Is Gamestop on borrowed time?

[Jussi]

 

[JaegerDice]

The thing is, none of this craziness actually helps Gamestop unless more people actually start going to Gamestop and buying games.... particularly used games.

The most they get out of this situation is that they can hopefully sell some of their own stock holdings at the high number (selling 500,000 shares is easier than selling 5,000,000 shares for the same total money) and pay off some or all of their debt.

That would allow them to operate in the black, even if the actual revenue and profits are low.

The people who get in and out of Gamestop stock at the right time will benefit from this a lot more than Gamestop itself. They still have a company to run with operating costs and a rapidly changing landscape as far as online sales. Hell, they don't even know if the next consoles will have disk drives yet. Imagine trying to plan a business when for all you know, 5 years from now, the very items you sell aren't even used anymore.

 

[chicagoskycam]

It's not uncommon for troubled stocks to be manipulated towards the end. I don't see how the brick and motor business survives long term. I'd say this is the last round of consoles with disc drives and many people have already opted for the diskless versions. They could keep their on-line business going for some time.

 

[Gardner McKay]

The thing is, none of this craziness actually helps Gamestop unless more people actually start going to Gamestop and buying games.... particularly used games.

The most they get out of this situation is that they can hopefully sell some of their own stock holdings at the high number (selling 500,000 shares is easier than selling 5,000,000 shares for the same total money) and pay off some or all of their debt.

That would allow them to operate in the black, even if the actual revenue and profits are low.

The people who get in and out of Gamestop stock at the right time will benefit from this a lot more than Gamestop itself. They still have a company to run with operating costs and a rapidly changing landscape as far as online sales. Hell, they don't even know if the next consoles will have disk drives yet. Imagine trying to plan a business when for all you know, 5 years from now, the very items you sell aren't even used anymore.

This isn't really about Gamestop. GME was simply the tool used to f*** over these hedge fund pricks who got greedy with their short positions and are now getting absolutely annihilated by margin calls. Same thing with AMC. It was used as a middle finger to the system.

 

[aleshemsky83]

It's not uncommon for troubled stocks to be manipulated towards the end. I don't see how the brick and motor business survives long term. I'd say this is the last round of consoles with disc drives and many people have already opted for the diskless versions. They could keep their on-line business going for some time.

I think Disc based still has a place, the majority of console sales are still on disc. Now how much of that is from Amazon, which is not a brick and mortar (motor, lol) is not clear, but I think there would be massive pushback if a console without a disc drive was released.

 

[chicagoskycam]

I think Disc based still has a place, the majority of console sales are still on disc. Now how much of that is from Amazon, which is not a brick and mortar (motor, lol) is not clear, but I think there would be massive pushback if a console without a disc drive was released.

I can see them just selling an external DVD drive moving forward but not adding it to the console. This will definitely be the last round of consoles with disc drives IMO. It's the same when the removed audio jacks on phones, ect. There is not enough to set Gamestop apart from other electronic retailers without the used games. They used to be a good resource for game knowledge. Maybe BB buys them and gives them a portion of their store like Magnolia. I know all my friends on Xbox have not used discs since the Xbox One and have had zero reasons to visit a GameStop. Midnight launches don't exist anymore when you can have the game pre-downloaded.

It will be so much easier to cram everything they want in consoles without the disc drive.

 

[aleshemsky83]

I can see them just selling an external DVD drive moving forward but not adding it to the console. This will definitely be the last round of consoles with disc drives IMO. It's the same when the removed audio jacks on phones, ect. There is not enough to set Gamestop apart from other electronic retailers without the used games. They used to be a good resource for game knowledge. Maybe BB buys them and gives them a portion of their store like Magnolia. I know all my friends on Xbox have not used discs since the Xbox One and have had zero reasons to visit a GameStop. Midnight launches don't exist anymore when you can have the game pre-downloaded.

It will be so much easier to cram everything they want in consoles without the disc drive.

