There's $5 of EPS here...stock can easily go to $75 (15x) in next couple of years on that. 15x is still a sizeable discount to the specialty retailer comps.
mix shift toward physical software definitely a positive as it's higher margin. On a constant currency basis, software +8.9% year over year without the full slate of new titles. Management expects momentum in that segment to continue into Q1. Console digital sales +50% year on year. Basically, torpedoes the bear case.
Name one non-fraudulent public company that has a long history of free cash generation and no net debt that went broke/ceased to exist in 12 months. The inability of shorts to think critically makes me feel better about being long...
I'm trying not to read a lot into the decision to release after the close. Not sure it's indicative of anything except maybe they wanted one more trading session to buy shares back on the cheap! :)
frankly, I thought AMZN would make more sense. Gives them a massive footprint of stores for pick-up/delivery of smaller electronic items for their customers. AMZN has been trying to do this with lockers at Staples and RadioShack but they got the boot. Would be hugely accretive and get them into used electronics in a big way.
My two cents: so much pessimism priced in that shorts are covering in case holiday sales come in ok. Like you, I've learned a lot here, too, as a long-time GME owner.
tytus' call may be a stretch but it's not crazy. I would say the odds of $50 by the end of Feb are 25%. here's a stock near a 52 week low with massive short interest and the holiday sales numbers tomorrow. The short thesis (ie GME=Blockbuster) is by no means bullet-proof. With such a crowded trade, a low valuation, and potential earnings growth of 15% over the next year, shorts have better be right because this stock is a coiled spring.
you're saying that the market always gets it right. Do you really believe that. HPQ traded at a very low valuation of earnings a few years ago. the market got that very wrong as the stock is up almost 3.5x since.
I think it's unlikely that GME doesn't come in within the guided range this quarter. Lower gas prices and busy stores in my area make me feel comfortable that they meet and may even beat. As for the coming year, you'd have to have SSS be negative and operating margins contract to get to $2.70 to $3.00 EPS. I doubt that happens with new title launches, a larger and larger installed base of new-gen consoles hungry for content, and lousy full-game download experience for gamers.
the reason why WMT is going to have a tough time getting into the used business is because going to WMT is a lousy experience - dare I say depressing?. Plus, how is WMT going to train their employees to engage the customer like GME does? it's not in their DNA. WMT's business model is built on crushing suppliers and offering product on the cheap. It's not a specialty retailer built on customer engagement.
I don't think the demographic at GME is really that into Black Friday. Isn't that more geared toward middle-aged parents looking to get a deal on TVs and ski jackets?
I read the BusinessWeek article. I'm not a gamer, but have visited numerous GME retail locations over the last year. I've found the staff in these locations to be a lot like the clerk in the article: friendly, knowledgeable, helpful and engaged with the customer. In one instance, a manager high-fived a guy who walked in and asked him how he liked his new console. They were on a first name basis. Incredible.
I think GME has a club-like feel the way Starbucks does. People may be able to do get the product at home (and maybe even cheaper) but we humans like to interact with other people and get out in the world.
I also think the knowledge GME has about its customers and their buying history is unique. They know how to source and distribute used merchandise effectively because they know where the bones are buried. Even if WMT were to dedicate a lot of resources to the used game business, it would take them a long time to build this knowledge. That's if you could get the gamers into the store versus going to GME....as stated above, the GME stores seem like a much more attractive alternative. Plus, they have a massive refurbishment facility.
One more thought: I think the softness in GME's recent number was misinterpreted by the investment community and the short trade has become way too long in the tooth. With the console makers aggressively bundling software with new consoles at a time when the slate of new titles hasn't been great, I think the software sales took a temporary pause as folks got most of the software they wanted for free as part of promotions. Over time, people are going to want content for the growing base of systems, and they'll go to GME (and other places) to get it. On the most recent call, management indicated that their market model (based on customer feedback about intent to purchase) is telling them to expect mid teens new software growth this year. Shorts will get annihilated if that comes to pass.