GME deathwatch - how to profit?

[jim555]

Thought this might be interesting...

https://www.reuters.com/business/finance/massachusetts-fines-massmutual-475-mln-failing-supervise-roaring-kitty-other-2021-09-16/

"Massachusetts fines MassMutual $4.75 mln in 'Roaring Kitty' case"

"BOSTON, Sept 16 (Reuters) - A MassMutual investment subsidiary has agreed to pay $4.75 million to resolve allegations by Massachusetts securities regulators including that it failed to supervise its agents, among them the social media persona "Roaring Kitty," whose online posts helped spark January's trading frenzy in GameStop Corp (GME.N) shares."

[WoodsRun]

From what I understood their last quarterly report was good news for GameStop.
Total Revenue was 1.183 Billion compared to 0.942 B the same quarter last year.
Gross Profit was 320M compared to 252M the same quarter last year.

~1.5 Billion in Cash to transform the company.
Almost no debt.

I would not bet against GameStop.

Edit: Numbers.

You invest without considering the share price?  It was under $10/sh one year ago, and is now about $209/share, or 20x higher.  Giving your numbers that context, the company looks horrible.

GME's market cap was $565M a year ago, and is $16,000M now.  By the measure used in index funds, GameStop has grown 2700% larger in 12 months.
https://ycharts.com/companies/GME/market_cap

That growth is what spoils the profit numbers you mentioned.  Using your profit numbers divided by market cap:
$252M / $565.6M = profits equal to 44% of it's market cap a year ago
$320M / $16000M = profits equal to 2% of it's market cap now

Yahoo displays GME's total revenue and gross profit.  Look at Jan numbers for 2018, 2019, 2020, 2021 ... both declined every year.  Their gross revenue was $9.2B in 2018, and $5.1B in 2021 - down by almost half.  Their gross profit sank from $3.04B to $1.26B, a decline of more than half.
https://finance.yahoo.com/quote/GME/financials?p=GME

I am investing in GameStop as I would invest in a tech company that has lots of cash positioned for growth.
The last earnings call included new CEO Matt Furlong explaining that they are transitioning from a retail to a tech company. In other words previous quarterly and annual profits / revenue are not relevant. It will turn into an entirely different company with vastly different profit margins.

[boarder42]

correct this is why its a small value company - lots of cash maybe they decide to make EVs and surpass tesla

Out of favor companies with good balance sheets are poised to pivot and explode.  Picking the right one is hard.  GME is an anomaly due to its Reddit fame.  But IJS a top SCV ETF holds this fund and many other companies everyone of us would look at and say this is shit why would i put my money here - this is the exact reason SCV outperforms VTSAX long term.

Just to correct a few incorrect statements:
(1) GME's market cap is $16 billion, so it is not considered a small cap company
(2) GME is a stock, not a "fund"
(3) IJS has Macy's ($6.8B) as it's largest holding.  GME ($16B) is too big for IJS.
https://www.ishares.com/us/products/239775/ishares-sp-smallcap-600-value-etf
(4) Since "GME is an anomaly", it cannot also be "the exact reason SCV outperforms VTSAX long term".

I think alot of what you inferred from what I said was taken out of context. My main point was as everyone laughs about something like game stop thinking it's a terrible bet which a majority of people here think it is. Was the basis for why scv outperforms. People think these small out of favor companies aren't going to do well but a few do. And I haven't looked at ijs holding recently but it held gme as of Feb or march when I last looked. Looks like theyve moved out of it as it doesn't fit the asset classes they are tracking. But prior to the run up AND during the run up ijs held gme.

You're claiming I took "GME is an anomaly" out of context from the sentence "GME is an anomaly due to its Reddit fame"?  Good luck convincing others I misunderstood that sentence - the meaning is quite clear.  You know that GME made national news and defined a new category called "meme stocks".  GME is an anomaly, and it is not appropriate to pretend it's performance is typical for small cap value stocks.

Am I taking your entire two posts out of context?  In both your first and second posts, you point to GME as an example of why SCV outperforms.  I've quoted it so others can see - you're clearly comparing GME with SCV performance, which is not accurate.  It is wrong to claim that GME's performance is somehow an example of SCV performance, when GME is an obvious outlier ("an anomaly").

You are trying to have it both ways.  You both acknowledge "GME is an anomaly due to its Reddit fame", and then claim in two different posts that somehow GME should be used as an example of small cap value (SCV) performance.

You also didn't refute my other points, you just rationalized why you presented wrong information.

You're not really understanding what I'm saying probably bc I'm not saying something correctly but I don't really care either way. You do you.

[Radagast]

correct this is why its a small value company - lots of cash maybe they decide to make EVs and surpass tesla

Out of favor companies with good balance sheets are poised to pivot and explode.  Picking the right one is hard.  GME is an anomaly due to its Reddit fame.  But IJS a top SCV ETF holds this fund and many other companies everyone of us would look at and say this is shit why would i put my money here - this is the exact reason SCV outperforms VTSAX long term.

Just to correct a few incorrect statements:
(1) GME's market cap is $16 billion, so it is not considered a small cap company
(2) GME is a stock, not a "fund"
(3) IJS has Macy's ($6.8B) as it's largest holding.  GME ($16B) is too big for IJS.
https://www.ishares.com/us/products/239775/ishares-sp-smallcap-600-value-etf
(4) Since "GME is an anomaly", it cannot also be "the exact reason SCV outperforms VTSAX long term".

I think I'm gonna take Boarder42's side here. Gamestop is not in IJS now, but it was at the end of 2020, and also throughout the first half of 2021 or so. The reason it no longer is is because IJS was unloading it for months. I remember skimming a thread on Bogleheads where there was a great amount of consternation that a huge percentage of IJS was in GME (not sure why though, it made IJS owners a ton of money). You can easily google this.

