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GameStop Corp. Message Board

  • long_term_cap_gains long_term_cap_gains May 27, 2013 9:13 AM Flag

    Big Investors have confirmation that the Business Model is broken

    Now the rumor that used game sales are gone for GME, big Investors have gotten the signal to sell, and they have started to do so in droves. The stock was pumped by analysts to allow big funds to exit with gains, at the expense of smaller investors who piled into and fell in love with the stock. This dynamic is going to continue to inflict pain on those who cannot bring themselves to acknowledge the obvious: The Company's Business Model is broken.

    Used smartphone and tablet sales will only go so far in shoring up the loss of the very lucrative used game business. It is a good move by the company but it is neither as profitable nor a sure thing. It will take years for it to replace the revenue and profits used games generate.

    The stock has much further to go on the down side, Institutions cannot all get out simultaneously, so it will take months to get to the final price level.

    GME has not repurchase shares above $25 (check the 10Qs and 10Ks), doubtful if it does so much above that. The price target over the mid term therefore is close to $25 give or take a buck.

    The stock has another $7 bucks to drop just to get to a reasonable level, and this is generous since the stock's 52 week low is much below even this level ($15.32). If business deteriorates more significantly, the 52 week low becomes a magnet. Remember that the market is never efficient, it could go beyond these levels as folks sell in panic given what seems like a never ending drop.

    Be careful, this stock is fraught with uncertainty and that is the one attribute the street hates the most.

    Sentiment: Sell

 
GME
27.43Sep 27 4:01 PMEDT