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posted by Fnord666 on Friday June 11, @01:04AM   Printer-friendly [Skip to comment(s)]
from the sharp-pointy-lines dept.

GameStop stock falls sharply amid 5M-share sales plan, SEC investigation:

GameStop's quarterly earnings report, released last night, contained relatively good news for the embattled retailer, including a smaller-than-expected operating loss and the company's first year-over-year increase in quarterly revenues in years. But GameStop's heavily inflated stock price is down significantly in morning trading on news that the company plans to sell more shares and the announcement that it is cooperating with a Securities and Exchange Commission investigation into the "meme stock" phenomenon.

In what CEO George Sherman called a "strong start to the year," GameStop's net sales were up over 25 percent to $1.3 billion in the fiscal quarter ending on April 30. That's despite "a roughly 12 percent reduction in the global store fleet due to our strategic de-densification efforts and the continued store closures in Europe during the quarter due to the COVID-19 pandemic."

Previously:
GameStop (The Stock) and GameStop (The Retailer) Continue to be Worlds Apart
GameStop Shares Rise, Fall and Rise Again in Roller-Coaster Day of Trading
The Complete Moron's Guide to GameStop's Stock Roller Coaster


Original Submission

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The Complete Moron’s Guide to GameStop’s Stock Roller Coaster 193 comments

The Complete Moron’s Guide to GameStop’s Stock Roller Coaster

The Complete Moron’s Guide to GameStop’s Stock Roller Coaster:

Last week, an epic short squeeze had driven GameStop stock up to $40 a share, a roughly 1,500 percent increase from its low point nine months ago. Little did anyone know at the time that this would only be the beginning of the story.

As I write this, GameStop's stock price is hovering around $350, up another 775 percent or so since I wrote about this situation eight days ago. By the time you read this, that number may be horribly outdated, as the stock continues to bounce up and down with extreme volatility hour by hour (it dipped down as low as $61 and peaked as high as $159 on Friday).

The current stock price now gives the company a market cap of about $26 billion.

On the surface, that means the market currently thinks GameStop is worth more than twice as much now (during a potentially existential threat to brick and mortar game sales) as it was during the height of the Wii boom in late 2007, when console game downloads were barely a thing.

Also at: Business Insider.

Melvin Capital, Hedge Fund Targeted by Reddit Board, Closes out of GameStop Short Position

Melvin Capital, hedge fund targeted by Reddit board, closes out of GameStop short position:

GameStop Shares Rise, Fall and Rise Again in Roller-Coaster Day of Trading 25 comments

GameStop shares rise, fall and rise again in roller-coaster day of trading:

GameStop shares spiked Wednesday, reaching $348 apiece, only to come crashing down to $172 each early in the afternoon, causing multiple halts in trading of the stock due to volatility. Stocks then moved back up and ended the day at $265[*], a 7% increase for the day.

The past two days were a buying frenzy for the video game retailer's stock since Monday, when it was $136. That surge coincided with a lift to the entire stock market after Saturday's passage of the COVID relief bill in the Senate, as well as with an announcement that the video game retailer is developing a new e-commerce strategy, with Chewy.com founder Ryan Cohen heading that effort.

Cohen, who made a large investment in GameStop last year, will lead a committee seeking to transform GameStop a "technology business," the company said in a press release Monday.

GameStop shares skyrocketed from less than $20 in early January to more than $480 at the end of January thanks to a massive push by traders on the Reddit forum r/WallStreetBets. The stock price has dropped dramatically since then.

Price quote on Yahoo!

Also at BBC

Previously:
The Complete Moron's Guide to GameStop's Stock Roller Coaster
Console Options Without Disc Drives Could be GameStop's Final Death Knell
Web Site thinkgeek.com Moving in with Parent Company GameStop
GameStop Heading Towards Possible Doom
GameStop Posts Massive Loss as Pre-Owned Game Sales Plummet
GameStop's Future in Question after Failing to Secure Buyout


Original Submission

GameStop (The Stock) and GameStop (The Retailer) Continue to be Worlds Apart 24 comments

GameStop (the stock) and GameStop (the retailer) continue to be worlds apart:

The last time GameStop announced its quarterly earnings, in early December, the stock market valued the video game retailer at about $1 billion. Following a worse-than-expected earnings report released Tuesday night, the company now has a market cap of just under $10 billion as of Wednesday morning.