Also I am not sure how much of an anomaly it was. Company stock returns, like many other economic things, follow a Pareto distribution, meaning 20% of the stocks produce 80% of the returns. But this relationship holds all the way to the end: 20% of the most 20% of profitable stocks produce 80% of the 80% of the returns. And so on, following 0.2^x and 0.8^x. Following that, you would expect a single stock in the S&P600 to be responsible for 40% of its returns (but probably the actual 80:20 is a little too extreme IRL, and it might be 67:33 or something)

On topic:
I made like $200 profit trading 1 share of GME with a starting $140. Now I am in RKLB, which so far has been a bad move.

[MustacheAndaHalf]

There's a trend in these recent posts - people are shown they are wrong with data, and then continue to keep the same views.

boarder42 - Or you could be wrong.  I notice you claim to not be understood, but can't quote anything I misunderstood.  You haven't been able to refute the points I made.  So to me, I think you know you're wrong, and don't want to admit it.  Is that a good strategy for investing?

From what I understood their last quarterly report was good news for GameStop.
Total Revenue was 1.183 Billion compared to 0.942 B the same quarter last year.
Gross Profit was 320M compared to 252M the same quarter last year.

~1.5 Billion in Cash to transform the company.
Almost no debt.

I would not bet against GameStop.

Edit: Numbers.

You invest without considering the share price?  It was under $10/sh one year ago, and is now about $209/share, or 20x higher.  Giving your numbers that context, the company looks horrible.

GME's market cap was $565M a year ago, and is $16,000M now.  By the measure used in index funds, GameStop has grown 2700% larger in 12 months.
https://ycharts.com/companies/GME/market_cap

That growth is what spoils the profit numbers you mentioned.  Using your profit numbers divided by market cap:
$252M / $565.6M = profits equal to 44% of it's market cap a year ago
$320M / $16000M = profits equal to 2% of it's market cap now

Yahoo displays GME's total revenue and gross profit.  Look at Jan numbers for 2018, 2019, 2020, 2021 ... both declined every year.  Their gross revenue was $9.2B in 2018, and $5.1B in 2021 - down by almost half.  Their gross profit sank from $3.04B to $1.26B, a decline of more than half.
https://finance.yahoo.com/quote/GME/financials?p=GME

I am investing in GameStop as I would invest in a tech company that has lots of cash positioned for growth.
The last earnings call included new CEO Matt Furlong explaining that they are transitioning from a retail to a tech company. In other words previous quarterly and annual profits / revenue are not relevant. It will turn into an entirely different company with vastly different profit margins.

In your earlier post, you quote the revenue and profit compared to last year.  And in this post, you contradict yourself, and claim the very numbers you posted "are not relevant".  Why did you post data that is "not relevant"?

GameStop is a retail company.  In SPDR Retail ETF it is listed under "COMPUTER & ELECTRONICS RETAIL".  And Vanguard Consumer Discretionary ETF (VCR) lists it as holding #55 (by weight).
https://www.ssga.com/us/en/individual/etfs/resources/doc-viewer#xrt&third-quarter-holdings
https://investor.vanguard.com/etf/profile/portfolio/VCR/portfolio-holdings

GME stock opened at $19/share, and then hit $483/share the same month.  Management hadn't changed, it was still a retail company with thousands of outlets and almost all employees working in retail stores.  What happened wasn't a transformation - it was an attack on short sellers by reddit/wallstreetbets.  And it worked - hedge funds lost billions.  Check any news coverage - it will match my description.

Which tech companies have 4800+ retail stores, like GameStop?  They employ 12,000 full time and about 20,000 part time workers.  Where do 95% (literally) work?  In retail.  A company that makes most of it's money from retail, has almost all it's workers in retail, and has 4800 retail stores... is a retail company.  This isn't the dot-com era, where having a website means you're a tech company (and, BTW, they already had a website for selling games last year - improving a website isn't a transformational change).

[MustacheAndaHalf]

... GME is an anomaly due to its Reddit fame.  But IJS a top SCV ETF holds this fund and many other companies ...

(1) GME's market cap is $16 billion, so it is not considered a small cap company
(3) IJS has Macy's ($6.8B) as it's largest holding.  GME ($16B) is too big for IJS.
https://www.ishares.com/us/products/239775/ishares-sp-smallcap-600-value-etf
(4) Since "GME is an anomaly", it cannot also be "the exact reason SCV outperforms VTSAX long term".

I think I'm gonna take Boarder42's side here. Gamestop is not in IJS now, but it was at the end of 2020, and also throughout the first half of 2021 or so. The reason it no longer is is because IJS was unloading it for months. I remember skimming a thread on Bogleheads where there was a great amount of consternation that a huge percentage of IJS was in GME (not sure why though, it made IJS owners a ton of money). You can easily google this.

Also I am not sure how much of an anomaly it was. Company stock returns, like many other economic things, follow a Pareto distribution, meaning 20% of the stocks produce 80% of the returns. But this relationship holds all the way to the end: 20% of the most 20% of profitable stocks produce 80% of the 80% of the returns. And so on, following 0.2^x and 0.8^x. Following that, you would expect a single stock in the S&P600 to be responsible for 40% of its returns (but probably the actual 80:20 is a little too extreme IRL, and it might be 67:33 or something)

On topic:
I made like $200 profit trading 1 share of GME with a starting $140. Now I am in RKLB, which so far has been a bad move.

Boarder42 was wrong, and I was right.  You can take the wrong side if you like, but you're still wrong.  You also don't seem to understand the goal of a small-cap ETF.  IJS doesn't speculate in what makes money - it doesn't keep GME because "it made IJS owners a ton of money".  That might be why you didn't understand a "great amount of consternation" on Bogleheads - they might rightly be concerned that a mid-cap stock had the largest weight in a small-cap ETF.  GME's market cap has been over $10 billion for the past 5 months.

In case you didn't know, "anomaly" was first mentioned by Boarder42.

Can you prove the statement "Company stock returns, like many other economic things, follow a Pareto distribution"?  I'm using specific numbers to prove my point, rather than generalizations like the 80% rule.  I don't expect general statements can be taken to an exponential power and still be accurate.  So I disagree that "you would expect a single stock in the S&P600 to be responsible for 40% of its returns".

