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Gamestop (GME) short squeeze

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  • Oct 27th, 2021 5:58 pm
[OP]
Jr. Member
Jan 5, 2015
188 posts
302 upvotes
Toronto, ON

Gamestop (GME) short squeeze

Is anyone else following this right now? The more people jump in and hold, the stronger the bubble pops (short sellers) with short interest at >100% of float.

This summarizes the DD on it the best.
https://seekingalpha.com/article/437189 ... ze-part-ii

Also the fact that no matter what your impressions are of Gamestop right now, their reported revenue this year is almost $6 billion for a stock with a 500 million market cap. Bankruptcy (despite what I initially assumed) was never actually a concern since they have more cash than debt, and this came out afterhours to seal the deal.
https://www.sec.gov/Archives/edgar/data ... 200828.htm

full disclosure: I've liquidated all my stocks (just a tiny $10K portfolio as a student, fueled with CESB cheques, thanks Trudeau) and went all into GME today. I have vested interests in pumping this further and really sealing the deal without having to rely on November's double console hype.

UPDATE: the seekingalpha article is paywalled now, but even reddit understands the DD on GME now so just google it
Last edited by aronpm on Nov 30th, 2020 9:30 am, edited 1 time in total.
5554 replies
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Jan 31, 2016
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Have you tried your pumping on other sites? Reddit would be more helpful, no?
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Apr 23, 2006
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Is OP still alive? GameStop is down bigly after Q2 report
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Dec 3, 2014
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Gamestop, EB Games, whatever you want - they are done, over, not worthy of any capital.

PS5 is selling a cheaper model that does not even have a disc drive because the present (and future) is downloading games (or perhaps even streaming at some point). How does a company like Gamestop make money when no one needs to "stop by" to buy games? GameNoStop
[OP]
Jr. Member
Jan 5, 2015
188 posts
302 upvotes
Toronto, ON
ak-47 wrote: Is OP still alive? GameStop is down bigly after Q2 report
I'm still alive and I didn't expect Q2 to be *that* bad to hold through. No problem though. Cost basis still pretty low since my first chunk was under $6.

Come back after November.
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aronpm wrote: I'm still alive and I didn't expect Q2 to be *that* bad to hold through. No problem though. Cost basis still pretty low since my first chunk was under $6.

Come back after November.
Had a good pop today.
[OP]
Jr. Member
Jan 5, 2015
188 posts
302 upvotes
Toronto, ON
dotsandpixels wrote: Had a good pop today.
Yep, and the funny thing is that GME remains fundamentally undervalued. The only reason it's still priced this low is because of irrational short selling. Balance sheet is healthy with $300 million net cash as of Q2 so it's unreasonable to continue betting that GME goes to $0.

I don't have access to S3 data or similar, but it looks like short interest % of float is still >100% given the info from (https://iborrowdesk.com/report/GME). Barely any shares available and interest rate fee is over 50%. Hopefully this will shape out to be like TLRY's short squeeze (during the weed stock 2018 hype) by the time November hits if not earlier. If that doesn't happen, eh whatever GME could still be worth at least $50 if revenues stop declining and no more cashburn. That's the valuation it would have if it was priced similarly to Bestbuy's price-to-sales ratio.
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aronpm wrote: Yep, and the funny thing is that GME remains fundamentally undervalued. The only reason it's still priced this low is because of irrational short selling. Balance sheet is healthy with $300 million net cash as of Q2 so it's unreasonable to continue betting that GME goes to $0.

I don't have access to S3 data or similar, but it looks like short interest % of float is still >100% given the info from (https://iborrowdesk.com/report/GME). Barely any shares available and interest rate fee is over 50%. Hopefully this will shape out to be like TLRY's short squeeze (during the weed stock 2018 hype) by the time November hits if not earlier. If that doesn't happen, eh whatever GME could still be worth at least $50 if revenues stop declining and no more cashburn. That's the valuation it would have if it was priced similarly to Bestbuy's price-to-sales ratio.
LMFAO...OP PLEASE STOP INVESTING before you lose everything in a WSB gamble....I feel like I'm reading a "Post" right from the Wallstreetbets Reddit Face With Tears Of Joy

Also just looked at the financials (I haven't followed GME). Your numbers are off...$570M Cash in Q1, and $735M Cash in Q2

In Q1 they got to $570M by borrowing $150M from a LOC.
Cash from Operating activities was -$50M, despite a $200M reduction in inventory....

