GameStop Saga

[🏀]

Before I start - I am biased, I do own a decent chunk of Gamestop stock.  Obviously, none of this is financial advice.

Jefferies has raised their GME target to $175 with an upside of $220.  That means an analyst actually believes the stock has higher to go than it's current closing price.  They are certainly an outlier, but they're still a massive investment bank.  Numerous others (including Bank of America) have taken their ball and gone home, meaning their analyst has thrown a fit that they can't properly value the stock based on "fundamentals".

Regardless, to answer your question:

1. The CEO, CFO, and new board members are compensated mainly via stock.  Actually the board is 100% stock.  It was based on the share price over a 1 month period - I believe there were a number of hires and additions over a period, but most of their cost basis is somewhere between  $140-180.  CEO  Matt Furlong's cost basis is over $200.  The chairman (Ryan Cohen) did not convince a bunch of ex-Amazon execs to quit on Bezos for a failing video game retailer.  Not to mention, he executed a subtle takeover of the board, ousted current CEO and CFO, and wholesale replaced his board seats with ex-Chewy and other impressive members.

2. Gamestop's current price has allowed them to raise ~1.7 billion in capital via stock issuance and pay off all debt, which frankly, was part of the bear thesis.  They aren't going bankrupt and they aren't failing anytime soon.

3. Many believe they are going to blow their targets out of the water in September for ahead of earnings.  Frankly, they have a rabid investor base who go out of their way to shop at Gamestop.  We're also on the upswing of a new console cycle, where Gamestop always gets a lift from.

4. They've expanded into adjacent markets, grown e-commerce revenue significantly, and opened two massive distribution facilities on the east and west coast.

5. There are confirmed crypto/NFT developers working for Gamestop.  Many hypothesize it's either to develop an NFT to resell "used" digital games (digital games being a consumer taste preference has also long been part of the bear thesis).  Others believe it is an NFT dividend, which would effectively prove the stock has 'synthetic' shares that a market maker, Citadel, used their MM privileges' to create.  Distribution of this would immediately require the short HFs to cover and cause a squeeze.

I could go on, but I think the company is doing well and the price is being suppressed by multiple entities.    I'm an investor, but am not a "Reddit Edgelord" as stated above.

This was really complete and fascinating response. I have no further questions at this time, thank you.

[JWags85]

Jefferies has raised their GME target to $175 with an upside of $220.  That means an analyst actually believes the stock has higher to go than it's current closing price.  They are certainly an outlier, but they're still a massive investment bank.  Numerous others (including Bank of America) have taken their ball and gone home, meaning their analyst has thrown a fit that they can't properly value the stock based on "fundamentals".

Spot on with the majority of what you said, well done.  However, I'll caveat this.  Price targets and analyst projections, especially from the big merchant banks, have basically become a joke.  They are used to sell stocks to their clients or help them move in and out of positions.  There are myriad examples of this.  Honestly, banks dropping their coverage of GME is sort of the most honest and truthful cause they know there isn't even remotely logical analysis of a company's fundamental or book value when the stock is playing and moving like this.

Regardless, to answer your question:

1. The CEO, CFO, and new board members are compensated mainly via stock.  Actually the board is 100% stock.  It was based on the share price over a 1 month period - I believe there were a number of hires and additions over a period, but most of their cost basis is somewhere between  $140-180.  CEO  Matt Furlong's cost basis is over $200.  The chairman (Ryan Cohen) did not convince a bunch of ex-Amazon execs to quit on Bezos for a failing video game retailer.  Not to mention, he executed a subtle takeover of the board, ousted current CEO and CFO, and wholesale replaced his board seats with ex-Chewy and other impressive members.

2. Gamestop's current price has allowed them to raise ~1.7 billion in capital via stock issuance and pay off all debt, which frankly, was part of the bear thesis.  They aren't going bankrupt and they aren't failing anytime soon.

These are the most important keys for me.  There are intelligent and forward thinking people running the show at GameStop now, and thats whats most encouraging and potentially exciting for the company moving forward.  As well as the secondary they raised which allowed them to clear their books.  Frankly every company that experienced some wild spike this year, including KOSS and others, should have quickly issued secondaries at the inflated price and replenished their coffers.