I claim GameStop is an outlier - an unusual situation caused by a short squeeze that became nationwide, mainstream news.  Unique events like the GameStop rise in Jan 2020 aren't something you can expect to happen.  And so, it's not reasonable to invest in small cap stocks in the hope that a rise like GME's will happen again.

[boarder42]

... GME is an anomaly due to its Reddit fame.  But IJS a top SCV ETF holds this fund and many other companies ...

(1) GME's market cap is $16 billion, so it is not considered a small cap company
(3) IJS has Macy's ($6.8B) as it's largest holding.  GME ($16B) is too big for IJS.
https://www.ishares.com/us/products/239775/ishares-sp-smallcap-600-value-etf
(4) Since "GME is an anomaly", it cannot also be "the exact reason SCV outperforms VTSAX long term".

I think I'm gonna take Boarder42's side here. Gamestop is not in IJS now, but it was at the end of 2020, and also throughout the first half of 2021 or so. The reason it no longer is is because IJS was unloading it for months. I remember skimming a thread on Bogleheads where there was a great amount of consternation that a huge percentage of IJS was in GME (not sure why though, it made IJS owners a ton of money). You can easily google this.

Also I am not sure how much of an anomaly it was. Company stock returns, like many other economic things, follow a Pareto distribution, meaning 20% of the stocks produce 80% of the returns. But this relationship holds all the way to the end: 20% of the most 20% of profitable stocks produce 80% of the 80% of the returns. And so on, following 0.2^x and 0.8^x. Following that, you would expect a single stock in the S&P600 to be responsible for 40% of its returns (but probably the actual 80:20 is a little too extreme IRL, and it might be 67:33 or something)

On topic:
I made like $200 profit trading 1 share of GME with a starting $140. Now I am in RKLB, which so far has been a bad move.

Boarder42 was wrong, and I was right.  You can take the wrong side if you like, but you're still wrong.  You also don't seem to understand the goal of a small-cap ETF.  IJS doesn't speculate in what makes money - it doesn't keep GME because "it made IJS owners a ton of money".  That might be why you didn't understand a "great amount of consternation" on Bogleheads - they might rightly be concerned that a mid-cap stock had the largest weight in a small-cap ETF.  GME's market cap has been over $10 billion for the past 5 months.

In case you didn't know, "anomaly" was first mentioned by Boarder42.

Can you prove the statement "Company stock returns, like many other economic things, follow a Pareto distribution"?  I'm using specific numbers to prove my point, rather than generalizations like the 80% rule.  I don't expect general statements can be taken to an exponential power and still be accurate.  So I disagree that "you would expect a single stock in the S&P600 to be responsible for 40% of its returns".

I claim GameStop is an outlier - an unusual situation caused by a short squeeze that became nationwide, mainstream news.  Unique events like the GameStop rise in Jan 2020 aren't something you can expect to happen.  And so, it's not reasonable to invest in small cap stocks in the hope that a rise like GME's will happen again.

my point had nothing to do with the returns of GME - my point was the psychology of why almost everyone thought GME was such a bad play even at 9 dollars when this whole ruse started at the beginning of the year.  It wasnt that the returns from GME in IJS dictate the reason SCV outperforms.  Simply the mindset of an out of favor company and how or why would people put money in it even at 9 dollars a share. To be frank most any thing in the SCV area could be considered an anomaly when it does out perform due to a pivot in business model b/c people dont expect or see those things coming.  Its why SCV is made up of small out of favor companies like financials and mining and retail and oil. 

As asset rich company that is undervalued to book has historically outperformed a large growth company with expectations of performance that may or may not come.  and its outperformed by 2-3%. 

again my point was along the lines of the psychology behind how people think not along the returns that GME provided.  Though Amazon could have come along and decided they needed the retail space of GME to expand their cashier less mini marts and it could have exploded.  there are lots of opportunities for small cash flush/asset rich companies to explode.  And the mentality of well that's just a dated company with alot of money is why the SCV premium exists and will exist in perpetuity.

[MustacheAndaHalf]

It wasnt that the returns from GME in IJS dictate the reason SCV outperforms.  Simply the mindset of an out of favor company and how or why would people put money in it even at 9 dollars a share.

You said nothing about that in your earlier posts.  Further, IJS is a small cap index fund.  It does not involve psychology - it buys whatever is in it's index.  When GME was a small cap, it was in IJS.  When GME stayed at mid-cap market cap, it was sold by small cap index funds.

[MustacheAndaHalf]

If GameStop is going to be great at online game sales, why does GME have a higher market cap than Valve?  Valve not only makes games, but runs the #1 website for selling games: steam.  Players have built up game libraries over the almost 20 years that steam has been #1.  Valve's estimated value is taken from this article:
https://millennialmoney.com/valve-stock-ipo/

I think GME is worth $14 billion (versus Valve $10 billion) because it's a meme stock.  In January, GME was at $480/sh at one point, driven by a short squeeze.  At the end of February, r/wallstreetbets struck again, driving the price sharply higher.  Both of those events happened with old management and no company news.

Look at YTD prices for GME on Yahoo Finance.  In June, there was a spike as the new CEO and transformation were announced... and by a month later, the stock had faded back to it's level from before June.  But look back to the end of February, and the second short squeeze.  The current price is about the same as the price back then.  If there's something else going on, the stock price should reflect it.  But it doesn't.
https://finance.yahoo.com/quote/GME/

[arebelspy]

But look back to the end of February, and the second short squeeze.  The current price is about the same as the price back then.  If there's something else going on, the stock price should reflect it.  But it doesn't.
https://finance.yahoo.com/quote/GME/

Oh man, you got so close, but didn't take the next step.

You're right, there isn't anything else going on but the squeeze.

The shorts haven't covered.

[ChpBstrd]

But look back to the end of February, and the second short squeeze.  The current price is about the same as the price back then.  If there's something else going on, the stock price should reflect it.  But it doesn't.
https://finance.yahoo.com/quote/GME/

Oh man, you got so close, but didn't take the next step.

You're right, there isn't anything else going on but the squeeze.

The shorts haven't covered.

