Time for a controversial investment thread 🧵
Here's why I believe this company that ran over 700% in 2021 is one of the most misunderstood stocks in the market and could be comparable to buying Tesla $TSLA in early 2020.
Here's why I believe this company that ran over 700% in 2021 is one of the most misunderstood stocks in the market and could be comparable to buying Tesla $TSLA in early 2020.
The company?
You guessed it, Gamestop. $GME
You guessed it, Gamestop. $GME
1/ Everyone thought Tesla was/is an auto OEM. In reality, they're turning into a technology company that also sells cars.
Gamestop is being pinned as a brick & mortar retailer. In the future, Gamestop will be a technology first company, that also has a brick & mortar business.
Gamestop is being pinned as a brick & mortar retailer. In the future, Gamestop will be a technology first company, that also has a brick & mortar business.
2/ I personally feel a ton of massive overperformers that wow people have been at the intersection of traditional industries/sectors, and technology.
The ones people argue if they're a XX company or a technology company.
The ones people argue if they're a XX company or a technology company.
3/ Also, I'd like to say, I'm not an "Ape" nor is my investment thesis centered around a theoretical MOASS.
To be clear, I'm not saying that won't happen. I'm saying I don't know enough about these naked shorting theories, nor do I have the proper access to information.
To be clear, I'm not saying that won't happen. I'm saying I don't know enough about these naked shorting theories, nor do I have the proper access to information.
4/ One thing I will say, is I've seen a ton of fishy activity around the stock.
But regardless, that doesn't change my perspective on owning the stock.
But regardless, that doesn't change my perspective on owning the stock.
5/ I personally believe this entire story has been incredibly misunderstood by most investors, and clouded by a lot of nonsense on WSB.
Although, there are incredibly smart individuals sharing high-quality research on there for free, its inspiring.
Although, there are incredibly smart individuals sharing high-quality research on there for free, its inspiring.
6/ I encourage you to give this a read, it might give you a new perspective, if not you can just laugh at me.
Lets go 👇 (to the moon?)
Lets go 👇 (to the moon?)
7/ Lets start with a brief history of GameStop and how it managed to be sub $4/share during the COVID-19 market selloff.
8/ GameStop started operations in 1984, as Babbage's, a software retailer. They slowly shifted to selling more and more videogame related products before taking on the name of GameStop in 1999. Given the gaming boom that was undergoing, they showed incredible success.
9/ They went on to purchase/start various different electronic retailers and build on their GameStop brand, including MovieStop, Eb Games, Rhino video Games, etc.
10/ They essentially were consolidating the video game retailer market, while exploring different complimentary segments, all typical moves to continue growth for a maturing industry-leader.
11/ They missed the entire point though. For GameStop to succeed, it couldn't just be a retailer. They had to become a technology company.
12/ GameStop went on to perform quite well, and turned into a dividend stock from the years 2012-2019. 2019 is when the most recent CEO, George Sherman entered the picture. George was suppose to be the savior of GameStop and lead the turn around.
13/ The majority of what George Sherman did was buyback shares, and yell omni-channel retailer pivot while slowly generating some of GameStop's revenue online - a true misuse of the world omni-channel, which has become quite the buzzword for nearly every retailer.
14/ All while digital downloads of video games were accelerating, threatening their core business model.
15/ Plus, e-commerce titans like Amazon were swallowing market share.
16/ August 2020: *Ryan Cohen enters the chat*
Everyone loves to talk about WSB triggering the short squeeze. They might've added fuel to the fire, but this man deserves all the credit. And I do mean credit, not blame. @ryancohen
Everyone loves to talk about WSB triggering the short squeeze. They might've added fuel to the fire, but this man deserves all the credit. And I do mean credit, not blame. @ryancohen
17/ Ryan is, in my eyes, an inspiration. For those of you who don't know who Ryan Cohen is, he is the founder and former CEO of Chewy .com. He sold it to PetSmart for $3.3B back in 2017.
He is often referred to as "Wall Street's Darling".
He is often referred to as "Wall Street's Darling".
18/ Ryan is an absolute workhorse and genius. With no college degree, he built what is now a $25B corporation ($CHWY) on five simple core principles he learnt from his dad.
19/ Most notable to me is "Delight your customers" which sounds outrageously simple, but clearly worked at Chewy. This is extremely relevant for GameStop, considering it has been hated by its customers for many years, yet is still standing today.
20/ Ryan bought 9,001,000 shares of Gamestop (in multiple filings) to accumulate what was 12.9% of the company, now roughly 11.8% after a dilutive cash raise.
A substantial purchase. Ryan then put the company on blast, with a passive aggressive statement to management.
A substantial purchase. Ryan then put the company on blast, with a passive aggressive statement to management.
