me sad. I enjoy the debate and I think very few folks would view that thread.
GROOT
Footballguy
The console will be gone in the future IMO. There will be a shift. And looking down at the ticker GME it's starting again.
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No disrespect and hopefully people don’t get upset by it but Best Buy’s market cap is about half of it’s sales. I think Best Buy is a perfect example. Dodds tried to assign a 2-5x price to sales multiplier to GameStop. Well, Amazon is at 4 and that’s likely one of the examples. Problem is that Amazon has multiple highly profitable streams starting with AWS which would likely be valued as one of the largest software companies out there. GameStop doesn’t have that. I think Best Buy is a good example as they too are closing some stores. Well, with Best Buy’s multiple, Game Stop should be selling for about $40 a share right now and that’s ignoring the fact that GS is not profitable, needs to spend a ton on setting up their infrastructure to go all e-commerce and do it well and has declining revenue.
I’m honestly tired of discussing the stock and wish it was in another thread. I understand now why people were annoyed at how much we talked about CYDY in here such that you couldn’t discuss anything else. That said, I agree with @Bob Sacamano when he said that the stock is already priced as if they turned it around perfectly and there’s no risk, which is a tough sell considering their current state and the fact that they have nothing outside of retailing things that are already widely available and downloadable. Chewy is honestly a bad comparison as when they started, there was nothing like them. Selling pet stuff online was basically just a more expensive thing than shopping in person. That’s not the case in gaming where GS’s revenue is declining because of what Sony and Microsoft and Apple, etc. are doing.
I think this is my last post on it. I still think the stock price is completely disconnected with the actual company and it makes sense. There’s no other stock talked about as much or getting cheerleaded by people convincing others to buy the stock. That’s as @Capella has said is what you are trading so there is money to be made or lost. I’m as dumb as him so I would have bought at $250 and sold at $120, which is why I avoid trading it. I read something that they are working on a share offering and the lead is the company who’s analyst upgraded the stock yesterday, interesting conflict of interest some might say. I’m too risk averse especially after having a rough March so far.
Wild Young Billy
A Crazy Cat
eCommerce, up until March 2020, was less than 20% of retail sales. During the last 12 months it jumped to about 22%. We will probably see it decline some in the next year once people are vaccinated but retail itself isn't dead. Yet.
ETA: Nerd out on some data - https://ben-evans.us6.list-manage.com/track/click?u=b98e2de85f03865f1d38de74f&id=87a396f13e&e=8fb706e7cc
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jamny
Footballguy
I don't think a separate thread is needed and I've never had any money in GME. I think it serves as a good example of the "new" market and will have an impact on future investments. It would be one thing to make it strictly GME but to add other meme stocks and I guess stuff like NFT's would get too muddled. I've learned a bit during this run that applies to the rest of the market. It would just be another thread to read and I prefer having it in one place. 
JAA
Footballguy
Great post, thank you. Frankly, this is the reason Im in this thread - conversation. If we dont have conversation like this, we can just name the thread "@Todem's stock picks" and i can check in weekly and see if he has posted anything.
What I like about your post above is that you bring a different perceptive to the conversation than I have (I think I do the same for you).
Best Buy is not going bankrupt. Its not going anywhere. Yes, it will need to close stores, it will need to change its model, but its not going anywhere. I'm in the camp that retail will be consolidated into a few higher profile, well managed, businesses. People will learn that if they only buy online then they will never get to touch something before it arrives at their door. They will also learn that its annoying to have to mail back returns, its much easier to walk in to the store and return it. Retail isn't going anywhere IMO.
WMT and TGT have doubled their share price in 5 years. BB is somewhat stagnant over the same timeframe. I believe retail is going to have a significant rebound in the next 2-5 years. Especially after this pandemic, people will want to go out to stores. They will absolutely not want to shop online, they will want to walk into stores. I mean, the roaring 20's were driven by a pandemic and stock crash.