Days to cover: 1.9
Short % if Float: 12.35%
https://www.marketbeat.com/stocks/NYSE/GME/short-interest/

The short squeeze has been over for a while.

[arebelspy]

We'll have to agree to disagree.

I think the outstanding shares (due to synthetic shorts) is way, way higher than the publish numbers and the hedge funds are still short over 100% of the float.

We'll see.

[ChpBstrd]

We'll have to agree to disagree.

I think the outstanding shares (due to synthetic shorts) is way, way higher than the publish numbers and the hedge funds are still short over 100% of the float.

We'll see.

This may explain the anomalies people were seeing:
https://markets.businessinsider.com/news/stocks/sec-charges-illegal-meme-stocks-options-trading-scheme-2021-9

[MustacheAndaHalf]

But look back to the end of February, and the second short squeeze.  The current price is about the same as the price back then.  If there's something else going on, the stock price should reflect it.  But it doesn't.
https://finance.yahoo.com/quote/GME/

Oh man, you got so close, but didn't take the next step.

You're right, there isn't anything else going on but the squeeze.

The shorts haven't covered.

There is no next step in the YTD performance data.
Why is there a short squeeze in Jan, another in late Feb/early March, then nothing?
https://finance.yahoo.com/quote/GME/

There hasn't been a short squeeze since mid-March, which is over 6 months ago.  I don't count the June meeting - earlier in this thread I thought the new CEO and transformational plans would push GME up.  But even if we disagree and call that a short squeeze... why 0-1 squeezes in 6 months?

[arebelspy]

I donno, I wouldn't say nothing has happened since March; it did jump 27% on no news just a month ago, August 24.

https://www.barrons.com/articles/gamestop-amc-stock-price-meme-51629847398?tesla=y

Hard to see any reasonable explanation for that.

None of these (save January) were the short squeeze though. That'll happen when the shorts (inevitably) cover.

[MustacheAndaHalf]

None of these (save January) were the short squeeze though. That'll happen when the shorts (inevitably) cover.

GME went from $45 on Feb 23 to $265 on Mar 10.  That +480% jump was not a short squeeze?
How else can you explain 2x in one day, and almost 6x in 2.5 weeks?

[arebelspy]

Oh, it certainly was in line with and a part of the short squeeze play going on.

I'm just saying it wasn't the end of it. It wasn't *the* short squeeze.

As we've seen in the last week via documents discovered/leaked from an ongoing lawsuit, the hedge funds (specifically Citadel, but I'm sure they're not the only ones) increased their short positions on Jan 27 after telling Robin Hood to shut off the buy button.

When all the shorts cover, the squeeze will happen.

[MustacheAndaHalf]

Oh, it certainly was in line with and a part of the short squeeze play going on.

I'm just saying it wasn't the end of it. It wasn't *the* short squeeze.

As we've seen in the last week via documents discovered/leaked from an ongoing lawsuit, the hedge funds (specifically Citadel, but I'm sure they're not the only ones) increased their short positions on Jan 27 after telling Robin Hood to shut off the buy button.

When all the shorts cover, the squeeze will happen.

I didn't find the stories you mention in a quick search.  There seems to be a lawsuit about what happened 8 months ago on Jan 27.  What have hedge funds been doing recently?

Personally, I find the price chart compelling.   I can turn it into numbers by visiting Yahoo Finance's "historical prices" page for GME, and getting the monthly summary.  There I see highs and lows for each month - to get volatility, I can divide them.  But I see stalemate - GME never returning to the high vs low ratio of those first 3 months (Jan - Mar):
Jan : 483 / 17 = 28.4x
Feb : 322 / 38.5 = 8.4x
Mar : 348.5 / 99.97 = 3.5x
Apr : 196.97 / 132 = 1.5x
May : 268.8 / 136.5 = 2.0x
Jun : 344.66 / 197 = 1.7x
Jul : 216.83 / 158 = 1.4x
Aug : 227 / 145.22 = 1.6x
Sep : 231.44 / 178 = 1.3x
https://finance.yahoo.com/quote/GME/history?period1=1609459200&period2=1632873600&interval=1mo&filter=history&frequency=1mo

If I was investing based on those numbers, $181 looks in the lower range for GME.  It's also midway between quarterly meetings, so I might buy now and wait for the November meeting, and sell during a run-up to that meeting - before it occurs.

[MustacheAndaHalf]

Addendum - Based on the theory that I would be a buyer right now, I sold my GME put option that will expire Jan 2022 (at a loss).  GME seems to stable to wait for volatility and a price drop.

That leaves me with one position on GME.  After closing positions at steep losses on Feb 24, that day my last position had risen to double those already large losses.  Given I had just one position, lots of liquidity... I decided to stare down the market, and not sell.  So far, that has reduced my losses - but it's still a loss.

[ChpBstrd]

It appears the solution to the "how to profit?" question is "do not play the game."

Long GME lost.
Long puts on GME lost.
Naked short calls did well at one particular time, but then again there are lots of ways to play Russian Roulette.

[boarder42]

It appears the solution to the "how to profit?" question is "do not play the game."

Long GME lost.
Long puts on GME lost.
Naked short calls did well at one particular time, but then again there are lots of ways to play Russian Roulette.

I made some money. I owned an index fund that held gme. Then it sold it when it was not small or value anymore. Think we found a way to profit off this in the future.

[Rockies]

I made a massive amount of money by not paying any time or attention to GME and not investing in it. Instead I worked and lived by life while steadily contributing 20% of my income to a diversified index fund. 

[WoodsRun]

There's a trend in these recent posts - people are shown they are wrong with data, and then continue to keep the same views.

boarder42 - Or you could be wrong.  I notice you claim to not be understood, but can't quote anything I misunderstood.  You haven't been able to refute the points I made.  So to me, I think you know you're wrong, and don't want to admit it.  Is that a good strategy for investing?

From what I understood their last quarterly report was good news for GameStop.
Total Revenue was 1.183 Billion compared to 0.942 B the same quarter last year.
Gross Profit was 320M compared to 252M the same quarter last year.

