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Market cap is now close to ~$11B, for a company that over the last 12 months burned ~$240M in cash. Revenues declined by ~11%. Net cash on hand is ~$600M. It's

by cs702 2y ago

Market cap is now close to ~$11B, for a company that over the last 12 months burned ~$240M in cash. Revenues declined by ~11%. Net cash on hand is ~$600M. It's hard to justify purchasing the shares at the current price based on the company's recent results. Its future prospects don't seem particularly promising either. A stock's price is set by the marginal buyer and seller. For example, a single share that trades at 50% less than the last price instantly brings market cap down by 50%. Once all the retail investors loading up on the stock have purchased as much as they can hold, very little marginal trading volume can bring the stock price back down. --- Reposting comment from duplicate OP: https://news.ycombinator.com/item?id=40343460 https://news.ycombinator.com/item?id=40343460

belter 2y ago
Ok, so what you are saying it's almost like GameStop shares are just like a virtual identity, that can be transacted for whatever value the parties attribute to it, with no other economic consideration that the trend of the moment...sounds like Bitcoin....
- archgoon 2y ago
  [dead]
- codedokode 2y ago
  Sounds like Tesla shares.
  - rsynnott 2y ago
    There are degrees of meme-stock-iness. The platonic ideal, of course, is that Trump one; it's almost a pure speculative token with only a minuscule social networking company attached.
vkou 2y ago
> For example, a single share that trades at 50% less than the last price instantly brings market cap down by 50%. It's not a single share trading low that brings the price down, it's the entire buy order book above that price being emptied out. Which, in effective markets, should happen reasonably quickly when a stock is overpriced, after the market has time to react to a pack of retail apes maxing out their credit cards to buy it at 'any price'.
- underlipton 2y ago
  IIRC, NBBO isn't affected by odd lots except outside of regular trading hours. You'd have to trade shares in multiples of 100. That's after the order book emptied to the ask/bid and a corresponding trade appeared. Then, someone could immediately decide that price was too high/low and the next trade moves it back, where the consensus keeps it.
kjhcvkek77 2y ago
Yes, but... if existing holders don't believe in the valuation they are free to become marginal sellers. (N.b. I'm personally staying away from meme stocks)
thehumanmeat 2y ago
Short it then.
- bishbosh 2y ago
  Mind walking me through that process? I'm genuinely interested in doing so.
  - bagels 2y ago
    Open a brokerage account and fund it. Apply for margin. Type the ticker in. Click sell to open. You have unlimited risk of loss, and if you don't maintain the margin, your position will be closed and you will owe a sum of money larger than you deposited. Be careful.
    - farhaven 2y ago
      Alternatively, open a brokerage account and go through their process to enable options trading (essentially mostly a short quiz on how options work to make sure you're not an obvious liability). Then either buy put options that are currently barely in the money (and will go further into the money once the stock comes tumbling down), or sell call options that are out of the money (or very slightly in if you can tolerate that risk) and will go further out once the price of the underlying goes down. As with shorting stock, the risk for selling calls is technically unlimited (even though IMHO it's extremely unlikely that GME will go to the moon again the same way it did last time). With buying puts, your risk is the money you spent for the option. If the stock price is higher than the option at expiry, you'll have lost all of it. If it's lower, you can pocket the difference between strike price and stock price, minus the cost of the option.
      - underlipton 2y ago
        >even though IMHO it's extremely unlikely that GME will go to the moon again the same way it did last time FWIW, it hit about $320 during pre-market trading this morning, in terms of the price it would have been before the stock split in 2022. Currently sitting at $200, in those terms.
coffeebeqn 2y ago
The most baffling bit is that I’m sure a fairly large part of the meme buying frenzy is gamers who know better. No one uses GameStop - it was a joke before all this started already. They have no chance against steam and epic and game pass.. ie. They’ll give you $5 in store credit for selling them a brand new game. I also wouldn’t be surprised if the next Gen consoles go the way of PC and don’t ship optical drives anymore - what would be the business of GME at that point ?
- _mlbt 2y ago
  I suspect GameStop knows this. All of the ones near me have reconfigured their stores to emphasize game and geek-culture related merchandise and memorabilia instead of games. I think there’s probably still a decent market for used console games from the 8-bit and 16-bit eras, and all the generations of Gameboys, and of course they could sell both new and used consoles and accessories. I think they could survive in these niches if they consolidate their stores a bit, as they have far too many locations given current market conditions.
  - xsmasher 2y ago
    Their only way out is to turn into Hot Topic / Spencer Gifts. Not a bright future.

