5 ms·

the bull thesis has been laid out in detail for months and it's a good one, this is organic interest, Ryan Cohen and others coming over from Chewy was the most

by vga805 6y ago

the bull thesis has been laid out in detail for months and it's a good one, this is organic interest, Ryan Cohen and others coming over from Chewy was the most recent catalyst

fennecfoxen 6y ago
People exist who in the past two days paid $150 for a share that most analysts think is worth about $14 — at a company with negative earnings for six of the last seven quarters, and minimal earnings growth over the past few years. I'm sure there was some bull case for the company, and it might have had a snowball's chance in hell around $14 or even $20/share. But at $60+ ? What on God's good earth is supposed to make the company worth that much?
- vga805 6y ago
  good point, to clarify the bull thesis wasn't bullish to the current absurdity. i think the bull case is a good one but im not going to lay out the case here. check out the user RoaringKitty 's videos on youtube from a few months ago. (the stock was hovering around 4 then) right now though the chaos has nothing to do with the underlying value. now it's all about the squeeze. but that's never been part of the bull thesis
- oceanplexian 6y ago
  The point of the post is that sentiment drives value, not the other way around. It’s a profound thesis and it makes the opinions of analysts irrelevant. If enough people want GameStop to succeed then it will. Ironically it’s the same thesis that wealthy SV investors go by when they decide to invest in a startup. Except the word invest is usually misleading. Most of the time they’re just looking for a vehicle to inject capital and influence, and the people and product are interchangeable parts used to achieve a a profitable outcome.
  - paxys 6y ago
    > If enough people want GameStop to succeed then it will More like – if enough people want GameStop to succeed then it has a slightly better chance of succeeding than if they didn't. Chances are that it is still a bubble that will eventually pop, like most others before it.
  - fennecfoxen 6y ago
    This is less profound than you think it is. The sentiment story is that if enough people want to pay $150 a share for approximately $0/yr in earnings, they will. What this glosses over is the reason for the sentiment, the question: "why do people want to pay this?" Traditional stories analysts tell would have people pay $150/share because they expect $8-$15/yr. This story is that people will pay $150/share because people want a way to say 'fuck wall street' and 'fuck analysts' and have unreasonable expectations of becoming wealthy. The former sentiment is sustainable in a way that the latter story kinda isn't.
- totalZero 6y ago
  > most analysts Counterpoint: "Most analysts" are hum-drum Wall Street hacks who cover dozens of companies and don't really have a clue about how the lion's share of them are run. I remember a few years back there was one analyst who kept talking about how NAND keeps getting cheaper and that's hurting memory suppliers...but the analyst's metrics didn't normalize for advancements in NAND speed nor the maturing of capital investments, so the analyst was basically looking at totally expected price declines over time and interpreting it as for some kind of static commodity while claiming it as a bear thesis. A few of them are really clever and knowledgeable. The rest are chumps. It's extremely difficult to judge GME based on regular metrics because their long-term outlook is a function of strategy and their short-term survival is a function of COVID. Sure, the company sells stuff that you can buy online, and sure, they sell it at malls and other places where nobody goes these days, but its stock was over-shorted and this was going to happen sooner or later anyway. Maybe my numbers are off, so correct me if I'm wrong....At today's closing price, GME, which has $6B/yr revenue, is worth a sixth of BBY, which has 43B/yr revenue.
  - hoten 6y ago
    Comparing revenue might make sense if they were in the same slice of retail, but they aren't, so I think you can take zero value from such a comparison.
    - totalZero 6y ago
      Lol. "This is flawed so it is worth zero" is a bad argument even when you present an alternative, but it's downright lazy when you just mail in the criticism without suggesting something else. GME sells consoles and consumer electronics in addition to games, so I'd put BBY on the short list of comps for sure. But if you think the product mix is so different as to make them incomparable, that's ok. Pick a better metric and explain why GME was accurately priced at $260mm market cap when the company does billions in revenue. Then, go back and explain why AMD was worth $2/share in 2014. Then, go to every other heavily shorted name and wave your hands around looking for reasons to justify obviously overshorted valuations.
- andreilys 6y ago
  It’s a short squeeze. Short selling investors who get margin called have to close their short positions, thus forcing them to purchase GME stock and driving it further up