The difference with iphone is that for whatever reason, iphone users just will never, ever, in a million years buy android. They just dont do it, so Apple can pull whatever BS they want. Console buyers do migrate, and again, physical is like half the console market. A disc drive adds like $10 to the manufacturing cost. If one of them does it, they be playing a huge risk that the other party doesn't.

 

[JeffreyLFC]

Disc are 100% a thing of the past. Video games developper don't even make a lot of money (not enough) as they have to pay for the actual disk printing & box & packaging, pay for the shipping and distribution and give a % of profit to the retailer (amazon included). They lose like 30%+ of the actual selling price.

There are way too many longterm benefits for cloud based games for all parties including consumers. Now Steam/PS Store/Xbox Store/Apple Store/etc. know that as well and are also a full ripoff for video game developpers as they take 25% cut just for the right to sell games on their store without doing anything.

 

[chicagoskycam]

The difference with iphone is that for whatever reason, iphone users just will never, ever, in a million years buy android. They just dont do it, so Apple can pull whatever BS they want. Console buyers do migrate, and again, physical is like half the console market. A disc drive adds like $10 to the manufacturing cost. If one of them does it, they be playing a huge risk that the other party doesn't.

It's not entirely the cost of the disc drive. It's the design of the console, packaging, heat distribution, and on and on, but making the same amount of $$$ without having to produce and ship a DVD will win out. Honestly, it's just wasteful at this point when we have an alternative. For people stuck in the past, they might offer an alternative just like the babies crying about phone jacks. Samsung followed suit not long after so stating Apple was pulling BS, nope. They just ripped the band-aid off and moved forward sooner. With cloud gaming about to take over, the console itself will be vastly different moving forward IMO.

The point of the convo in this thread is every year gamers are buying fewer discs than they were before, which was the bread and butter of Gamestop's business model in terms of selling used games. The other issue is many successful games are just updates with season passes, ect. There is no need to buy a new game. Fortnite has a submodel right now, Warzone is still going strong. Xbox offering games pass on 1st party titles including EA games. We are not waiting for the next version of the game in some cases, just the update. I am playing games much longer because they have been updated to completely different versions at no cost. Free to play. All of this stuff is not good for Gamestop.

One thing I do agree with is the percentage Apple, MSFT and PS are taking in their online stores are way too high, part of the reason for some of the recent lawsuits. More of that $$$ should go to the developers and this is another reason you will see Sony/MSFT eliminate disc drives.

 

[Tkachuk Norris]

Disc are 100% a thing of the past. Video games developper don't even make a lot of money (not enough) as they have to pay for the actual disk printing & box & packaging, pay for the shipping and distribution and give a % of profit to the retailer (amazon included). They lose like 30%+ of the actual selling price.

There are way too many longterm benefits for cloud based games for all parties including consumers. Now Steam/PS Store/Xbox Store/Apple Store/etc. know that as well and are also a full ripoff for video game developpers as they take 25% cut just for the right to sell games on their store without doing anything.

me and my brother share games and the disc is essential for that. Saves us 50% and then we can resell them. Saves us a bit of money. Not that video games are expensive but it’s cheap af this way.

 

[JeffreyLFC]

me and my brother share games and the disc is essential for that. Saves us 50% and then we can resell them. Saves us a bit of money. Not that video games are expensive but it’s cheap af this way.

Great that's very reminiscent of movie rental business before everything went full streaming. I do not believe Game on disk other than like special edition and collectors edition are going to be released a decade from now. My guess is there would be full online services similar to Netflix with monthly fees and large collection of games. So you and your brother could share subscription and play whenever you want and have access to old school games too.

 

[x Tame Impala]

I don’t think this GME situation has anything to do with Game Stop’s long term viability.

 

[Maplebeasts]

I don’t think this GME situation has anything to do with Game Stop’s long term viability.