In Q2 They got to $735M (+$165M)...they don't make it easy to see incremental....but let me break it out for you....
$200M is from further liquidation of inventory....
$50M they received from selling property/equipment....
Repaid back about $75M of net debt....

And these 3 items alone make up the positive cash flow....

Reducing inventory by 50% since last year is not sustainable in a business like this...this time last year, they had $950M of inventory, in 2020 they have $475M....

Relying on a "short squeeze" is a silly strategy


Edit 1/14: I'll admit when I'm wrong - Congrats on the win OP - WSB currently rules the market, I even tried a small gamble at this through calls, expired 1/8 worthless (couple days before the short squeeze, oh well). I'd take some profits, short squeezes dont typically last long!
Last edited by deal_with_singh on Jan 26th, 2021 6:05 pm, edited 2 times in total.
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the fact that ps5 / xbox are both offering digital consoles should be a warning sign of things to come for GME long term

unless they can make their business run on selling fortnight tshirts and selling funko pops
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[OP]
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Jan 5, 2015
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Toronto, ON
bLuPhYrE wrote: the fact that ps5 / xbox are both offering digital consoles should be a warning sign of things to come for GME long term

unless they can make their business run on selling fortnight tshirts and selling funko pops
Those fears are overblown.
Image
https://arstechnica.com/gaming/2020/09/ ... pre-order/
Whether that was by limiting the amount of digital editions available or customer preference is besides the point. There were also PS5 digital editions bundles with Playstation store and subscription cards, so it's not like Gamestop doesn't get a small cut of digital sales.

As for the other dude, the point was that bankruptcy is now out of the question for Gamestop no matter what you think about their move with reducing obsolete inventory. There are around 50 million shares short which were betting on Gamestop going to $0, and they obviously lost the bet as Gamestop managed to survive to the start of a massive console cycle. It's delusional to keep betting on bankruptcy now with two new consoles coming out and corona restrictions fueling a gaming boon. With current borrowing fees (~50% interest), shorts that don't cover will break even only if Gamestop goes to $0 in 2 years.

Also, it's pretty silly to interpret the stores closing down as signs of bankruptcy when it's been part of de-densifying strategies for years after being overextended. It was bad enough some time ago that there were two EBgames in the same mall near me.
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GME turning into...the next AMZN!

"Ryan Cohen, the entrepreneur who built Chewy.com into a pet-supply giant and sold it for more than $3 billion, is now pitching GameStop Corp. on a lofty goal: becoming a true competitor to Amazon.com Inc., according to a person familiar with the matter.

After acquiring a nearly 10% stake in GameStop -- making him the video-game retailer’s biggest individual investor -"

https://www.bloomberg.com/news/articles ... r-business

You cant make this stuff up
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Apr 25, 2006
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Ops killing it.

Don't tell people what to do when you trade/invest, but if you are experienced, never listen to them either.
"If you make a mistake but then change your ways, it is like never having made a mistake at all" - Confucius
[OP]
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Jan 5, 2015
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Toronto, ON
treva84 wrote: No offence, but this is a terrible reason to hold a dud company (hope of forced buying).
I see it more of an opportunity that the entire float is still shorted and that naked short selling was bad enough it made the list. It was practically priced at bankruptcy a month ago was because of how heavily shorted it was. Sure, the potential for a short squeeze or burn is definitely what baited me into GME, but I would have taken my profits by now if there wasn't also a reasonable long play to it with the upcoming positive catalysts.

Short interest is still close to 100% of float on a company that isn't going bankrupt and has upcoming positive sentiment/catalysts. When has there been a situation like this before?
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aronpm wrote: I see it more of an opportunity that the entire float is still shorted and that naked short selling was bad enough it made the list. It was practically priced at bankruptcy a month ago was because of how heavily shorted it was. Sure, the potential for a short squeeze or burn is definitely what baited me into GME, but I would have taken my profits by now if there wasn't also a reasonable long play to it with the upcoming positive catalysts.

Short interest is still close to 100% of float on a company that isn't going bankrupt and has upcoming positive sentiment/catalysts. When has there been a situation like this before?
Well, I can't really answer your last question because I don't know, but I see a retailer with declining same store sales, declining square footage (stores closing) and management that's slashing inventory. If this trend continues, if you hold it long enough, it does go to zero. You also have video game makers allowing direct to consumer downloads, which essentially cuts out the retailers.

From your point of view, what are the positive catalysts?
Keep calm and go long

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