Sure, that's down roughly 18 percent from Tuesday's closing price, and off roughly 44 percent from a January peak that saw the stock offering become a poster child for the retail investor-driven "meme stock" phenomenon. Still there's not much in this week's report to suggest that GameStop as a company is worth ten times as much as it was just three months ago, much less the higher valuations it briefly enjoyed in the interim.

[...] Overall, GameStop's latest earnings report shows a company still struggling to turn itself around. For the full fiscal year, the company lost $215 million on net, improving on a net loss of just over $470 million the year prior. Net sales for the year were down over 21 percent, to $5.09 billion, a decline GameStop blamed in part on its "de-densification efforts" (i.e. closing nearly 700 stores). Even taking that move into account, though, sales for comparable stores were down 9.5 percent for the year.

Previously:
GameStop Shares Rise, Fall and Rise Again in Roller-Coaster Day of Trading
The Complete Moron's Guide to GameStop's Stock Roller Coaster
Console Options Without Disc Drives Could be GameStop's Final Death Knell
GameStop Heading Towards Possible Doom
GameStop Posts Massive Loss as Pre-Owned Game Sales Plummet


Original Submission

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  • (Score: 2) by Revek on Friday June 11, @01:46AM (11 children)

    by Revek (5022) on Friday June 11, @01:46AM (#1144150)

    There is no way it won't make people who have the stock serious money. All the rest is the losers shorting it to drive the price down so the can continue pretend they haven't already lost.

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    • (Score: 2) by JoeMerchant on Friday June 11, @02:06AM (10 children)

      by JoeMerchant (3937) on Friday June 11, @02:06AM (#1144154)

      As I understand the squeeze, the shorts aren't driving the price down - they are the primary force driving it up.

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      • (Score: 5, Interesting) by Revek on Friday June 11, @02:56AM (9 children)

        by Revek (5022) on Friday June 11, @02:56AM (#1144160)

        To drive the price down they execute a series of ladder attacks where they trade shares between themselves at an increasingly lower price. This also increases the volume of trades on the stock quickly. Back in march they were doing it so much they triggered trade stops several times in one day. Lately they have been taking care to not trigger a stop.

        Gamestop was set to join Radio Shack, Sears and Toys-R-us. You see if they had driven the price down far enough to drive the company out of business they wouldn't have had to buy back the shorts and they wouldn't have had to claim the profit on their taxes. These naked shorts are considered synthetic shares. By the rules naked shorts/synthetic shares must be bought back, just like real shares. In order to truly exit their positions they have to buy those stocks back and the apes are not selling.

        The primary force behind GME is the hedges shorted Gamestop for over a hundred percent and all the 'retail' investors bought the majority of the naked shorts. There are literally millions shares more on the market than Gamestop has ever issued. If the majority just wait it out they will rake in a huge return. How much is subject of endless speculation but much more than a thousand a share. All the press and FUD is to try to convince these guys to sell. They are not selling and ultimately they will win.

        I have a few shares bought below fifty bucks. I have quit playing games and spent many an hour learning how this game is played and what has happened with Gamestop will not come again. These hedge fund weenies fear it for they will always have be careful they don't short any stock too much. They are still looking for a way out that screws all 'retail' investors but so far all they can do is invent new lies to cover their failure.

        Remember bitcoin and other crypto currencies tanking? That was the large hedge funds cashing in to keep ahead of their impending margin calls. They are literally losing huge amounts of money everyday and have to constantly keep shifting their outstanding shorts around to keep the illusions that they have no short positions with Gamestop and other stocks they were driving down to zero when this new occupy wall street happened.

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        • (Score: 3, Insightful) by bzipitidoo on Friday June 11, @05:12AM (3 children)

          by bzipitidoo (4388) Subscriber Badge on Friday June 11, @05:12AM (#1144178) Journal

          > Gamestop was set to join Radio Shack, Sears and Toys-R-us.

          And Blockbuster.