- phil_e_delphian 6y ago
  DoorDash has had negative earnings for all but 2 (1?) quarters it has existed, and trades at about $190 a share, despite direct competition from multiple functionally identical competitors. The market is broken, at least retail investors are benefiting for once.
  - tasuki 6y ago
    How much a single share costs really isn't interesting or important.
    - phil_e_delphian 6y ago
      Tell that to the investors holding >$200 GME shares right now
      - tasuki 6y ago
        I don't think you understand the point I was trying to make. The point wasn't that share price is completely meaningless, the point was that it's meaningless without more information. A share of AAPL now costs $139, a share of GOOG costs $1860. How would you compare the two companies based on that? How does the price of a single share relate to whether or not the company has positive or negative earnings?
  - fennecfoxen 6y ago
    DoorDash has a growth story that GameStop doesn’t. It’s pure fiction, mind you! But at least it exists. Either stock is terrifying.
    - phil_e_delphian 6y ago
      Agreed. The difference this time is that the gains are socialized this time, not retained in the fraternity of HF, PE, and IB. Which is exactly why Wall Street and financial media is denigrating it. They hate that they don't have the edge, or a monopoly on profits in this case.
- dash2 6y ago
  One answer is given at gmedd.com, which presents analysis suggesting that even in the “bear case”, GME could be fairly valued at about $40/share. Disclaimer: I don’t know if their analysis is any good, but would like to hear your thoughts.
  - alisonkisk 6y ago
    Gamers is an WSB guy who made the domain to capitalize on the mania. The content is just goofy.
- PartiallyTyped 6y ago
  Counter Point $AMD was at $0.15, AMD was the only company besides Intel that actually had x86-64 patents. Intel would have never let AMD fail because they would be a monopoly and that is worse than leading a duopoly. Notice the bean counter Intel ceo, the yields getting worse over time, the performance not improving besides a 1-2% year over year and Intel getting complacent, repeatedly to screwing over the customer with requirement of buying a new motherboard with every new release. AMD was a steal for anyone in the know. Counter argument 2: Any price target posted by Citron was wrong. Counter argument 3: Why would any analyst give a proper price target when they can screw you over?
  - fennecfoxen 6y ago
    These remarks are presented for the interest of passerbys, not because the comment I reply to has merit and deserves them. Counterpoint 1: AMD was a chipmaker with skilled engineers on staff and a growth story where they could seize market share with better technology. Gamestop is a retailer with retail clerks on staff and a story where increasing competition from PC and console app stores slowly eats away at their market share. Exact same thing, right? Counterpoint 2: Saying the price target is wrong is one thing, and may in many circumstances be eminently defensible. Saying the correct price is $50-$150 is another. Counterpoint 3: This exemplifies the thinking going on here. "I don't understand the stock market and think someone is screwing us over. Let's define our own alternate reality, and gang up on them for revenge! Revolution!" Last time we saw that show was January 6. For a few people, who get out at the right time, this will be a much more successful revolution, but on the whole, it succeeds only with a transient disruption, and harm the individual would-be revolutionaries the most.
    - PartiallyTyped 6y ago
      > These remarks are presented for the interest of passerbys, not because the comment I reply to has merit and deserves them. Ouff. > AMD was a chipmaker with skilled engineers on staff and a growth story where they could seize market share with better technology. Gamestop is a retailer with retail clerks on staff and a story where increasing competition from PC and console app stores slowly eats away at their market share. Exact same thing, right? Do your due diligence this is just one, https://www.gmedd.com https://www.gmedd.com, there have been many others and they all converge to the same argument. GME is worth much more than the $10 PT given by analysts. > Counterpoint 2: Saying the price target is wrong is one thing, and may in many circumstances be eminently defensible. Saying the correct price is $50-$150 is another. Except citron was wrong in every single price target they have given by more often than not an order magnitude, except for 1. If you pay enough attention, you will see that many of the same 'pages' play both the bull and bear game, if only to come out and say they were correct. > Counterpoint 3: This exemplifies the thinking going on here. "I don't understand the stock market and think someone is screwing us over. Let's define our own alternate reality, and gang up on them for revenge! Revolution!" Had you done your due diligence and paid attention to