~1.5 Billion in Cash to transform the company.
Almost no debt.

I would not bet against GameStop.

Edit: Numbers.

You invest without considering the share price?  It was under $10/sh one year ago, and is now about $209/share, or 20x higher.  Giving your numbers that context, the company looks horrible.

GME's market cap was $565M a year ago, and is $16,000M now.  By the measure used in index funds, GameStop has grown 2700% larger in 12 months.
https://ycharts.com/companies/GME/market_cap

That growth is what spoils the profit numbers you mentioned.  Using your profit numbers divided by market cap:
$252M / $565.6M = profits equal to 44% of it's market cap a year ago
$320M / $16000M = profits equal to 2% of it's market cap now

Yahoo displays GME's total revenue and gross profit.  Look at Jan numbers for 2018, 2019, 2020, 2021 ... both declined every year.  Their gross revenue was $9.2B in 2018, and $5.1B in 2021 - down by almost half.  Their gross profit sank from $3.04B to $1.26B, a decline of more than half.
https://finance.yahoo.com/quote/GME/financials?p=GME

I am investing in GameStop as I would invest in a tech company that has lots of cash positioned for growth.
The last earnings call included new CEO Matt Furlong explaining that they are transitioning from a retail to a tech company. In other words previous quarterly and annual profits / revenue are not relevant. It will turn into an entirely different company with vastly different profit margins.

In your earlier post, you quote the revenue and profit compared to last year.  And in this post, you contradict yourself, and claim the very numbers you posted "are not relevant".  Why did you post data that is "not relevant"?

GameStop is a retail company.  In SPDR Retail ETF it is listed under "COMPUTER & ELECTRONICS RETAIL".  And Vanguard Consumer Discretionary ETF (VCR) lists it as holding #55 (by weight).
https://www.ssga.com/us/en/individual/etfs/resources/doc-viewer#xrt&third-quarter-holdings
https://investor.vanguard.com/etf/profile/portfolio/VCR/portfolio-holdings

GME stock opened at $19/share, and then hit $483/share the same month.  Management hadn't changed, it was still a retail company with thousands of outlets and almost all employees working in retail stores.  What happened wasn't a transformation - it was an attack on short sellers by reddit/wallstreetbets.  And it worked - hedge funds lost billions.  Check any news coverage - it will match my description.

Which tech companies have 4800+ retail stores, like GameStop?  They employ 12,000 full time and about 20,000 part time workers.  Where do 95% (literally) work?  In retail.  A company that makes most of it's money from retail, has almost all it's workers in retail, and has 4800 retail stores... is a retail company.  This isn't the dot-com era, where having a website means you're a tech company (and, BTW, they already had a website for selling games last year - improving a website isn't a transformational change).

Sorry I was trying to reply to one of your earlier posts where you said they had a 'greater loss than expected'

What's amazing about GME stock is how it rebounds, regardless of information.  Analysts digested GameStop's earnings report & earnings call, and sent the stock down 10%.  I read that earnings had greater losses than expected, and there was complete silence from management about the company's transformation.  Seems like valid reasons to lower expectations for GME stock... but WSB jumped in and bought until the stock price recovered.

I'm coming to view WSB as "trolling with money".  They want to change things, make noise... and use money as a form of trolling.  Does the stock price make sense?  Do a troll's posts make sense?  The stock price moves are like a troll's posts, drawing in interested people to discuss - or invest.  The fundamentals aren't there - the stock price could be $150 or $250 without anything taking place.

I see two risks: (1) GME is a mess that comes crashing down.  (2) It works, and people who made money this way keep trying this same approach.  Chase meme stocks endlessly, which also seems like a bad idea.  Maybe GameStop will be more successful than expected, but if that's the case, the Chairman and CEO are suspiciously quiet about the transformation they extolled mere months ago.

In which I tried to point out that earnings were not as bad as expected. That is the only reason I brought up the fundamentals.

That being said, I still think it is hard to evaluate the future of GameStop based on previous earnings reports. At this point in time investing in GameStop is like investing in a low / mid cap tech company. GameStop has already closed several retail locations to consolidate sales. I don't know how much GameStop will still depend on traditional retail going forward.

[ChpBstrd]

What "low/mid cap tech company" lacks a viable product or a business plan to produce a viable product, even after being gifted a billion dollars by investors to come up with such a thing?

GME hasn't done enough homework to make it onto the Shark Tank TV show, much less be categorized alongside boutique software firms and semiconductor suppliers who have a clear direction towards growth.

[MustacheAndaHalf]

It appears the solution to the "how to profit?" question is "do not play the game."

Long GME lost.
Long puts on GME lost.
Naked short calls did well at one particular time, but then again there are lots of ways to play Russian Roulette.

I have another take on the short calls, but I pretty much agree with this description.

When GME spiked in January, the short squeeze left the company extremely overvalued.  National media coverage let every hedge fund and institutional investor know a profit opportunity was available, and the next Monday, they all took it.  I could have been wrong, but I think my analysis was sound, and the risk was appropriate.  I should have made 90% profit (sell short $100, then buy it back later for $10).

What I did instead, is think the institutional money would never leave.  I treated the drop in GME's price as a sure thing, and ignored risk and amount of money I put in.

I recently covered some of my remaining GME short calls.  If the stock gets hyped up before the shareholder's meeting, I might return to my original position size.  I'm keeping it small and manageable, which I didn't do at the end of February.

[MustacheAndaHalf]

I've closed my short call position, and now hold no exposure to GameStop outside index funds.  Ah, quite a relief!

Next, one of two things will happen:
(1) I'll stay away from GME shares and options
(2) I'll sell GME calls next month near the time of the shareholder's meeting

[ChpBstrd]

I've closed my short call position, and now hold no exposure to GameStop outside index funds.  Ah, quite a relief!

Next, one of two things will happen:
(1) I'll stay away from GME shares and options
(2) I'll sell GME calls next month near the time of the shareholder's meeting

Volatility is too low to sell calls right now. VIX is in the 15's. Maybe that will change next month. If anything, I'm tempted to go long S&P index calls. One could 2x leverage the S&P 500 for the entire year of 2022 with a maximum downside of about 12-15%. I'm actively doing the math on the Calls and Cash strategy I was suggesting months ago on this board.

