One other thing to think about. at the new level of the dividend, 1.32\share, a 3% yield now puts GME's share price at 44.
Here's some advice. Don't take advice from Motley Fool. Or any fool for that matter. If your short window is 5 years, then you have a chance of being right. Idiots at Fool are short GME and have been trying to affect the outcome for their stock with relentless pro-short rants FOR YEARS NOW. You could be right or you could be wrong being short but unless your shorting window is wide open for a LONG time period, say 5-10 years you will not be able to call the shot, meaning when and if it happens that GME slips on revenue. Fool is impatient and trying to affect the outcome. Hard to believe people get paid to work at Fool. Shallow thinkers.
Just made GME one of my top short picks for 2014.
While the company still produces strong cash flow, it's in a challenging industry with stronger competition and new areas of competition on the horizon. While conventional retail may apply to clothing and other merchandise, gaming does not warrant a touch and feely experience. Gaming will be dominated by online sales, leaving stores like Best Buy and Game Stop in the dust. Game Stop's PE and Price to Cash Flow appears attractive; however it can be expected that margins will come under severe pressure as it attempts to compete against more efficient competitors.
Short term price target $30
Long term price target $12
Sentiment: Strong Sell
I'm sure Sony and MS will be introducing new high capacity storage drives to solve any future storage problems. How about 1 or 5 TB drives. That will do the trick..
Sentiment: Strong Sell
Gamestop's best days are behind it. They have too many stores and carry. Amazon doesn't have this problem. Jeez Best Buy may not survive. Did you notice how the insider share count has declined.
they've been shutting underperforming stores for years and the store closings are immaterial (200 net stores closed versus a fleet of 6,488 is only 3%).
Gamestop exec management seems to be one of the most anti-short teams around. Announcement of the dividend increase after hours. Love it! Any short that did not expect this, expect more of the same going forward. ;)
They have generated over $450 million in free cash flow each year for the last four years and will generate even more than that in the year ended 1/31/14. Why shouldn't they pay some of it out/buy back stock? Especially when the stock trades at a free cash flow yield 10%? Armageddon may be coming as you and others predict, but when? Broadband has been with us a long time and GME keeps on making good money.
GME has seen better days. There was a time when Gamestop was the go to place. Now they have all kind of competition from conventional bricks to digital which may just bury them. If you think Gamestop isn't in decline and the 200 net stores closed isn't a reflection of the decline, then I'll simply disagree and as you said you are entitled to your opinion too. I also believe the increased dividend was a desperate move to pacify a fund that may exit. They really shouldn't be buying back stock or paying any dividend now imo.
-Less AAA titles doesn't translate into lower sales of those games. Look at GTA V's huge success. The publishers are focusing on developing franchises and sequels because they earn better returns that way versus developing a lot of one-off content. Same is true of the movie business.
- GME sells DLC and other digital content at a high margin...and it still owns game streaming service Spawn, but won't launch it until it's ready for prime-time
- Downloading may be getting better because internet connections are getting faster, but that doesn't mean they are getting cheaper nor does it mean that carriers won't charge bandwidth hogs more for their big appetites. Plus, they can't be re-sold, so downloading is already more expensive for the gamer who wants to trade in when done with the game.
-Consoles aren't dead yet. Yes, tablets and other mobile devices are garnering share but they're not about to displace a dedicated gaming device. Plus, as tablet/mobile category grows, GME participates via its buy/sell/trade model. The mobile business at GME posted $50 million of sales in Q3 and keeps on growing.
-GME's used business getting hammered? it was down 2% in Q3 and is UP 7% in Q4 in the midst of a new console launch, that's extraordinary. Management said on the Q3 call that they expect to see used accelerate as the console launch ages. And hey, if there are less exciting new games out there as you suggest, maybe gamers give some older, less well-known games a second look on the used rack.
Sorry, thought you posted somewhere else that GME had a surplus of inventory, and that it was a negative because they weren't selling.
You're obviously free to be as objective or subjective as you wish. If a company's health was judged by the number of people in its stores, there would be multitudes of billionaire investors. The GMEs near me typically have 3-4 customers on weekdays, 5-6 weeknights, 10+ weekends for small shops and 15+ for the larger locations near shopping centers.
Then, I've seen plenty of busy stores (and restaurants) shut down.
Next, how are 1100 Radio Shack store closings even in the most remote way related to GME's 200 net closings? I doubt investors would have insisted that GME keep unprofitable locations running, and I don't see Radio Shack tactically opening 50 more stores, or whatever the number is for GME. There's no relationship here other than that they're both retail locations.
I never said well stocked is not a negative, 2 window shoppers was.
Report this morning that 1,100 Radio Shack stores will close. Gamestop had 200 net closures last year.
Get the picture? Probably not.
Like I've said, the people going to GameStop aren't checking in here to read your opinion.
And again, again, again, there is a vast difference between indie games and blockbuster titles. GME is not in competition with 99¢ apps. And gamers are rapidly souring on microtransactions, as it's made fully-priced games even more expensive - do your homework on Forza 5. More to pay, less to own.
GME hasn't relied on PC game sales in... oh, nobody remembers. You don't, obviously.
Wake me up when people no longer want to own the full-price games they've purchased.
Newsflash: Microsoft and Playstation JUST RELEASED DISC-BASED CONSOLES. These disc-based consoles are in their relative infancy. You really don't seem to understand gaming.
They are not going to make their numbers. Gamestop has been closing more stores than they open. Last report ending Nov 2013 they had 200 fewer stores and that includes the 44 stores they acquired in Europe. I happened to be at well known mall Saturday night. Gamestop was empty except for 2 window shoppers. They were well stocked. I see Gamestop turning into a Radio Shack type store. It's not the go to store it once was.
So I have heard all the chat about how huge AAA games can't be downloaded because they are so big and how this is going to save GME from oblivion. And, I agree its true that 25Gig+ games are going to be sold on disks for several more years. But, let me take a minute to remind the longs about why that is totally false hope for GME:
- Big AAA games are very expensive to make now and so volume of these games is way off. Far fewer titles even getting launched into the channel this year. Fewer disks means fewer sales.
- All sorts of other game environments competing for gaming dollars that dont use big file sizes. Free2Play; DLC add ons; microtransactions; Streaming. These are sales that GME doesnt make.
- Lots of games are NOT too big to download - for example the casual games, indie games, etc. These games are going digital only in a hurry. These are sales that GME isnt making.
- Downloading is getting better in many ways which means the big AAA game is fighting a losing battle. Examples - better eStores from all the big three hardware makers; can start play while DL is progressing; can buy on your iPhone and start downloading; improving internet capacity everywhere.
- Casual gamers are leaving the console/handheld universe in droves. They are going mobile and this means DL only for games. This is why WiiU is failing. This is why GME is barely carrying Nintendo games any more.
- All of the big three now doing a much better job of selling old catalog on digital. This is hammering GME's used business as noted last quarter by GME.
- Steam is example of how even large games can go digital only. These sales are also gone from GME's world.
- Apple and Amazon coming with their own initiatives. Sure to be Digital Only. Sorry GME.