It's all about the short interest vs. total number of shares. The Hedge funds (Melvin, Citadel, etc.) shorted more stocks than actually exist by 40% of the share float. They are also legally obligated to buy back the stock that they borrowed when they shorted. So long as the stock is bought and held on to, the price will keep going up and up until enough shares are sold for the hedges to cover their losses. Gamestop as a company is not actually as valuable as the current stock prices indicate, it's just a basic case of supply and demand for the stock, except the demand in this case is bleeding out billions in interest, needs to buy the stock, and can't get enough of the stock to cover so long as the retail investors hold.

 

[Maplebeasts]

If you watched the market and numbers, you would be able to tell that this is a lie. Melvin and Citadel have definitely not even gotten close to exiting or closing their positions.

 

[Maplebeasts]

This isn't really about Gamestop. GME was simply the tool used to f*** over these hedge fund pricks who got greedy with their short positions and are now getting absolutely annihilated by margin calls. Same thing with AMC. It was used as a middle finger to the system.

Well I mean the retailer investors are also in for mega profits so long as they hold the stock and buy the dips. The guys who bought in even months ago are seeing as much as 100-1000 fold returns and that number is going to keep going up so long as Melvin and Citadel can't buy back enough shares to cover their short positions.

 

[Gardner McKay]

Well I mean the retailer investors are also in for mega profits so long as they hold the stock and buy the dips. The guys who bought in even months ago are seeing as much as 100-1000 fold returns and that number is going to keep going up so long as Melvin and Citadel can't buy back enough shares to cover their short positions.

There have been people who had barely any money and have managed to make life changing sums through this event.

I know the goal is ultimately to make it as painful for the hedge funds as possible, but cashing out and taking some major profit would result in a small but still unbelievable transfer of wealth from these Wall Street pricks back to your average Joe.

 

[Maplebeasts]

There have been people who had barely any money and have managed to make life changing sums through this event.

I know the goal is ultimately to make it as painful for the hedge funds as possible, but cashing out and taking some major profit would result in a small but still unbelievable transfer of wealth from these Wall Street pricks back to your average Joe.

Exactly, which is part of the reason I am a proud shareholder of Gamestock. It's not just for the money (well this MIGHT be the biggest reason for me) but revenge for 2008 when these hedgefund jerks put millions out of their homes and a job through their stupidity and greed. This situation will almost certainly never happen again as the SEC will surely create/enforce laws against naked shorting and shorting more than 100% of a share float.

 

[chicagoskycam]

Down 30% today

 

[John Price]

 

[John Price]

GameStop shares up 250% in two days. Here we go again?

 

[John Price]

GameStop (GME) plans to expand into PC gaming, monitor, & gaming TV sales

 

[Unspecified]

I sold a game to Gamestop for pure investigative purposes and marked the box in the lower right with a tiny red dot. I sold it for $8 and went back a few days later and it was being sold at $32.99. How this place is still in business with the f***ed up pricing model is crazy.

 

[RandV]

I sold a game to Gamestop for pure investigative purposes and marked the box in the lower right with a tiny red dot. I sold it for $8 and went back a few days later and it was being sold at $32.99. How this place is still in business with the f***ed up pricing model is crazy.

I'm pretty sure that's more or less been the standard for as long as used game stores have been around, like going back to the 8 and 16 bit days. The only time you'd get a big cut is when Gamestop started pushing their buy play and sell policy on new releases in the 2000's, where they'd maybe give you $30-40 on trade in and then turn around and try and sell back the used game for $5 less than the new. Otherwise it's always been perfectly normal to only get offered a few bucks on trade in for old games which then will be sold for $20-30.

 

[Unspecified]

I'm pretty sure that's more or less been the standard for as long as used game stores have been around, like going back to the 8 and 16 bit days. The only time you'd get a big cut is when Gamestop started pushing their buy play and sell policy on new releases in the 2000's, where they'd maybe give you $30-40 on trade in and then turn around and try and sell back the used game for $5 less than the new. Otherwise it's always been perfectly normal to only get offered a few bucks on trade in for old games which then will be sold for $20-30.

I had just never seen it personally happen even though i knew that was the case. Look i know companies need to make a profit but a 400+% profit? That is all but straight up robbery.