If selling calls, I'd also be afraid the October and November inflation numbers suddenly start to confirm the Fed's "transitory" thesis. If so, we could be in for a big EOY rally.

[MustacheAndaHalf]

I've closed my short call position, and now hold no exposure to GameStop outside index funds.  Ah, quite a relief!

Next, one of two things will happen:
(1) I'll stay away from GME shares and options
(2) I'll sell GME calls next month near the time of the shareholder's meeting

Volatility is too low to sell calls right now. VIX is in the 15's. Maybe that will change next month. If anything, I'm tempted to go long S&P index calls. One could 2x leverage the S&P 500 for the entire year of 2022 with a maximum downside of about 12-15%.

Well, S&P doesn't have much to do with GME deathwatch, but I'll bite.

Do you literally mean "S&P index calls", as in ^SPX call options?  Buying 2x those costs about $200,000 each contract.  Those are the only calls I've ever seen with negative time value - they are sold at a discount.  I suspect that's because 2x calls aren't that popular, tie up a lot of money, and can't be exercised like other options (they are cash settled).

My guess is you meant SPY calls, which can be exercised to get shares of SPY (the S&P 500 ETF).  I've managed to buy those 2x options for under 1% time value over 2+ years, which seems like a good deal to me.

But there's no such thing as "maximum downside of 15%".  If the S&P 500 falls 10%, these 2x calls take a 20% loss.  It's very unlikely that Dec 2023 calls will be 20% down from here, but it's possible.

Back to GME, the VIX is useful for non-meme stocks.  I've heard options with 100% implied volatility called extremely volatile, but GME hit 4000% implied volatility back in Jan/Feb.  Although an interesting idea - if GME has volatility similar to the wider market, maybe that spells trouble for GME?  Nobody wants to go very slowly to the moon, especially if they're below escape velocity and fall back to earth ...
(Or maybe "escape volatility"?)

The most recent news item on GameStop's website is about hiring 500 people for customer care.  It's part of the move towards better customer service.  Which is nice... but might not be a huge transformation on the scale people imagined.
https://gamestop.gcs-web.com/news-releases/news-release-details/gamestop-hire-500-employees-new-customer-care-center-south

The next GameStop quarterly meeting happens Dec 6, not Nov.  I'm assuming price and volume will increase the week before this meeting.
"Q3 2021 GameStop Corp Earnings Release        6 Dec 2021 / 6PM CST"
https://www.reuters.com/companies/GME.N/events

It's a convenient trade, if I try to do it.  I can wait for activity, and then decide if I want to short shares or calls.  There's a dozen analysts covering GameStop, and the fundamentals are likely to disappoint relative to it's current market cap.  So there will likely be a drop from their negative views, at which point we find out if GME fans start buying to make up for it.

Either way, weeks afterwards the stock is likely to be down, and I'll wait for that.  Or maybe I'll just ignore the whole thing, and invest in something more predictable!

[arebelspy]

The most recent news item on GameStop's website is about hiring 500 people for customer care.  It's part of the move towards better customer service.  Which is nice... but might not be a huge transformation on the scale people imagined.
https://gamestop.gcs-web.com/news-releases/news-release-details/gamestop-hire-500-employees-new-customer-care-center-south

I think you underestimate their digital transformation and the potential impact of Blockchain a and NFTs on their business.

[MustacheAndaHalf]

The most recent news item on GameStop's website is about hiring 500 people for customer care.  It's part of the move towards better customer service.  Which is nice... but might not be a huge transformation on the scale people imagined.
https://gamestop.gcs-web.com/news-releases/news-release-details/gamestop-hire-500-employees-new-customer-care-center-south

I think you underestimate their digital transformation and the potential impact of Blockchain a and NFTs on their business.

GameStop's price was determined by the short squeeze at the start of 2021, not by it's plans for digital transformation.  GME is a meme stock with a price decided by WallStreetBets.

Buying a game or game download requires trust in the game company that made it.  A blockchain doesn't add anything, because trust is required.  Game companies can make persistent items available in their stores, or use another NFT provider.  At best, GameStop could cash in on some partnerships and NFT money, but that entire market is relatively small - certainly not in the billions.

GameStop is king of retail game sales, and nothing else.  Steam already leads in digital sales, and each game company doesn't want to lose sales to GameStop's online store.  If game companies view GameStop as a threat, they could even pull their games from GameStop, since they don't want to fund a competitor.

GameStop hired a director from Amazon who had no CEO experience, and hadn't worked in the game industry.  Why is that a recipe for success?  GameStop has to partner with game companies, and compete with entrenched competitors.  While I expect that to turn out worse than expected, the stock is already priced for astounding success.

If WallStreetBets abandons GME, and analysts provide price targets based on company fundamentals, the stock price would drop sharply.  That already happened at the last quarterly meeting - a stock price drop, followed by a rescue from WallStreetBets.  If GME ever trades on fundamentals again, the stock price will drop quickly.

[WoodsRun]

The most recent news item on GameStop's website is about hiring 500 people for customer care.  It's part of the move towards better customer service.  Which is nice... but might not be a huge transformation on the scale people imagined.
https://gamestop.gcs-web.com/news-releases/news-release-details/gamestop-hire-500-employees-new-customer-care-center-south

I think you underestimate their digital transformation and the potential impact of Blockchain a and NFTs on their business.

If WallStreetBets abandons GME, and analysts provide price targets based on company fundamentals, the stock price would drop sharply.  That already happened at the last quarterly meeting - a stock price drop, followed by a rescue from WallStreetBets.  If GME ever trades on fundamentals again, the stock price will drop quickly.

Yes if Reddit / retail investors completely abandon GameStop I could see the possibility of it being over. But at the moment GameStop will be working on their NFT platform and other Web3 developments. With that information I can see investors piling more money into the stock, not less. This will be good for the company and will aid in their digital transformation.