GameStop isn't a disaster that is destined to fail anymore, but until there is a clear monetized plan for their new digital/NFT/ecommerce channels, I have a really hard time justifying a 3 digit stock price.  I think a likely outcome is this retail/fund tug of war eventually ends, the stock recedes to a more realistic price in the $25-$50 range, and then moves upwards from there as Cohen and his team continue with revitalizing the business strategy

[Skatastrophy]

These are the most important keys for me.  There are intelligent and forward thinking people running the show at GameStop now, and thats whats most encouraging and potentially exciting for the company moving forward.  As well as the secondary they raised which allowed them to clear their books.  Frankly every company that experienced some wild spike this year, including KOSS and others, should have quickly issued secondaries at the inflated price and replenished their coffers.

+1

Gamestop raised ~$1B off the backs of this retail craze. I don't know if they'll do anything else with it after they paid down all of their debt, but it was a good move.

[dgies9156]

Simple Rules for Investment Success:

1) If you don't understand it, don't buy it.

2) Companies have to make money. That's how investors consistently get returns.

3) Invest for the long-haul.

4) Don't bet the money for grandma's operation on GameStop or any high-risk emerging growth company.

5) Do your homework. If returns are too good to be true, someone is lying.

6) Unless you are trading on material nonpublic information (which, for the record, is a felony), you can't consistently beat the market. Don't ever forget, high reward means high risk.

7) Day traders lie about as often as fishermen do. Maybe a lot more!

8) Make sure your advisor is well-respected and is backed by a strong firm. Again, do your homework.

I've probably lost a few opportunities along the way, but my goal has been to invest in solid companies with good track records. Best performance over time has been Deere & Co., and JP Morgan. Had 'em both for a long time and done very well. Best on a few banks that have done well in the M&A market as well.

You wouldn't catch me dead owning Game Stop. Bad industry being overtaken by online. Other then a crappy technical trade on a low volume stock, there is nothing to see here. People need to stop playing and start thinking!

[TSmith34, Inc.]

Simple Rules for Investment Success:

1) If you don't understand it, don't buy it.

As I said at the time in the investment thread, this is why I got out after my extremely brief foray.

During the initial spike into triple digits I made a small investment in put options, believing the stock was wildly overvalued and would come back down. Went to a meeting and came back an hour later to see that the stock has continued to spike from 114 when I bought the puts to 170+.

In any rational market I should have been solidly in the red at that point and I opened up the trading screen with the intention of doubling down on my paper loss only to see that the value of my puts had inexplicably gone up. So instead I bought the puts back with a small profit, got out and stayed out.

I wasn't investing, and I wasn't even day trading, so any understanding or trading knowledge or expertise on my part was useless. It was just spinning a roulette wheel at that point.

[JWags85]

As I said at the time in the investment thread, this is why I got out after my extremely brief foray.

During the initial spike into triple digits I made a small investment in put options, believing the stock was wildly overvalued and would come back down. Went to a meeting and came back an hour later to see that the stock has continued to spike from 114 when I bought the puts to 170+.

In any rational market I should have been solidly in the red at that point and I opened up the trading screen with the intention of doubling down on my paper loss only to see that the value of my puts had inexplicably gone up. So instead I bought the puts back with a small profit, got out and stayed out.

I traded some AMC calls back in, I want to say late May.  The stock moved aggressively from the 30s to the 50-60s.  I had calls a week or two out.  My positions increased more in 2 different days where the stock was flat or slightly down than on a day where it ripped up.  Volatility in the meme stocks is something else.

[Herman Cain]

I have never shorted a stock in my life . The risk reward ratio never quite worked in my view.

In the old days there were specialists who kept orderly markets . The specialists had the order book at any one time so they a license to print money as a result . Not sure how much of this Game Stop Imbroglio would have occurred under the old system

In today’s fully transparent electronic market place , the volatility is extreme .

I am not adding to my portfolio right now but also not selling either .

[WarriorDoc]

GameStop closed at $211 today. Pretty clear it’s not retail driving this volume. And if you look at the run-ups, it looks quarterly.

[speri]

GameStop closed at $211 today. Pretty clear it’s not retail driving this volume. And if you look at the run-ups, it looks quarterly.

I noticed that too. I'm not a stock guy, but I find the GmaeStop story the most intriguing thing going on in the stock market. I really think this will be the biggest national story of 2021 (or 2022 if it drags on that long).