the situation as it unfolded, you'd have seen that the market made sense, the stock was over shorted and in no way reflective of the actual price targets created by various models and analyses such as the one I linked above. > Last time we saw that show was January 6. For a few people, who get out at the right time, this will be a much more successful revolution, but on the whole, it succeeds only with a transient disruption, and harm the individual would-be revolutionaries the most. We saw that show in every single revolution. This only reinforces the belief that the average proletariat is getting screwed over and manipulated by the same class of people. Hint, it was the proletariat that paid for the greed, not the institutions, the hedge funds or the MMs. It is the proletariat that are stuck between a rock and a hard place, it is the proletariat that are getting manipulated into intra class wars.
- delaaxe 6y ago
  There's a long term bull price target at $169: https://www.gmedd.com/wp-content/uploads/2021/01/GMEdd-GameStopValuation-20Jan21.pdf https://www.gmedd.com/wp-content/uploads/2021/01/GMEdd-GameS...
  - alisonkisk 6y ago
    > We have rounded the multiple to 15.2x in honor of Tylee, Cohen’s toy poodle and Cohen’s reputation as an aggressive, entrepreneurial founder. OK, I'll pay $300 for a stock that will be worth $169 in 4 years assuming that Ryan Cohen has 100% chance of using is legendary Ryan Cohen powers to seize digital game sale margins from all the walled gardens, because somebody on WSB bought a domain name and used orange and green highlights in a spiffy PDF.
JohnJamesRambo 6y ago
Come on, that is what you’ve been trained to say. I heard the exact same phrases from my younger brother.
- vga805 6y ago
  Trained by who? what are you talking about?
xiphias2 6y ago
It works at the start, but the problem is that the people who want to sell their positions need to dump it on the losers and just keep pumping the price and making late comers lose lots of money. The reality of wealth building is that short term it’s always 0 sum game, long term it’s a way to get rich.
- cortesoft 6y ago
  Well sort of... in this case, there are a ridiculous amount of short sellers... more than 100% of all the shares have been sold short. That means that there is in some ways infinite demand... every single share currently owned HAS to be bought by a short seller at some point, in order to return it to the borrowed actual owner... so as long as all the current owners hold fast, they can sell their shares for as high as they can go. It doesn't even matter if the company itself is worthless, the demand is there. You are right about the zero sum in this case, though... it just might be the short sellers who are left holding the bag.
Noos 6y ago
I'm not sure if he can do much. Gamestop has the same problem that drove other retailers like suncoast, sam goody, strawberries, and many other ones out of business; you cannot survive the digitalization of your primary products. Gamestop relies on console systems and videogames both new and used to make the core of its primary business. These are what draw people into their locations and to their web site, and allow add on sales like memberships, warranties, collectibles, and accessories to be sold. They generally go to malls, either interior or open. The problem is the decrease in physical games over digital kills the primary reason to go into their stores, and also prevents middlemen from existing; there is no value add to getting a digital code from gamestop as opposed to steam, ps store, etc. It also murders the high value used game and console sales because now there is less product to trade in. That just leaves them with collectibles, which they've always been low quality and too expensive, accessories, and a tiny assortment of physical games that now they barely even have stock of. They "advertise" the top 100 games or so in their store, yet don't have stock of many of them ,and their used games are barely a shelf of them. The problem with being an internet retailer is amazon already does what they do better; it's an uphill battle where they have no real value add. Even Amazon seems to have less and less new physical games, and they have an infinite amount of chinese sellers dramatically lowering the price of game accessories. I don't see any way to be bullish on them because of their actual business. edit: its not just them. There's a regional game store chain where I live, and they suffer the exact same problems. They are desperately trying to carry anything and everything geek related just to fill the store with inventory; records, collectible card games, comics, manga, crt tvs, used movies, anime accessories, model kits, etc. They actually are losing the game store focus, as used product even in the retro market is dead now...very few retro systems and games.
- alisonkisk 6y ago
  If this is correct, then why did Chewy succeed against Amazon? Granted, dogfood is waaaay different than selling digital games outside a walled garden. No one can lock you out of your dogfood.