[arebelspy]

And let's not forget the short squeeze.

So many shares sold short and never closed (SEC report that came out last week confirmed the volume in Jan was retail FOMO, not shorts covering).

[ChpBstrd]

Overall, the markets are getting very frothy, with greed-driven desperation bets all over the place:

Crypto: Let's put all our money into something with no working application on the bet that others will pay even more for it.
GME/AMC: Let's put all our money into a defunct retailer / theatre with serious strategic issues and see what they do with the funds from secondary offerings.
SPACs: Let's put all our money into a shell corporation on the basis that it might pick up a bargain some day.
DWAC: Let's put all our money into a non-existent possible future social media platform run by people with no experience at social media and lots of experience screwing investors.

Maybe this is a consequence of today's deeply negative real bond yields or our CAPE being near 39, or maybe it's because any investor over 45 has lived through 3 massive SORR corrections/financial crises in their lifetimes already and has developed a distrust for long-term buy-and-hold? Would WallStreetBets have even become a thing if retail investors were enthusiastic about The Simple Path to Wealth, A Random Walk Down Wall Street, or the MMM message? It seems like the mentality is that the only way to get rich is to win a gamble, and the way to get nowhere is to diligently save, invest in diversified indexes, and get wiped out by the next crisis - if not killed by the COVID floating around at your job. I wonder if this was what things were like in 1980, when everyone assumed inflation could only rise and that the crazy government's interest rate hikes were going to put all US industry out of business, and despair + greed pushed people into silver and gold as a desperate last-ditch capitulation gambles because everything else looked so bad? Has anyone been informed that S&P500 earnings are forecast to increase about 9.3% next year?

Anyways, I can't decide whether today's "irrational exuberance" is a buy signal like 1981 or 2011, or if it's a bubble signal like 1999. As I learned once before, a bursting bubble drags everything down.

[boarder42]

Overall, the markets are getting very frothy, with greed-driven desperation bets all over the place:

Crypto: Let's put all our money into something with no working application on the bet that others will pay even more for it.
GME/AMC: Let's put all our money into a defunct retailer / theatre with serious strategic issues and see what they do with the funds from secondary offerings.
SPACs: Let's put all our money into a shell corporation on the basis that it might pick up a bargain some day.
DWAC: Let's put all our money into a non-existent possible future social media platform run by people with no experience at social media and lots of experience screwing investors.

Maybe this is a consequence of today's deeply negative real bond yields or our CAPE being near 39, or maybe it's because any investor over 45 has lived through 3 massive SORR corrections/financial crises in their lifetimes already and has developed a distrust for long-term buy-and-hold? Would WallStreetBets have even become a thing if retail investors were enthusiastic about The Simple Path to Wealth, A Random Walk Down Wall Street, or the MMM message? It seems like the mentality is that the only way to get rich is to win a gamble, and the way to get nowhere is to diligently save, invest in diversified indexes, and get wiped out by the next crisis - if not killed by the COVID floating around at your job. I wonder if this was what things were like in 1980, when everyone assumed inflation could only rise and that the crazy government's interest rate hikes were going to put all US industry out of business, and despair + greed pushed people into silver and gold as a desperate last-ditch capitulation gambles because everything else looked so bad? Has anyone been informed that S&P500 earnings are forecast to increase about 9.3% next year?

Anyways, I can't decide whether today's "irrational exuberance" is a buy signal like 1981 or 2011, or if it's a bubble signal like 1999. As I learned once before, a bursting bubble drags everything down.

pretty good analysis of the current frothiness.  Just what bubble will burst and when and what will be pulled with it.  also while a bursting bubble drags everything down there are many asset classes that recover faster after bubbles burst.  Typically b/c they aren't part of the bubble that burst.

Its odd when i get people who know nothing about investing but know its what i talk about alot, and they come to me asking me about crypto or AARK or even posts around here talking about swapping indexes b/c this one has outperformed that one recently.  Recency bias, FOMO, uneducated investors.  its definitely getting frothy.

[MustacheAndaHalf]

It's interesting that nobody riding GME to the moon ever responds to my points about Steam vs GameStop.  The digital transformation means selling games online, right?  How will GameStop beat the existing #1 seller of games online, which is Steam / Valve?

[ChpBstrd]

It's interesting that nobody riding GME to the moon ever responds to my points about Steam vs GameStop.  The digital transformation means selling games online, right?  How will GameStop beat the existing #1 seller of games online, which is Steam / Valve?

There is no answer. GME is going the way of the old AOL CDs people got in the mail back in the 90s.

[arebelspy]

It's interesting that nobody riding GME to the moon ever responds to my points about Steam vs GameStop.  The digital transformation means selling games online, right?  How will GameStop beat the existing #1 seller of games online, which is Steam / Valve?

Selling digital video games (or reselling them) is only a very small part of the digital transformation. It means expanding to more than a game company, but a tech/financial company.

[WoodsRun]

It's interesting that nobody riding GME to the moon ever responds to my points about Steam vs GameStop.  The digital transformation means selling games online, right?  How will GameStop beat the existing #1 seller of games online, which is Steam / Valve?

Steam / Valve does not support Blockchain.

Edit: sidenote, I learned that Steam is from Valve since you mentioned it.

[ChpBstrd]

It's interesting that nobody riding GME to the moon ever responds to my points about Steam vs GameStop.  The digital transformation means selling games online, right?  How will GameStop beat the existing #1 seller of games online, which is Steam / Valve?

Steam / Valve does not support Blockchain.

Edit: sidenote, I learned that Steam is from Valve since you mentioned it.

Is GME going to solve a problem with blockchain that Steam/Valve cannot solve without blockchain? For example, is Steam/Valve unable to confirm which of its customers have purchased digital items, or where customers are in the payment process?

[MustacheAndaHalf]

It's interesting that nobody riding GME to the moon ever responds to my points about Steam vs GameStop.  The digital transformation means selling games online, right?  How will GameStop beat the existing #1 seller of games online, which is Steam / Valve?

