In this video I review GameStop (GME, $4.03, $260M market cap). As of July 2020 I'm bullish on the stock – perhaps foolishly so. What are your thoughts on GME? Do you agree or disagree with my take? What did I overlook in my analysis? Which of my assumptions were off?
There's a lot to cover in a GME thesis. I did my best to review what I consider most of the important items. As time passes I'm sure I'll realize I forgot to discuss something important. I'll update this description with such updates.
One item I failed to mention is how management could use GME's rising cash balance to repurchase the remaining 2021 bonds on the open market at a discount; the bonds currently trade at ~87 as of July 2020. It's possible the discount would vanish if they attempted to buy back the bonds in size, but it's still a scenario worth mentioning because such a move would marginally increase its value per share.
Another glaring omission is Scott Preston's GME piece in Barron's from February 2020 – I can't believe I forgot to mention it. It's one of the best articles written on the company and a must-read for anyone following the story. In particular Scott does a terrific job walking through the different ways GME can reinvent itself. The article is here: www.barrons.com/articles/gamestop-stock-can-quintuple-within-two-years-portfolio-manager-51581535869
Resources mentioned in the video:
Furey, Edward "Present Value of Cash Flows Calculator"; CalculatorSoup, www.calculatorsoup.com
- Online Calculators
Hestia/Permit Restore GameStop presentation May 2020: www.sec.gov/Archives/edgar/data/1326380/000092189520001510/ex1todfan14a12166002_051920.pdf
Scion 13D April 2020: www.sec.gov/Archives/edgar/data/1326380/000090514820000491/efc20-335_sc13d.htm
Scion June 2020: www.businesswire.com/news/home/20200603005929/en/Scion-Asset-Management-Voted-Support-GameStop’s-Board
SeekingAlpha GME Articles: seekingalpha.com/symbol/GME/analysis
contrast, only 17 percent,were sold as physical copies.&text=The digital gaming industry is,The
The Verge – Xbox Series X optical drive: www.theverge.com/2019/6/10/18659800/microsoft-xbox-project-scarlett-optical-drive-console-e3-2019
Xbox 2013 blog update: news.xbox.com/en-us/2013/06/19/update/
Variety – Death of Physical Video Games Exaggerated: variety.com/2019/gaming/features/physical-video-games-death-disc-digital-1203207513/#article-comments
GamesIndustry.biz – AAA game downloads: www.gamesindustry.biz/articles/2019-06-07-aaa-game-downloads-on-the-brink-of-overtaking-physical-in-europe
GamesIndustry.biz – GameStop's concept stores: www.gamesindustry.biz/articles/2020-02-24-gamestops-concept-stores-a-laboratory-not-a-hail-mary
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