GME went from sub 20 to 60 in late 2007/early 2008 due to ps3/xbox introduction. GME also went from 20 to 57 this year due to ps4/xbox one introduction.
Now the question is --
GME should slowly go back to $20s just like the previous one, right?
it's the multiple of earnings and cash flow that matter, not the price. GME had debt then, so you have to use Enterprise value-to-EBITDA multiples for apples/apples comparisons of the company's historical value. Also there are less shares outstanding now. Note that the company trades at less than 8x EV/2014 estimated EBITDA, but traded as high 20x EBITDA in the upswing of the last console cycle. So there's a lot of upside in the stock if history is any guide.
I really have no idea what you're talking about.
I'm not saying it doesn't make sense; just that I need to learn a little bit more ;)
Sounds right, though... lol.
For me... yes, I'll admit I need to learn more about financials; however, I've done fine going at stocks from a consumer psychology angle. As far as I'm concerned, two factors play prominently here in GME for me:
1) People like the physicality of brick and mortar; younger kids can't ride their bikes to Amazon. You can't get a mall experience online. Another thing about walking into stores: impulse buy. The immediacy of visiting and subsequently leaving a physical store doesn't play out online.
2) People like to own what they purchase. (People compare to Blockbuster, but movies are not games.)
Hi Razor. I think you will lose the crowd here with your analysis. I agree with you. This sucker is cheap. And it incorporates far too much discounting of the doomsday scenario. This company is still kicking out a tremendous amount of EBITDA, and it is cheap on an enterprise multiple for sure. Simple people try to find simple comparisons, but as you point out it is apples to oranges.
although I had been bullish market won't pay 10x for a business model they no longer believe in. If the tape keeps heading down, then it fills the $39 gap prior to earnings in March. Mgt would be wise to let the stock hit that gap before pulling trigger on their $500mill buyback.