3 ms·

I can't speak for the OP, but for me, the problem is the obvious arbitrage on the used games by GS. I think I can say the market agrees with us, the company has

by moate 3y ago

I can't speak for the OP, but for me, the problem is the obvious arbitrage on the used games by GS. I think I can say the market agrees with us, the company has been slowly dying for years and would likely be in a position like Bed Bath & Beyond and the many other large physical retailers who didn't find a way to pivot were it not for a weird group of anti-investors pwning short positions and then the ensuing media pile on. (Your metaphor is also flawed as the theater and home theater experiences are very different, where as "playing a game for the first time, in my own home now" vs "playing a game for the first time, in my own home, 3 months from now" are pretty marginal differences, especially for single player games. It's why I rarely buy games at launch, but I also don't care about video game "spoilers")

dragontamer 3y ago
The opposite. Bid-ask spreads are inversely proportional to volume. The less volume there is in a marketplace, the larger the bid-ask spreads get. If you trade in the Options market, you'll see 30% to 50% differences in bid-ask spreads on the thinly traded stocks. Similarly, video game used-market has been dying (or at least, the marketplace owned by Gamestop), so we're seeing that lesser volume with an increase in bid-ask spread. Play an obscure trading card game like Magi Nations, you'll see the same thing. There's just not a lot of players, not a lot of traders, so the spreads are huge. Play a popular game with a popular marketplace like Magic the Gathering, and the bid/ask spreads are much closer. ------------- The less popular a marketplace is, the longer inventory will sit in warehouses (leading to higher risks and possibly larger losses for the market-makers). Thereby, forcing Gamestop to increase the bid-ask spread. When Gamestop was popular 10 to 20 years ago, there was enough volume to keep the used-buy vs used-sell prices closer together.
- vel0city 3y ago
  > If you trade in the Options market, you'll see 30% to 50% differences in bid-ask spreads on the thinly traded stocks. If the spread was only 30-50% I wouldn't mind. Gamestop's spread between bid-ask for used games (even popular new ones) is like 400-500%.
  - dragontamer 3y ago
    That doesn't change anything I said earlier. The worse and worse a marketplace does, the more and more the owner is forced to increase the bid-ask spread. Not everything is as efficiently run as the New York Stock Exchange. When you start getting to more obscure games and such, the bid ask spread balloon. 2023 is a different time than 2003. The used market is dying, and its dying because its dying, and the market is forced to make prices worse because its dying and that's causing worse prices to happen. Its a death cycle. Now maybe with good management and good investment, Gamestop can try to stop this spiral by losing money on sales and trying to offer a smaller bid-ask spread. But the company is more aligned to the lotto-tickets they got from the memestonk APEs and is more interested in building a new internet store than fixing the fundamental marketplace issues.
- moate 3y ago
  This is a lot of words that don't explain at all why you think seeing a movie in a theater vs your home and playing a "new" vs "stale" video game are similar experiences. Based on the other comments, you seem to be solving for different conversational problems than me. Good luck with the dragons or whatever!

by moate 3y ago

dragontamer 3y ago

The opposite. Bid-ask spreads are inversely proportional to volume. The less volume there is in a marketplace, the larger the bid-ask spreads get. If you trade in the Options market, you'll see 30% to 50% differences in bid-ask spreads on the thinly traded stocks. Similarly, video game used-market has been dying (or at least, the marketplace owned by Gamestop), so we're seeing that lesser volume with an increase in bid-ask spread. Play an obscure trading card game like Magi Nations, you'll see the same thing. There's just not a lot of players, not a lot of traders, so the spreads are huge. Play a popular game with a popular marketplace like Magic the Gathering, and the bid/ask spreads are much closer. ------------- The less popular a marketplace is, the longer inventory will sit in warehouses (leading to higher risks and possibly larger losses for the market-makers). Thereby, forcing Gamestop to increase the bid-ask spread. When Gamestop was popular 10 to 20 years ago, there was enough volume to keep the used-buy vs used-sell prices closer together.

vel0city 3y ago
> If you trade in the Options market, you'll see 30% to 50% differences in bid-ask spreads on the thinly traded stocks. If the spread was only 30-50% I wouldn't mind. Gamestop's spread between bid-ask for used games (even popular new ones) is like 400-500%.
- dragontamer 3y ago
  That doesn't change anything I said earlier. The worse and worse a marketplace does, the more and more the owner is forced to increase the bid-ask spread. Not everything is as efficiently run as the New York Stock Exchange. When you start getting to more obscure games and such, the bid ask spread balloon. 2023 is a different time than 2003. The used market is dying, and its dying because its dying, and the market is forced to make prices worse because its dying and that's causing worse prices to happen. Its a death cycle. Now maybe with good management and good investment, Gamestop can try to stop this spiral by losing money on sales and trying to offer a smaller bid-ask spread. But the company is more aligned to the lotto-tickets they got from the memestonk APEs and is more interested in building a new internet store than fixing the fundamental marketplace issues.
moate 3y ago
This is a lot of words that don't explain at all why you think seeing a movie in a theater vs your home and playing a "new" vs "stale" video game are similar experiences. Based on the other comments, you seem to be solving for different conversational problems than me. Good luck with the dragons or whatever!