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GameStop Corp. Message Board

  • jesterbunk jesterbunk Apr 5, 2011 10:17 AM Flag

    GME's digital growth forecast

    Currently, their total digital is $290M, of which around $90M is from the PC side. I estimate Impulse has about $125M revenue (just over a year ago Stardock said Steam was 70% to their 10%, and recent estimates put Steam's revenue at $1BN, and I'm assuming Steam's marketshare has increased due to Steamworks etc.).

    The majority of GME's $1.5BN digital forecast for 2014 is from the PC side, projecting $900M-$1BN from that.

    This suggests a projected CAGR for PC digital of 47%. Seems aggressive?

    Bearing in mind this is the same management team who said two years ago there wouldn't even be an addressable market for digital until 2014, and now they've flipped completely and are projecting massive growth.

    Btw, if Impulse has revenues of $125M and is profitable, presumably the acquisition cost several hundred million. Isn't that material enough to disclose to shareholders?

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    • Jester I have to say I agree with you on most points. I think most of us just want GME to get alittle higher before someone pops our balloon. Thanks for keeping it real with your opinions.

    • Yes, good points.

      +23% in 6 weeks, as you said we may have already seen the squeeze.

    • All good points. My main point is, the reasons IMO that GME was so HEAVILY shorted, are no longer valid, so I would expect a decent size short squeeze, which we may have already seen or have not seen yet, but I would not bet that is over with yet.

    • "The only acceptable argument right now to short GME is if you think they will not have success with their initiatives"

      Well, the consumer must play a part too, right? High gas prices and budget cuts aren't helpful. True, people like entertainment, but there's no shortage of gaming entertainment for free or for a dollar these days, unlike the old days where the only cheap games were used games from GME.

    • Well stated. My response is, the physical media used business (up-to-this-point) has funded and is funding the purchase\acquisition of technology and initiatives to make GME's future success more probable. At the present time it's fence straddling, one foot in each arena. Who else is able to do this? OnLive is leveraged in one arena, all digital. Same with Steam. Don't discount the value of the used business just because it is going away or lessening at some point in the furure, that's the main mistake shrties are making. IT IS FUNDING THE FUTURE FOR GME. GME has been giving you the answers for awhile now, but shorts weren't listening. The only acceptable argument right now to short GME is if you think they will not have success with their initiatives, and that was not the main reason GME is 25% shorted as of this time. You gotta change with the times.

    • "if you been "consistently" long-term bearish on GME and have not considered\amended this outlook based on recent events"

      As I said, I wanted to see them acquire a PC portal, and days later they did. The investor day also provided some, though not enough, transparency. More than before, at least.

      So I am less LT bearish than before, and would be more inclined to shorts puts to capture the volatility and theta in them, thanks to increased transparency and buybacks providing support. I am less inclined to go short, or if I did it would be more likely be via slightly ITM calls rather than naked stock, again for the volatility and theta to give some cushion.

      I'm not as blind bullish as many here though. Forecasts expect 97% of GME's business to be stagnant in coming years, and 3% to grow. That 97% segment grew from $5.32BN four years ago to $9.47BN, and the digital forecasting is looking for $1.2BN growth in the next four years. It's worth noting also that digital sales have lower margins than used game sales, something they benefited greatly from while the packaged goods market was rising. So excuse me for not getting the pom-poms out.

      Then this talk from the GME President about making their own tablet, with a bluetooth controller. Say what? Would it also come with a portable tripod to hold the tablet while you hold the controller? It's a massively competitive market, GME has no experience whatsoever, and it really sounds like the President is at best throwing out buzzwords he thinks the street finds "hot", and at worst totally clueless.

    • This discussion you are having is none of my business, but if you been "consistently" long-term bearish on GME and have not considered\amended this outlook based on recent events, you are not much different than the Piper Jaffery db analyst that because he stated a $17 price target and underperform on GME a while ago he's willing to go down the well with an out-of-date analysis due to stubborn-ness.

    • You do such a good job of paraphrasing everything I say, I might just let you post for me from now on.

      Jester, I always find "debating" with you is good for a laugh.

      You are so intellectually insecure, it doesn't take much to get a rise out of you.

    • "Why are you writing puts on a stock you are so bearish on, and then spending all your time on here trying to convince everyone how terrible their strategy is?"

      I've consistently said long term bearish, years.

      I've consistently said short term puts, days. And that the investor day would provide support, which it did.

      Someone here thought you were intelligent, yet you do not understand the difference between years and days?

      As for this thread, if you recall the main debate was whether we should give merit or discount comments made by sources not from GME, and you made your fanboy stance clear on that topic. That's the kind of stance I'd expect from a GME employee btw.

    • Why are you writing puts on a stock you are so bearish on, and then spending all your time on here trying to convince everyone how terrible their strategy is?

      Doesn't add up if you ask me - just guessing.

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