by cs702 2y ago

belter 2y ago

Ok, so what you are saying it's almost like GameStop shares are just like a virtual identity, that can be transacted for whatever value the parties attribute to it, with no other economic consideration that the trend of the moment...sounds like Bitcoin....

archgoon 2y ago
[dead]
codedokode 2y ago
Sounds like Tesla shares.
- rsynnott 2y ago
  There are degrees of meme-stock-iness. The platonic ideal, of course, is that Trump one; it's almost a pure speculative token with only a minuscule social networking company attached.

vkou 2y ago

> For example, a single share that trades at 50% less than the last price instantly brings market cap down by 50%. It's not a single share trading low that brings the price down, it's the entire buy order book above that price being emptied out. Which, in effective markets, should happen reasonably quickly when a stock is overpriced, after the market has time to react to a pack of retail apes maxing out their credit cards to buy it at 'any price'.

underlipton 2y ago
IIRC, NBBO isn't affected by odd lots except outside of regular trading hours. You'd have to trade shares in multiples of 100. That's after the order book emptied to the ask/bid and a corresponding trade appeared. Then, someone could immediately decide that price was too high/low and the next trade moves it back, where the consensus keeps it.

kjhcvkek77 2y ago

Yes, but... if existing holders don't believe in the valuation they are free to become marginal sellers. (N.b. I'm personally staying away from meme stocks)

thehumanmeat 2y ago

Short it then.

bishbosh 2y ago
Mind walking me through that process? I'm genuinely interested in doing so.
- bagels 2y ago
  Open a brokerage account and fund it. Apply for margin. Type the ticker in. Click sell to open. You have unlimited risk of loss, and if you don't maintain the margin, your position will be closed and you will owe a sum of money larger than you deposited. Be careful.
  - farhaven 2y ago
    Alternatively, open a brokerage account and go through their process to enable options trading (essentially mostly a short quiz on how options work to make sure you're not an obvious liability). Then either buy put options that are currently barely in the money (and will go further into the money once the stock comes tumbling down), or sell call options that are out of the money (or very slightly in if you can tolerate that risk) and will go further out once the price of the underlying goes down. As with shorting stock, the risk for selling calls is technically unlimited (even though IMHO it's extremely unlikely that GME will go to the moon again the same way it did last time). With buying puts, your risk is the money you spent for the option. If the stock price is higher than the option at expiry, you'll have lost all of it. If it's lower, you can pocket the difference between strike price and stock price, minus the cost of the option.
    - underlipton 2y ago
      >even though IMHO it's extremely unlikely that GME will go to the moon again the same way it did last time FWIW, it hit about $320 during pre-market trading this morning, in terms of the price it would have been before the stock split in 2022. Currently sitting at $200, in those terms.

coffeebeqn 2y ago

The most baffling bit is that I’m sure a fairly large part of the meme buying frenzy is gamers who know better. No one uses GameStop - it was a joke before all this started already. They have no chance against steam and epic and game pass.. ie. They’ll give you $5 in store credit for selling them a brand new game. I also wouldn’t be surprised if the next Gen consoles go the way of PC and don’t ship optical drives anymore - what would be the business of GME at that point ?

_mlbt 2y ago
I suspect GameStop knows this. All of the ones near me have reconfigured their stores to emphasize game and geek-culture related merchandise and memorabilia instead of games. I think there’s probably still a decent market for used console games from the 8-bit and 16-bit eras, and all the generations of Gameboys, and of course they could sell both new and used consoles and accessories. I think they could survive in these niches if they consolidate their stores a bit, as they have far too many locations given current market conditions.
- xsmasher 2y ago
  Their only way out is to turn into Hot Topic / Spencer Gifts. Not a bright future.