          Yeah, why does Gamestop even still exist? I don't see a point to a dedicated store front for computer games any more. The huge overhead of that compared to downloading drives prices up, by a lot I should think. Shouldn't have lasted this long, except that developers clung to the hope that the old delivery method could stem piracy. Expect the pandemic delivered a critical hit that should have finished them off, if not for the market manipulation.

          Every time I bought a game at retail, I got less than I was led to expect. The game wasn't finished, or was missing crucial things such as an instruction manual, that had to be purchased separately as a "hint book". Then you inevitably had to buy expansions. And it was very expensive. When I quit, $60 was the going rate for the base game. High though that was, it was far cheaper than the subscription MMORPG thing, which I tried for a few years.

          Now, the only games I touch are freebies, and Humble Bundle or GOG, for download. No, I don't care for Steam either. Humble Bundle pushes Steam a lot, and have to watch for that. If I can't get a DRM free version, I don't play it.

          As to the stock market manipulation, well, yes. The only thing I wonder is, why Gamestop? Why that stock? It must be that they're small enough, and are in bad shape.

          • (Score: 3, Interesting) by Anonymous Coward on Friday June 11, @05:55AM

            by Anonymous Coward on Friday June 11, @05:55AM (#1144186)

            The only thing I wonder is, why Gamestop? Why that stock? It must be that they're small enough, and are in bad shape.

            No. It's because WSB noticed that the hedge funds had sold 140% of the existing stock.

            A car analogy.

            Pretend there are only ten 1925 Model T's left in the world. I don't own any, but I sell fourteen of them. WSB notices this and starts buying Model T's. They manage to acquire 6 real ones, leaving 4 out there.

            I now need to buy 14 Model T's to deliver on the sales. The only way I can possibly do that is to buy all the Model T's I can at whatever price I have to pay, deliver them, then buy them back and deliver them again.

            WSB says "We're not selling". The other four are getting traded back and forth frantically trying to cover up the fact that I and my friends only have four. There is no option to cancel the original sales, I HAVE TO buy those 14 model T's, regardless of how high the price goes.

          • (Score: 5, Interesting) by Revek on Friday June 11, @12:58PM (1 child)

            by Revek (5022) on Friday June 11, @12:58PM (#1144232)

            You miss the point. Radio Shack, Sears and Toys-R-us would still be here if not for the less than legal tactics of the hedge funds. What they were doing was using illegal market tactics to run them out of business. The penalty for their illegal tactics was a pitiful fine. The SEC just fined them and got a small cut of their profits. You are hyper focused on own experiences with games and miss the larger picture. I didn't like gamestop very much and have never shopped there but I did like going to radio shack every now and then. I did take my kids to Toys r us. Those companies are just the tip of the iceberg when it comes to the lives those psychos that run the hedge funds have ruined. All so they could make tax free billions.

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            • (Score: 2) by bzipitidoo on Friday June 11, @05:14PM

              by bzipitidoo (4388) Subscriber Badge on Friday June 11, @05:14PM (#1144301) Journal

              Ah, didn't know hedge funds were behind those. Toy-R-Us I know was different, yes. Another toy store that was destroyed was Kay-Bee. I got the impression that one was that some rich boys wanted to play around at managing a business, acquired Kay-Bee, and through incompetence and carelessness ran it into the ground. One of the highest profile cases was the demise and resurrection of the Hostess Twinkie.

              A term I've heard for this, in relation to smaller nations trapped with huge amounts of foreign debt, is "vulture capitalism". Inflict massive austerity and runaway inflation on the victim nations, drive them into default, so that hedge funds can make huge profits off the interest and panic selling of bonds.

        • (Score: 2) by istartedi on Friday June 11, @03:43PM (3 children)

          by istartedi (123) on Friday June 11, @03:43PM (#1144266) Journal

          If the majority just wait it out they will rake in a huge return. How much is subject of endless speculation but much more than a thousand a share.

          I have trouble with a statement like that. It seems like wishful thinking on the part of those who want to "stick it to the man". AFAIK, the man is playing both sides of the table. There are hedge funds who are long this stock. Deals can be cut, they can use options to reduce their losses and if it's about making a point they can hold out for a long time until the market for this thing returns to a value based on fundamentals. A lot of call options went ITM--we don't know how many were held as hedges by shorts who are going to deploy some kind of rinse-lather-repeat strategy that will ultimately cure their portfolios.

