![]() This online movement entering mainstream spaces has made for big news, but it’s really just the latest example of a longstanding trend. Recently, that creativity has left the online space and entered the real world, with members buying up billboards and other outdoor advertising to broadcast the message, the meme, louder than ever before: Hold your stocks □□ GME to the moon □. As this movement has grown, the community has gotten more creative in calling for its members to hold the stock, and not to sell until the stock value of the company has grown to previously unthinkable heights. On the date of publication, Thomas Niel did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.If you haven’t seen the news, an online community of retail investors from Reddit is in an investment war with hedge funds over GameStop stock (NYSE: GME). The sum of these amounts could potentially produce a worthwhile total return.īut until GME stock gets near “cigar butt” prices, consider it best to keep staying away. Then by returning any additional positive cash flow to investors via dividends and share repurchases. If the company decides not to move out of a business that’s in terminal decline, at a low enough price, GME could be profitable as a “cigar butt” style investment.īetween now and when its business is no longer viable, GameStop could essentially liquidate itself.įirst, by distributing its $1.4 billion war chest as a special dividend. That was back when investors like Michael Burry, not meme traders on Reddit, were its biggest fans. If investors lose faith in the “digital transformation” bull case for GameStop, and shares tumble down to the single digits, GameStop could become the value stock it once was. Mostly, because a Blockbuster-esque “game over” moment is not necessarily inevitable. If GME gets back or near pre-meme prices, it could again become a buy. In fact, if investors concluding that putting GameStop’s e-commerce pivot on the back burner is bad for future growth, much as I have argued before, a move back to pre-meme prices could speed up. Shares have trend lower since the height of “meme stock mania” more than two years ago. However, additional temporary spikes will not take GME off a downward trajectory. This could have an outsized impact on not just GME, but other popular “ meme stocks” such as AMC Entertainment (NYSE: AMC). ![]() If there are positive macro developments, such as dovish statements from the Federal Reserve, “risk on” sentiment could again temporarily return to the market. For instance, another wave of “short squeeze mania” could help drive a brief, moderate spike in price. A similar take may become the majority view in the market.Īdmittedly, given how volatile GME stock can be, an unexpected near-term spike is not outside the realm of possibility. ![]() Second, while this plan works well in the near-term, it could turn GME into “ the next Blockbuster” (i.e. Some, such as myself, believed that this plan was bad news for the stock, in two ways.įirst, focusing on maximizing profits over growth (via “digital transformation”) called into question GameStop’s inflated valuation. ![]() However, this was not the view of everyone. To many, this renewed focus on profitability appeared to be something that could help sustain GME’s valuation and pave the way for a continued comeback. Namely, the disclosure of plans to put off the build-out of its e-commerce business in favor of maximizing the profitability of its legacy bricks-and-mortar retail business. Management’s updates to guidance also appeared to be positive for the future of GME stock. 31, 2022, the company reported net income of $48.2 million, a big swing from the $147.5 million net loss reported for Q4 2021. At the onset, it made sense why the market reacted positively to GameStop’s last quarterly earnings release.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |