Trader C0bb
Derivatives Trader & Portfolio Manager, Creator of G-Ron TrendCloud
GameStop has not created value where it matters to shareholders: the share price has been a dog for five years. Much of that came from heavy dilution and from alienating the investor base that drove the stock to parabolic heights. The idea that Ryan Cohen creates shareholder value is revisionist history, whatever the balance-sheet gains. x.comÂ
GameStop is not worth buying: it has no product, its management and reputation are poor, and it is constantly diluting shareholders. x.com x.comÂ
GameStop keeps winning under Ryan Cohen, now forecasting adjusted EBITDA above $600M for the fiscal year ending January 2027, versus $345.4M the prior year. x.comÂ
GameStop will go lower after hitting new 52-week lows, with $14-$16 the likely floor. If Ryan Cohen doesn't inspire shareholder confidence, it could fall as low as $10, and hedge funds love shorting it. x.comÂ
GameStop's eBay acquisition, paid half in cash and half in stock, means dilution to oblivion for shareholders. Per @ReesePolitics, Ryan Cohen's CNBC Squawk Box interview on the deal turned into a heated exchange in which Andrew Ross Sorkin was in disbelief at his repetitive answers, and his line that the details are on the website draws ridicule. x.comÂ
GameStop looks cheap against its earnings. It trades at about 14 times earnings versus the roughly 18 times retailers usually get. Applying 18 times to next year's estimated $1.37 a share, give or take 12%, gives a fair value of $21.70-27.62, leaving the stock 13% below the bottom of that range. This is a valuation read only, with no fundamental work behind it. x.comÂ
GameStop is going to zero: it trades at 67 times forward earnings versus 11 for Micron, a valuation that shows its backers are not serious people. x.comÂ
GameStop's eBay bid looks unlikely to get funded, because Ryan Cohen only gets the $20 billion of financing if the deal stays investment grade, which is not likely. Per @Stonkfather2021, buying 51% of eBay would take about $28.4 billion, covered by GameStop's $9.5 billion+ and TD Securities' $20 billion. x.comÂ
GameStop's case rests on CEO Ryan Cohen's continued insider buying, nearly $70 million this year, supporting a $30 target. The stock is up almost 20% year to date, on par with the Nasdaq 100. x.comÂ
GameStop shareholders are likely to be diluted to fill a funding gap of more than $10B. Its CEO implied as much in an interview without saying it outright, which is most likely why the stock reversed course. x.comÂ