Selling digital video games (or reselling them) is only a very small part of the digital transformation. It means expanding to more than a game company, but a tech/financial company.

I've never seen GameStop claim they will become a tech/financial company.  Is there a news source for that?  I searched for "gamestop plans digital transformation", and got this article.
https://qz.com/2019225/what-really-is-gamestops-e-commerce-transformation/

Oh, and my earlier information about NFTs sales was outdated.  First half of 2021, $2.5 billion sales ... and now it's quadrupled to $10.7 billion total sales.
https://www.reuters.com/technology/nft-sales-surge-107-bln-q3-crypto-asset-frenzy-hits-new-highs-2021-10-04/


Gamestop has an NFT page on it's website, where they ask people to join their team.  That's reliable information that NFTs are part of their strategy.  The above article concludes with the following:

Gaming-related NFTs also surged, with the blockchain-based game Axie Infinity leading the "play-to-earn" sector with $776 million in Q3 revenues, DappRadar said.

Axie Infinity is a game company with an iPhone/Android game.  They made their own crypto currency, and their own NFTs.  If anyone is positioned to consult for other game companies, it's Axie Infinity.  Making an NFT is the easy part - verifying it, and integrating it into a game is much harder.  I just don't see game companies paying GameStop to do the easy part for them.

[arebelspy]

IMO, you are thinking much too narrowly about the possibilities of Blockchain and fungible and non-fungible tokens.

GameStop as a brick and mortar store that has an online presence is what they are today. Evidence is they're transitioning into something more.

Regardless, this recent article makes a good case that you shouldn't fight the Reddit mob sentiment anyways:
https://www.nasdaq.com/articles/dont-try-to-fight-an-uphill-battle-against-the-gamestop-apes-2021-10-25

[MustacheAndaHalf]

IMO, you are thinking much too narrowly about the possibilities of Blockchain and fungible and non-fungible tokens.

GameStop as a brick and mortar store that has an online presence is what they are today. Evidence is they're transitioning into something more.

You're making short, vague statements without evidence for your claims.  That I'm "thinking much too narrowly" is a claim - where is your evidence?  You mention "Evidence is they're transitioning into something more", so where is the evidence? 

Regardless, this recent article makes a good case that you shouldn't fight the Reddit mob sentiment anyways:
https://www.nasdaq.com/articles/dont-try-to-fight-an-uphill-battle-against-the-gamestop-apes-2021-10-25

If this is your evidence, there's a problem.  The last line of that article is: "The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc."  Which hints at why I should question the source of that article.  That article links to the original source of the content, which is here:
https://investorplace.com/2021/10/dont-try-to-fight-an-uphill-battle-against-the-gme-stock-apes/

And that's where it becomes clear you linked to a blogger who also said "It’s perfectly okay to hold both DOGE and SHIB in your cryptocurrency portfolio. Neither one is “better” than the other; they’re just different."
https://investorplace.com/2021/10/you-can-love-your-shiba-inu-but-dont-put-dogecoin-in-the-doghouse/


The data from the article I quoted is from a company called DappRadar, which supposedly tracks NFT markets.  If I'm wrong about that source, I'm fine being corrected about it.  But I'm citing data for my evidence, rather than bloggers.

I think this is a trend with most GameStop supporters here.  Vague, short comments that make claims - but nothing to back it up.  Usually not even a clear explanation, let alone data or evidence.  I think it's better to invest based on data.

[arebelspy]

You mention "Evidence is they're transitioning into something more", so where is the evidence? 

Loopring publishing to Git referencing Gamestop seems a good indicator. Could be wrong, but this is how making predictions go. By the time the evidence is the way you want it, the move has happened.

[arebelspy]

For the conspiracy theorists there's a lot of coincidences.

Like 3 months ago someone posts this image on the main GME subreddit, superstonk:
https://www.reddit.com/r/Superstonk/comments/ofpteu/today_in_visual_format/



Two days ago billionaire chairman of the board Ryan Cohen tweets same image, sans captions/text:
https://mobile.twitter.com/ryancohen/status/1453174821072801794

Could be a coincidence, absolutely. But why, exactly, is a billionaire well aware of the hype surrounding his company tweeting this random ass picture for no reason?

[secondcor521]

But why, exactly, is a billionaire well aware of the hype surrounding his company tweeting this random ass picture for no reason?

My first thought is he doesn't have a better business plan.

[arebelspy]

Could be. Hype up the internet mob to keep valuations high and take advantage of that.

They did get rid of all their debt and raise billions this year by becoming a meme stock.

[secondcor521]

They did get rid of all their debt and raise billions this year by becoming a meme stock.

Yes, but that was hardly their plan, and isn't really a sustainable business model IMHO.

[arebelspy]

They did get rid of all their debt and raise billions this year by becoming a meme stock.

Yes, but that was hardly their plan, and isn't really a sustainable business model IMHO.

Agreed.

I was referring to your hypothesis of his recent tweet being that he has no other business plan other than hyping internet mob to keep valuation high, and that earlier meme stock status gave him the "pay off debt and raise cash" benefits, so continuing that, while not indefinitely sustainable, has benefits, and this could be why he's tweeting it.

[MustacheAndaHalf]

You mention "Evidence is they're transitioning into something more", so where is the evidence? 

Loopring publishing to Git referencing Gamestop seems a good indicator. Could be wrong, but this is how making predictions go. By the time the evidence is the way you want it, the move has happened.

I found the NFT marketplace, but I already knew about that.  There's already large marketplaces for NFTs.  GameStop is still hiring a team... would you rather invest in a market leader or a company who hasn't started?
https://gmedd.com/blockchain/loopring-code-confirms-gamestop-nft-marketplace-is-underway/

You posted an article by a guy who believes joke crypto currencies (DOGE, SHIB) are legitimate investments to hold.  I'm not counting that as evidence for something more!  (I don't get that kind of scoop often.  I plan to gloat about it one more post before dropping it, haha!)

[arebelspy]

Regardless of what he thinks make good investments (things that seem clearly like greater fool speculation), I can still agree with his larger point in that specific article about "don't fight the apes."