21/ This was clearly a tactic to gain other shareholder's support.
Well it worked, Ryan completed a hostile takeover of Gamestop.
The entire BoD and Management team as been overhauled over the past 12 months.
Well it worked, Ryan completed a hostile takeover of Gamestop.
The entire BoD and Management team as been overhauled over the past 12 months.
22/ @ryancohen is also now the Chairman of Gamestop.
Probably the most hands on Chairman in history. He has been leading the entire turnaround.
Which includes regular visits to Gamestop stores for quality checks.
Probably the most hands on Chairman in history. He has been leading the entire turnaround.
Which includes regular visits to Gamestop stores for quality checks.
https://twitter.com/ryancohen/status/1392649234944507906
23/ I reached out to my network working in capital markets, and no one I spoke to even knew of Ryan Cohen, but supposedly knew the $GME story.
The one being pushed by media.
Reddit fighting with HFs over a dying brick & mortar retailer.
Yeah, I'm sure that's the story.
The one being pushed by media.
Reddit fighting with HFs over a dying brick & mortar retailer.
Yeah, I'm sure that's the story.
24/ Anyway, why on earth is Gamestop still a buy after a 786% YTD gain?
Citadel are criminals. That's it, that's all.
Jk, I'm sure they are, but lets stay on topic.
Citadel are criminals. That's it, that's all.
Jk, I'm sure they are, but lets stay on topic.
25/ I encourage everyone to look at Gamestop from a pure fundamental business perspective. Seriously, ignore the chart. Pretend it didn't trade publicly.
26/ Investment Thesis I: Store De-densification & Expanded Product Offering
GameStop's lease structure is favorable for incoming management, allowing them to shave poor performing stores quickly and lean up the business. 38.3% of store leases ended in 2021.
GameStop's lease structure is favorable for incoming management, allowing them to shave poor performing stores quickly and lean up the business. 38.3% of store leases ended in 2021.
27/ Management has stated a lot of stores they've already closed are seeing the revenue move to nearby stores and/or move to their website.
28/ Gamestops fulfilment center expansion plans are evidence of a large expansion in product lines.
They're building a 530,000 square foot facility in Reno, Nevada, and a 700,000 square foot facility in York, Pennsylvania.
Seems a bit large for some CD's?
They're building a 530,000 square foot facility in Reno, Nevada, and a 700,000 square foot facility in York, Pennsylvania.
Seems a bit large for some CD's?
29/ The big point on the expanded product offerings is that Gamestop had historically been narrow sighted in products.
With E-commerce, they can dramatically expand their product offering. A lot of their stores aren't large enough to support larger product selection.
With E-commerce, they can dramatically expand their product offering. A lot of their stores aren't large enough to support larger product selection.
30/ Look at this homepage. These are all complinatary products for the gaming community that Gamestop never took part in.
https://twitter.com/RodAlzmann/status/1477503341034975246
31/ If you go to their website now, you'll find a much wider variety of products, such as toys.
Good thing the Toys R Us bankruptcy opened a massive hole in that segment.
Good thing the Toys R Us bankruptcy opened a massive hole in that segment.
32/ @GMEshortsqueeze has been tracking the massive growth in product.
Remember, those fulfillment centers are much too large to sell just video games, consoles, and some random collectibles.
Remember, those fulfillment centers are much too large to sell just video games, consoles, and some random collectibles.
https://twitter.com/GMEshortsqueeze/status/1427655870708699142
33/ Also make sure to give @GMEshortsqueeze account a follow. They do an amazing job at keeping you up to date on $GME developments.
I personally have their notifications on loud for the most timely and insightful $GME updates.
I personally have their notifications on loud for the most timely and insightful $GME updates.
34/ This part is really just new management doing what should've been done 5 years ago.
Trim the fat (stores) and expand product offerings via advanced supply chains and proper utilization of data.
Trim the fat (stores) and expand product offerings via advanced supply chains and proper utilization of data.
35/ Investment Thesis II: Uniquely Positioned in a rapidly growing industry
GameStop is the only niche retailer in what was a $155B industry in 2020 and is expected to grow at a whopping 10.90% CAGR to $260B in 2025.
GameStop is the only niche retailer in what was a $155B industry in 2020 and is expected to grow at a whopping 10.90% CAGR to $260B in 2025.
36/ It's no secret the gaming industry is growing, and will become more and more relevant in society as we grow our quality of life.
Gaming fills the void of an extremely productive society.
But maybe that's for another thread.
Gaming fills the void of an extremely productive society.
But maybe that's for another thread.
37/ Obviously there are multiple different subsectors in this space. Like video game creators and console OEMs.
One thing Gamestop has done an incredible job at in the past, is making sure they didn't participate in growing segments of the Gaming industry.
