As a total investor layperson who doesn't own any stock†, I don't think so. The current price seems about right.
• The pandemic is temporary and retail stores will re-open.
• Gamestop isn't bankrupt and doesn't have mountains of debt.
• There will be people who still want to buy physical games—whether for their resale value, or as collectibles, or because downloading 100GB on a slow internet connection sucks.
• Gamestop should be able to leverage their brand to increase their online presence.
I don't understand why they were so heavily shorted before, and I do think the redditors had a good investment case (early-on, before things went nuts).
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† I have some money in index funds, and some in an account managed by a professional broker. But nothing I personally selected.
People buying physical games don't need gamestop to keep buying physical games. They can buy them at target or walmart when they are there grocery shopping, or ship them for free from amazon. People buying used games and systems also aren't generally going to turn to gamestop and their overpriced junk, like they would have 15 years ago, now that online marketplaces, both local and national, have matured. Consider used games with an active market, like Super Smash Brothers Melee which still commands $50 used, aren't even sold at gamestop anymore and haven't been for years. They don't have anything older than the previous generation system, and of that past generation they will probably not have great inventory of popular titles, so retro buyers aren't even going there to begin with. It's dead retail walking and they do nothing unique.
> People buying physical games don't need gamestop to keep buying physical games. They can buy them at target or walmart when they are there grocery shopping, or ship them for free from amazon.
Sure, but what has changed between now and five years ago?
It's twice its value in 2016 despite revenue falling significantly pre-covid and accumulating a lot of debt.
Reddit investors may have had a good investment case at 4 dollars (basically assuming it won't go bankrupt). But it could right-size and enjoy modest growth in online sales and still not be worth what it is now.
• The pandemic is temporary and retail stores will re-open.
• Gamestop isn't bankrupt and doesn't have mountains of debt.
• There will be people who still want to buy physical games—whether for their resale value, or as collectibles, or because downloading 100GB on a slow internet connection sucks.
• Gamestop should be able to leverage their brand to increase their online presence.
I don't understand why they were so heavily shorted before, and I do think the redditors had a good investment case (early-on, before things went nuts).
---
† I have some money in index funds, and some in an account managed by a professional broker. But nothing I personally selected.