>>I would like to be short a little higher. How the stock gets there is irrelevant to me.<<
But your whole argument is that GME is valued too high because growth expectations will not happen. If growth expectations are made and then some your reason for shorting is nil. The only other reason is that downloading games will be competition, but most here know that will be at least a decade away and there are so many drawbacks for both publishers and consumers it will never be the dominant way of buying games.
To say GME is only seasonal (i.e. holiday shopping season from Thanksgiving to Christmas) and not cyclical just goes to show you don't know much about the industry. It is absolutely cyclical, because it typically is slowest during the summer (only 40% VG sales growth this month) and sells most during the fall and winter..
Anyway the VG industry is not even seasonal (as you claim) it just sells better during the holidays like virtually every product out there. Seasonal products are things like boxed candy that sells most of its products at Valentine's day and sales are low the rest of the year. Video games sell strong all year long and incredibly strong during the holidays. Seasonal.. You really love to show how clueless you are for some reason!
I would like to be short a little higher. How the stock gets there is irrelevant to me. Squeeze on eps will be fine. Yeah, I would prefer it gap up on bad numbers, but that won't happen...so a slight beat with a gap up would be great to short into. Seasonality doesn't bother me...yes, this is seasonal not cyclical like you said. Don't you know the difference?
He seems to think that downloading games is a big threat. If that's what he's waiting for it could be over a decade. Not only will consoles become much more expensive due to much bigger hard drives, bandwidth will have to go up 10 fold to make it even close to feasable. As of now it takes a long time just to download a demo of a game that comes nowhere close to the full game.
It will be AT LEAST 2 generations of consoles away before it is even possible, but with that idea opening the door wide open to pirated games and screwing the consumer out of being able to ever rent or resell games it probably will never happen. There are just way to many draw backs and most experts agree it is at a minimum 10 years away before it will be even possible. Who wants to wait days for a game to download?
You say growth expectations are high and (you said earlier) you are going to short if they beat estimates, thus growth is even higher than the high expectations.. Doesn't make much sense to me.
With PS3, XBOX360, Wii, DS, PSP, and PS2 customer bases all at much higher levels, the video game business will absolutely soar this Christmas as there are a lot of big games coming out over the next few months. Shorting right into the cyclical best time of year for the gaming industry is suicide IMO. Maybe for a quick dollar or two on overbought conditions after a big rally or something, but the easy money will be made on the long side IMO.
That is what makes a market. Only time will tell who is right...not this week, not next week, but a year or so out is what the market will be looking at. With the heavy short interest, day to day moves mean very little. Just look at FNM---appeared to be out of the woods a month or so back, only to collapse again today. Short interest distorted the rally...now reality sets in, the shorts were apparently correct. Gaming will be here to stay, but growth expectations at GME are pretty high...eventually others could cut into their market, games could be downloaded, etc.
I understand your point, but longs just feel (and for good reason) there's more road ahead of us so why look in the rearview?
What you're saying can be true of any company at anytime. Some just may be more or less susceptible to it. Are you saying that gaming as a cultural movement/form of entertainment is going to be obselete sometime soon?
"Other retailers are not growing like GME nor do they have profit margins any where near what Gamestop makes.
PEG below 1 also means Gamestop is undervalued relative to growth. "
That is precisely the problem with Gamestop. Their margins are too high to be sustainable. You cannot compare GME to a retailer like Walmart, Home Depot or any clothing names. Those companies have low margins but also have cyclical businesses. If they have a downturn, their sales/margins drop but they can come back.
In electronics there is alway uncertainty; technology change or sudden competitive forces from either the game producers, other retailers. Technology can go obsolete but what you buy at Walmart or Home Depot will be bought regardless...even 10 years down the road.
For this reason a high margin stock like GME is a much riskier long.