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GameStop's Brilliant First Step

Apr. 07, 2021 6:28 AM ETGameStop Corp. (GME)26 Comments


  • GameStop's shares are significantly overvalued at this point in time.
  • However, management is finally taking advantage of this fact by issuing new shares.
  • This is a great first step that was accompanied by strong sales data, but it's not aggressive enough to preserve the firm's value.
  • Looking for a helping hand in the market? Members of Crude Value Insights get exclusive ideas and guidance to navigate any climate. Learn More »
GameStop Store Munich
Photo by FinkAvenue/iStock Editorial via Getty Images

For better or worse, GameStop (NYSE:GME) never ceases to surprise. All year, the business has been through a rollercoaster of a ride as speculators, aiming to punish hedge funds and other institutional investors for shorting the stock, have sent shares soaring higher

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Daniel Jones profile picture

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Comments (26)

Ohh almost forgot to update you....the CEO shares got forfeited (millions of dollars worth) shares due to poor performance so that ATM offer is irrelevant now.
leeo268 profile picture
The smartest move by the sluggish management yet.
3.5M shares is just the start. Once that is done, expect another round of new shares. GME will need few billions at least to convert their brick and mortar business to e-commerce. The online platform and distribution centers are not cheap to build.
pig stock getting wobbly today...
theheckwithtech profile picture
@papaValeant today will be a good day to add to our short positions.
Tom Lloyd profile picture
When fundamentals are ignored you have to measure demand and supply driving price. This is easily seen on charts. As the company sells stock you will clearly see that supply taking price down. At a minimum it prevents price from going higher. Newbies have a very poor to non-existent Sell discipline and will ride this to the ground. They are buy-and-hold speculators, great for investing but deadly for speculation.
Crude Oil value guy decides to write about GME to try to get more visibility for his newsletter. 42,069th person to do so this month
Mathieu Malecot profile picture
when share stop failing to deliver GME will start selling more shares. that's my best guess.
@Mathieu Malecot The SEC came out and said FTDs are not necessarily signs of short selling. It could be buyer’s not coming up with the funds to complete a purchase.
Mathieu Malecot profile picture
@kjw003 max 72 days until they amend how they calculate liquidity reqs to meet delivery. currently they calculate on a monthly basis to determine max liquidity needs. amended rule calculates daily. that should clean up FTD, or at least keep FTD spikes from occurring. these FTD happen when someone defaults and the National Securities Clearing Corporation (NSCC) can't fund purchase to deliver shares. the monthly calculation is being gamed so they are moving to daily calculation. www.federalregister.gov/...

feel free to nitpick.
They've had ATM since Dec of last year.
Congrats, You're about the 25th person to write about this post facto.
Also, grammar check please. Writing in present tense about actions that haven't happened yet is for Sci Fi authors...
@Davanzob They just upsized their ATM program to up to 3.5M shares or $1B. Also likely started executing it before share price collapses.
Equityhigher profile picture
This outdated 1990s company was caked near $5-6 prior to this “roller coaster”. For those that made a million, good for you and take your money, pay the capital gain tax and move on. The business model is dead and to change will require significant investment to only meet competition to squish them or at least mute their sales to a trickle and never see an ROI. I played some outs for a while but in the end this thing is a turd!!
@Equityhigher Why write about the past. Everyone knows the current business model is dead. That’s why the board was turned upside down. Stock prices reflect the future and you’re writing about the 90’s.
Last I checked their business model hasn't changed since then.
They were the Blockbuster video of gaming until a group of savvy market manipulators coerced a bunch of low IQ millenial meme investors into making a handful of the early manipulators rich.
Congrats to them, but most of these low IQ millenial meme investors are gonna get torched while also picking up terrible investing habits.
I saw an article today about a father and son investing duo; the father, a long term Buffet value guy, made 77% in 2020. The son, an amateur short term meme stock investor, finished in the red.
The meme stock day trading clowns may make short term gains (or not) but in the long term they will most likely underperform the market.
Mathieu Malecot profile picture
@eurdone88 you might want to look at ecommerce growth and store closings if you think nothing's changed.
Amazing how these authors continue to look at WSB and their anger at HF's as the reason why this stock is trading at these levels. How can you possibly believe that a bunch of Mom&Pop's, student's, and amateur investor's, could control the valuations of a $13 billion dollar company??? Does logic come into play at any time when these articles are written or do they just run with the common theme? I'm guessing that every week someone calls for the stock to drop then hope is, one day, one of them might be right. Then they can be the lucky one (out of the 100's before) to say, I told you so. Reminds me of Nouriel Roubini. For 5 years he called for the markets to crash. Then when they finally did in 2008, suddenly he was a genius and everyone wanted him on their show. They all just forgot about the 5 straight years of him being wrong. Imagine the 5 years of missed gains for anyone who listened to him in the beginning. Now imagine the feeling of having listened to them when GME was at $20...
Why does management need to offer more shares? GameStop already has more cash than debt and is cash flow positive. Decreased expenses from store closures can fund the e-commerce growth. The current shareholders are owners of the company. If the shareholder wanted to raise cash, the shareholder can sell their shares.

A large retail shareholder base is also free advertising. Besides American shareholders, have you seen how popular GameStop is in Europe.

@Rule of 72t
Totally agree!
I'm pushing for a stock split, not more issuance.
Krypto profile picture
@Rule of 72t The stock is just too overpriced not to sell more of it, but "investors" should be appraised of the substantial risks.
@Rule of 72t To buy other companies/takeovers

With another billion they have a nice war chest to look around and see what could be a good fit.

Great way to grow and diversify the business.
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