by vga805 6y ago

the bull thesis has been laid out in detail for months and it's a good one, this is organic interest, Ryan Cohen and others coming over from Chewy was the most recent catalyst

fennecfoxen 6y ago

People exist who in the past two days paid $150 for a share that most analysts think is worth about $14 — at a company with negative earnings for six of the last seven quarters, and minimal earnings growth over the past few years. I'm sure there was some bull case for the company, and it might have had a snowball's chance in hell around $14 or even $20/share. But at $60+ ? What on God's good earth is supposed to make the company worth that much?

vga805 6y ago
good point, to clarify the bull thesis wasn't bullish to the current absurdity. i think the bull case is a good one but im not going to lay out the case here. check out the user RoaringKitty 's videos on youtube from a few months ago. (the stock was hovering around 4 then) right now though the chaos has nothing to do with the underlying value. now it's all about the squeeze. but that's never been part of the bull thesis
oceanplexian 6y ago
The point of the post is that sentiment drives value, not the other way around. It’s a profound thesis and it makes the opinions of analysts irrelevant. If enough people want GameStop to succeed then it will. Ironically it’s the same thesis that wealthy SV investors go by when they decide to invest in a startup. Except the word invest is usually misleading. Most of the time they’re just looking for a vehicle to inject capital and influence, and the people and product are interchangeable parts used to achieve a a profitable outcome.
- paxys 6y ago
  > If enough people want GameStop to succeed then it will More like – if enough people want GameStop to succeed then it has a slightly better chance of succeeding than if they didn't. Chances are that it is still a bubble that will eventually pop, like most others before it.
- fennecfoxen 6y ago
  This is less profound than you think it is. The sentiment story is that if enough people want to pay $150 a share for approximately $0/yr in earnings, they will. What this glosses over is the reason for the sentiment, the question: "why do people want to pay this?" Traditional stories analysts tell would have people pay $150/share because they expect $8-$15/yr. This story is that people will pay $150/share because people want a way to say 'fuck wall street' and 'fuck analysts' and have unreasonable expectations of becoming wealthy. The former sentiment is sustainable in a way that the latter story kinda isn't.
totalZero 6y ago
> most analysts Counterpoint: "Most analysts" are hum-drum Wall Street hacks who cover dozens of companies and don't really have a clue about how the lion's share of them are run. I remember a few years back there was one analyst who kept talking about how NAND keeps getting cheaper and that's hurting memory suppliers...but the analyst's metrics didn't normalize for advancements in NAND speed nor the maturing of capital investments, so the analyst was basically looking at totally expected price declines over time and interpreting it as for some kind of static commodity while claiming it as a bear thesis. A few of them are really clever and knowledgeable. The rest are chumps. It's extremely difficult to judge GME based on regular metrics because their long-term outlook is a function of strategy and their short-term survival is a function of COVID. Sure, the company sells stuff that you can buy online, and sure, they sell it at malls and other places where nobody goes these days, but its stock was over-shorted and this was going to happen sooner or later anyway. Maybe my numbers are off, so correct me if I'm wrong....At today's closing price, GME, which has $6B/yr revenue, is worth a sixth of BBY, which has 43B/yr revenue.
- hoten 6y ago
  Comparing revenue might make sense if they were in the same slice of retail, but they aren't, so I think you can take zero value from such a comparison.
  - totalZero 6y ago
    Lol. "This is flawed so it is worth zero" is a bad argument even when you present an alternative, but it's downright lazy when you just mail in the criticism without suggesting something else. GME sells consoles and consumer electronics in addition to games, so I'd put BBY on the short list of comps for sure. But if you think the product mix is so different as to make them incomparable, that's ok. Pick a better metric and explain why GME was accurately priced at $260mm market cap when the company does billions in revenue. Then, go back and explain why AMD was worth $2/share in 2014. Then, go to every other heavily shorted name and wave your hands around looking for reasons to justify obviously overshorted valuations.
andreilys 6y ago
It’s a short squeeze. Short selling investors who get margin called have to close their short positions, thus forcing them to purchase GME stock and driving it further up
phil_e_delphian 6y ago
DoorDash has had negative earnings for all but 2 (1?) quarters it has existed, and trades at about $190 a share, despite direct competition from multiple functionally identical competitors. The market is broken, at least retail investors are benefiting for once.
- tasuki 6y ago
  How much a single share costs really isn't interesting or important.
  - phil_e_delphian 6y ago
    Tell that to the investors holding >$200 GME shares right now
    - tasuki 6y ago
      I don't think you understand the point I was trying to make. The point wasn't that share price is completely meaningless, the point was that it's meaningless without more information. A share of AAPL now costs $139, a share of GOOG costs $1860. How would you compare the two companies based on that? How does the price of a single share relate to whether or not the company has positive or negative earnings?
