Another Day In REIT Paradise: When Does The Game Stop?

Summary

• How often do you see that kind of mass exodus from a publicly listed company?
• But the easy-to-read writing has been on the wall nonetheless that this stock was exceptionally, exceedingly speculative at best.
• “If you hype something and it succeeds, you’re a genius; it wasn’t a hype. If you hype it and it fails, then it was just a hype.”.

Quote of the Day:

“If you hype something and it succeeds, you're a genius; it wasn't a hype. If you hype it and it fails, then it was just a hype.” – Neil Bogart

(Source: StoryBlocks)

So…

GameStop (GME)…

What can we say?

How about that the company recorded a $138.8 million adjusted net loss for its fiscal year 2020 compared to a $19.1 million adjusted profit in 2019. And how about that net sales declined 21% to $5.09 billion.

Now, you can easily and validly argue that last year was a rough one for most every mall-based retailer. But the fact that it didn’t get a fair shake hardly means it’s a worthwhile investment.

Especially when it hasn’t been doing well for years now.

We never want to invest off of pity. And hype is at least as dangerous a motivator.

We want facts. And figures that back up those facts. And facts that back up those figures.

Which means we really don’t want GameStop right now.

Yesterday, the company wouldn’t answer questions about its newest plans to promote its e-commerce platform – something it should have been focusing on for years now, incidentally. Fox Business writer Jonathan Garber says the company did provide “some evidence that it’s turnaround plan may be working” on its Q4 conference call.

However, it “did not allow analysts to ask questions about the new initiative.”

As part-owners of a company, investors should always demand transparency from management. Accept no substitutes. The same goes for aligning themselves with leaders who stay at least with the curve, if not ahead of it.

Speaking of leadership, the GameStop board is apparently falling apart even as we speak. One person from Nintendo and one from Activision are reportedly leaving, with six other members expected to retire in the foreseeable future.

How often do you see that kind of mass exodus from a publicly listed company?

GameStop stock enthusiasts can claim that this is a new development. That there was no way they saw this coming. And I’ll be the first to admit that I wasn’t predicting it.

But the easy-to-read writing has been on the wall nonetheless that this stock was exceptionally, exceedingly speculative at best.

To quote Neil Bogart again, “If you hype something and it succeeds, you’re a genius; it wasn’t a hype. If you hype it and it fails, then it was just a hype.”

In which case, fair enough. But for my part, I’d rather not hype at all.

The World According to Commercial Real Estate

That aversion to hype is one of the many reasons why I appreciate my partnership with The Daily REITBeat so much.

When it’s presenting the latest updates about the REITs we follow, it just gives the facts. That’s it. Just a nice, neat summary of information like the following:

• American Tower (AMT) priced $700 million of 1.60% notes due 2026 and the same amount of 2.70% notes due 2031. The proceeds will be put toward paying down its $4.1 billion senior unsecured multicurrency revolving credit facility.
• Gladstone Commercial (GOOD) says it’s collected about 98% of its March cash base rent due, adding that its portfolio is over 95% occupied at this time.
• The GEO Group (GEO) saw S&P lower its issuer credit rating from BB- to B with a negative outlook. Meanwhile, Moody’s changed its corporate family and unsecured debt ratings from B1 to B2, along with other downgrades.

I’m also a fan of seeing the information below so succinctly summarized, as I’m sure you appreciate too:

(Source: The Daily REITBeat)

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Author's note: Brad Thomas is a Wall Street writer, which means he's not always right with his predictions or recommendations. Since that also applies to his grammar, please excuse any typos you may find. Also, this article is free: written and distributed only to assist in research while providing a forum for second-level thinking.