          The real money was made by /u/DeepFuckingValue on reddit who bought call options last year. I don't recall the actual numbers, but it was something like January $20 calls @ $5/conctract--boatloads of them, a deal that looked ridiculous at the time because the stock was sub $5 and like they say, everybody thought it was Radio Shack. That guy was no "ape" either--he had professional corporate experience in a financial field, insurance I think. He got the idea from the same guy who shorted housing back in '08. For a number of months it was actually a losing deal and WSB was actually commiserating with him over the unrealized "loss porn".

          Anyway, not much score left for retail here. That $1000/sh is, IMHO, just wishful thinking, and the volatility makes all the options super expensive. You won't find anything likely to go ITM for less than $500/contract. The prospect of 100-fold or 1000-fold gains just isn't there for the average Joe any more. It went to a few people who liked DFV's posts last year.

          Disclaimer: No position in the stock either way. Not financial advice.

          • (Score: 2) by Revek on Friday June 11, @05:31PM (2 children)

            by Revek (5022) on Friday June 11, @05:31PM (#1144310)

            Its simple really. The way a stock is treated on the market is normally when its high they sell and when its price is going way down you panic sell.

            That is not what happened here. These guys are holding and the hedges have to pay the shorts back. Its that simple they have to pay those shorts back and in order to do so the apes have to sell.

            It will reach a point where the hedges or the banks that margin call them to sell off their assets will have to have to buy the stocks back. They will have to ask a price that the apes are willing to sell and they have decided what it is worth. Its really been this way all along but all the investors always agreed it was time to cut your losses and sell. The apes consider themselves too stupid or smooth brained to do so.

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            • (Score: 0) by Anonymous Coward on Saturday June 12, @04:37AM (1 child)

              by Anonymous Coward on Saturday June 12, @04:37AM (#1144488)

              Did anyone here read the article?

              "news that the company plans to sell more shares"

              So if the company sells more shares these shares get created. That is there are now more outstanding shares. The company selling more shares is no different than if the retail investors sold those shares, it will still drive the price down just the same. The shares will go on the market from the company and the hedge funds will buy its shares from the company.

              Look up Tops shipping. They keep issuing more shares. This drives price down. They do a reverse stock split reducing the number of outstanding shares and increasing price per share. Then they sell more shares again. Price drops again. Repeat. It's been going on for many years. It's quite the scam.

              • (Score: 2) by Revek on Saturday June 12, @10:01PM

                by Revek (5022) on Saturday June 12, @10:01PM (#1144694)

                Shares are already sold. A drop in the bucket really.

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        • (Score: 0) by Anonymous Coward on Friday June 11, @04:42PM

          by Anonymous Coward on Friday June 11, @04:42PM (#1144284)

          To be clear, I have no skin in the game. I do not have any shares in it, nor shorts, nor anything else.

          I'm curious as to the reasoning here. Is it more likely that:
          1) There is a vast conspiracy between "hedge funds," all of which have a financial incentive to cheat the others to earn money for themselves (see: Prisoner's Dilemma), to engage in wide-scale market manipulation of GME? Keep in mind that mass market manipulation is literally illegal, and this is a single stock which has already proven itself to be exceeding volatile, and at least some hedge funds HAVE publicly divested themselves of GME.
          2) There is "something else" going on, such as the systemic manipulation of retail investors to prop up share prices in a "pump and dump" style confidence job.

          I really don't know, but I am hesitant any time somebody claims that things are the way they are because of a secret cabal engaging in a wide conspiracy. Of course, sometimes it is true, and there is a vast conspiracy going on (see: Pentagon papers, Chelsea Manning, Edward Snowden). Much more often, though, it is just desperate denial of reality (see: moon-landing hoaxer, flat-earthers, anti-vaxers, and some other modern things I won't mention because "time will tell").

          It's just like whenever somebody says "this time is different." Yes, occasionally things are different... but far more often they are the same and the bubble is about to pop.

  • (Score: 0, Funny) by Anonymous Coward on Friday June 11, @11:06AM

    by Anonymous Coward on Friday June 11, @11:06AM (#1144212)

    And we have today's Buzzword Bingo winner.

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