- fennecfoxen 6y ago
  DoorDash has a growth story that GameStop doesn’t. It’s pure fiction, mind you! But at least it exists. Either stock is terrifying.
  - phil_e_delphian 6y ago
    Agreed. The difference this time is that the gains are socialized this time, not retained in the fraternity of HF, PE, and IB. Which is exactly why Wall Street and financial media is denigrating it. They hate that they don't have the edge, or a monopoly on profits in this case.
dash2 6y ago
One answer is given at gmedd.com, which presents analysis suggesting that even in the “bear case”, GME could be fairly valued at about $40/share. Disclaimer: I don’t know if their analysis is any good, but would like to hear your thoughts.
- alisonkisk 6y ago
  Gamers is an WSB guy who made the domain to capitalize on the mania. The content is just goofy.
PartiallyTyped 6y ago
Counter Point $AMD was at $0.15, AMD was the only company besides Intel that actually had x86-64 patents. Intel would have never let AMD fail because they would be a monopoly and that is worse than leading a duopoly. Notice the bean counter Intel ceo, the yields getting worse over time, the performance not improving besides a 1-2% year over year and Intel getting complacent, repeatedly to screwing over the customer with requirement of buying a new motherboard with every new release. AMD was a steal for anyone in the know. Counter argument 2: Any price target posted by Citron was wrong. Counter argument 3: Why would any analyst give a proper price target when they can screw you over?
- fennecfoxen 6y ago
  These remarks are presented for the interest of passerbys, not because the comment I reply to has merit and deserves them. Counterpoint 1: AMD was a chipmaker with skilled engineers on staff and a growth story where they could seize market share with better technology. Gamestop is a retailer with retail clerks on staff and a story where increasing competition from PC and console app stores slowly eats away at their market share. Exact same thing, right? Counterpoint 2: Saying the price target is wrong is one thing, and may in many circumstances be eminently defensible. Saying the correct price is $50-$150 is another. Counterpoint 3: This exemplifies the thinking going on here. "I don't understand the stock market and think someone is screwing us over. Let's define our own alternate reality, and gang up on them for revenge! Revolution!" Last time we saw that show was January 6. For a few people, who get out at the right time, this will be a much more successful revolution, but on the whole, it succeeds only with a transient disruption, and harm the individual would-be revolutionaries the most.
  - PartiallyTyped 6y ago
    > These remarks are presented for the interest of passerbys, not because the comment I reply to has merit and deserves them. Ouff. > AMD was a chipmaker with skilled engineers on staff and a growth story where they could seize market share with better technology. Gamestop is a retailer with retail clerks on staff and a story where increasing competition from PC and console app stores slowly eats away at their market share. Exact same thing, right? Do your due diligence this is just one, https://www.gmedd.com https://www.gmedd.com, there have been many others and they all converge to the same argument. GME is worth much more than the $10 PT given by analysts. > Counterpoint 2: Saying the price target is wrong is one thing, and may in many circumstances be eminently defensible. Saying the correct price is $50-$150 is another. Except citron was wrong in every single price target they have given by more often than not an order magnitude, except for 1. If you pay enough attention, you will see that many of the same 'pages' play both the bull and bear game, if only to come out and say they were correct. > Counterpoint 3: This exemplifies the thinking going on here. "I don't understand the stock market and think someone is screwing us over. Let's define our own alternate reality, and gang up on them for revenge! Revolution!" Had you done your due diligence and paid attention to the situation as it unfolded, you'd have seen that the market made sense, the stock was over shorted and in no way reflective of the actual price targets created by various models and analyses such as the one I linked above. > Last time we saw that show was January 6. For a few people, who get out at the right time, this will be a much more successful revolution, but on the whole, it succeeds only with a transient disruption, and harm the individual would-be revolutionaries the most. We saw that show in every single revolution. This only reinforces the belief that the average proletariat is getting screwed over and manipulated by the same class of people. Hint, it was the proletariat that paid for the greed, not the institutions, the hedge funds or the MMs. It is the proletariat that are stuck between a rock and a hard place, it is the proletariat that are getting manipulated into intra class wars.
delaaxe 6y ago
There's a long term bull price target at $169: https://www.gmedd.com/wp-content/uploads/2021/01/GMEdd-GameStopValuation-20Jan21.pdf https://www.gmedd.com/wp-content/uploads/2021/01/GMEdd-GameS...
- alisonkisk 6y ago
  > We have rounded the multiple to 15.2x in honor of Tylee, Cohen’s toy poodle and Cohen’s reputation as an aggressive, entrepreneurial founder. OK, I'll pay $300 for a stock that will be worth $169 in 4 years assuming that Ryan Cohen has 100% chance of using is legendary Ryan Cohen powers to seize digital game sale margins from all the walled gardens, because somebody on WSB bought a domain name and used orange and green highlights in a spiffy PDF.

