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GameStop Corp. Message Board

  • livecod livecod Jan 7, 2010 11:19 AM Flag

    20 cents miss drops GME $3.60??

    Funny math by the shorts and the market:

    GME trades for about 9 times reported earnings but on a miss the pe ratio gets expanded to 18 or more??? 20 cent miss times 18 equals today's $3.60 drop???? That makes little sense which means this drop will be temporary.

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    • I couldn't agree with you more. I think the stock is very cheap at $20, and while i understand the reaction i believe it is wall street's usual overreaction. I have found these overreactions to be very good for my bottom line. Especially as in this case, where the news wasn't nearly as bad as the drop. Sure, it's a disappointment, but one quarter's $.20 miss is not the end of the world.

      Jumped in today and will buy a bit more at the close if it is still around $20, +/- say $1. I like the prospects of GME going forward.

      Good luck!

    • 6 of one, half dozen of another...your logic works both ways...getting a great deal on a scratched Porsche is different from getting a great deal on a scratched 8 year old Ford Focus.

    • codi, you are missing my point! Of course GME stock is not a Porsche!!!!.... my analogy refers to the 20 cent miss as being a "scratch" relative to the overall big picture of GME as a company. GME still made about $1.30, still is a leader in game sales, still is making more money this month, is still a good company.

    • just yesterday I told you all, bad management, and that they would miss despite MW2, this is a used game company.

    • Come on now, there is a difference between getting a deal on a scratched Porsche and buying into GME at $20....you know what you are getting with a Porsche...not so with GME.

      I think we can agree that they are being attacked competitively on various fronts...they had a real terrible holiday season...their CFO left earlier in the year...and, again, their line to the street today about "tough global economics" is pure bull. They are not scratched Porsche.

    • Exactly. Thats why I'm sticking in.

      “It is important to note that this is still the second highest earnings year in GameStop’s history coming off a record fiscal year 2008. Our fiscal year 2009 projected EPS represents a 25% growth over fiscal year 2007.”

    • Codi, I am not excusing mgt for setting expectations too high but sometimes that gives investors an opportunity to buy cheap.

      People are only looking at the miss today but that is short term and soon investors should and will look longer term and at the positives $1.30 is NOT bad at all for earnings in a single quarter for a $20 stock!!

      It's like some people see a small scratch on a brand new $100,000 Porsche and they now think the car is only worth 80K, at some point others are going to say wow, it's still a Porsche, still a great bargain and others will come into buy it. My point is that many are seeing the glass half empty today and focusing on 20 f'ing cents but the main event is that they still made GREAT money $1.30.

      Let's see 20 cents miss VS. $1.30 in PROFIT!!!!! I'll focus on $1.30 profit!!!

    • Fair enough. I won't exchange barbs about who's got the bigger one...regarding portfolio that is, but my only point is that the sales miss was HUGE, management's rational weak and, as a result, investing in GME today is more a speculative play than it was yesterday....until management can lay out details around such a huge miss in what is shaping up to be a pretty good holiday season.

    • Managements rationale is crap. Weather didn't affect the other retailers who had upside and positive comps. Just a bad excuse

      One of two things is happening here.

      1) GME is in lower video game cycle with fewer 2009 titles and tough comps over 2008. If this is the case 2010 will be stronger as game pipeline is much stronger then 2009 and more consoles out there

      2) GME is losing market share to competitors. Has wal-mart, amazon or best buy cut into gme's share? I have not seen any reports for or against this.

      3) Economic Malaise. This certainly is a small factor but with other stores showing great comps one has to take it in context for GME with product cycles. Like the movie industry the video game industry is very susceptible to product release cycles and timing.

      Overall if I was an analyst I'd be very bullish on GME for 2010. I think there is a strong cycle this year and easier comps. I think risk/reward favors the longs on GME in 2010. Valuation today is extremely compelling with large margin of safety still built in.

    • that is a good point, the market always over reacts though, good buy in the 20s

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