JohnJamesRambo 6y ago

Come on, that is what you’ve been trained to say. I heard the exact same phrases from my younger brother.

vga805 6y ago
Trained by who? what are you talking about?

xiphias2 6y ago

It works at the start, but the problem is that the people who want to sell their positions need to dump it on the losers and just keep pumping the price and making late comers lose lots of money. The reality of wealth building is that short term it’s always 0 sum game, long term it’s a way to get rich.

cortesoft 6y ago
Well sort of... in this case, there are a ridiculous amount of short sellers... more than 100% of all the shares have been sold short. That means that there is in some ways infinite demand... every single share currently owned HAS to be bought by a short seller at some point, in order to return it to the borrowed actual owner... so as long as all the current owners hold fast, they can sell their shares for as high as they can go. It doesn't even matter if the company itself is worthless, the demand is there. You are right about the zero sum in this case, though... it just might be the short sellers who are left holding the bag.

Noos 6y ago

I'm not sure if he can do much. Gamestop has the same problem that drove other retailers like suncoast, sam goody, strawberries, and many other ones out of business; you cannot survive the digitalization of your primary products. Gamestop relies on console systems and videogames both new and used to make the core of its primary business. These are what draw people into their locations and to their web site, and allow add on sales like memberships, warranties, collectibles, and accessories to be sold. They generally go to malls, either interior or open. The problem is the decrease in physical games over digital kills the primary reason to go into their stores, and also prevents middlemen from existing; there is no value add to getting a digital code from gamestop as opposed to steam, ps store, etc. It also murders the high value used game and console sales because now there is less product to trade in. That just leaves them with collectibles, which they've always been low quality and too expensive, accessories, and a tiny assortment of physical games that now they barely even have stock of. They "advertise" the top 100 games or so in their store, yet don't have stock of many of them ,and their used games are barely a shelf of them. The problem with being an internet retailer is amazon already does what they do better; it's an uphill battle where they have no real value add. Even Amazon seems to have less and less new physical games, and they have an infinite amount of chinese sellers dramatically lowering the price of game accessories. I don't see any way to be bullish on them because of their actual business. edit: its not just them. There's a regional game store chain where I live, and they suffer the exact same problems. They are desperately trying to carry anything and everything geek related just to fill the store with inventory; records, collectible card games, comics, manga, crt tvs, used movies, anime accessories, model kits, etc. They actually are losing the game store focus, as used product even in the retro market is dead now...very few retro systems and games.

alisonkisk 6y ago
If this is correct, then why did Chewy succeed against Amazon? Granted, dogfood is waaaay different than selling digital games outside a walled garden. No one can lock you out of your dogfood.