One thing Gamestop has done an incredible job at in the past, is making sure they didn't participate in growing segments of the Gaming industry.
38/ Seriously, take this in.
Gamestop starting selling gaming PC related products like 10 months ago. That's a serious joke considering the PC side of gaming has been one of the fasting growing hardware sides of gaming over the last five years.
Gamestop starting selling gaming PC related products like 10 months ago. That's a serious joke considering the PC side of gaming has been one of the fasting growing hardware sides of gaming over the last five years.
39/ Imagine being a management team seeing this trend and instead relying on 6-7 year apart console drops.
PC gaming would've provided some serious smoothing to the hardware side of the business over the years.
PC gaming would've provided some serious smoothing to the hardware side of the business over the years.
40/ Private Label Products are one of my favorite $GME opportunities.
Gamestop can make a Amazon Basics like brand, centered around gamers. Think of cords, controllers, headsets, blue light glasses, anything core to the gaming community.
Gamestop can make a Amazon Basics like brand, centered around gamers. Think of cords, controllers, headsets, blue light glasses, anything core to the gaming community.
41/ With the massive set of data they have on a wide variety of gamers, they can optimize this efficiently, just like Amazon has done with Amazon Basics.
42/ Gamestop's customer data on 55 million power up members could be a thesis in and of itself. They've never properly utilized this in the past.
A good example of how this data can be leveraged is shown below.
A good example of how this data can be leveraged is shown below.
https://twitter.com/GMEshortsqueeze/status/1408059258738929670
43/ Also, yes, they've hired a full private label product team over the last 10 months.
Excited to see where they take it.
Excited to see where they take it.
44/ Investment Thesis III: Digital Transformation - E-Commerce & Blockchain
Gamestop's e-commerce transition has been going much better than anyone has been giving it credit for.
I'm tired of hearing the line mall-based retailer.
It's not.
Gamestop's e-commerce transition has been going much better than anyone has been giving it credit for.
I'm tired of hearing the line mall-based retailer.
It's not.
45/ 29% of sales were generated online in 2020.
Today that number is over 40%.
Today that number is over 40%.
46/ Let's talk about blockchain.
This is where the thesis gets more speculative, but I think it's more than enough to justify looking at.
This is where the thesis gets more speculative, but I think it's more than enough to justify looking at.
47/ GameStop has hired a sh*t load of employee's with blockchain experience.
In general, Gamestop has been on an absolute hiring spree.
In general, Gamestop has been on an absolute hiring spree.
48/ Over 350 higher-level employees so far this year.
Seriously, its nuts, check it out in the link below. Credit: @GMEdd
Amazon, Chewy, Facebook, Apple, Zulily, etc.
onedrive.live.com/View.aspx?resi…
Seriously, its nuts, check it out in the link below. Credit: @GMEdd
Amazon, Chewy, Facebook, Apple, Zulily, etc.
onedrive.live.com/View.aspx?resi…
49/ The biggest thing for me here is that all these individuals left high-end, high-paying jobs to come here.
Imagine leaving an amazon executive position?
Imagine leaving an amazon executive position?
50/ To go to a company and get stock options at these prices?
Well a lot are doing it.
Well a lot are doing it.
51/ A great example is Matt Furlong, who was recently the head of Amazon Australia. He doubled revenue both years in his tenure there.
Had ton of room to move around Amazon. But left to be $GME's CEO.
Had ton of room to move around Amazon. But left to be $GME's CEO.
53/ Here's a landing page for Gamestop's upcoming marketplace. nft.gamestop.com.
We know they're working on an NFT marketplace of some sort.
We know they're working on an NFT marketplace of some sort.
54/ The NFT market is set to grow at 52.9% CAGR 🤯
https://twitter.com/rvc330/status/1476263461218881541
55/ Loopring is rumored to be working with Gamestop on an NFT marketplace.
There's some substantial evidence of this.
gmedd.com/blockchain/loo…
There's some substantial evidence of this.
gmedd.com/blockchain/loo…
56/ @GMEdd does great job at due diligence on $GME. The whole team is awesome, I've been following some like @RodAlzmann since last fall. Checkout gmedd.com, along with some key contributors @Toast, @vestro, @AlphaHound3, @jeffamazonxm, and @MileHighStocks.
57/ If this is true, which I have a high level of confidence in, Gamestop could eliminate gas fees from NFTs.
Gas fees can be incredibly high, and are a massive drop-off point for NFT participation.
Gas fees can be incredibly high, and are a massive drop-off point for NFT participation.
58/ Remember when shipping fees were a massive drop-off point for e-commerce?
Then Amazon solved that, which helped accelerate the entire e-commerce boom?
Gamestop is going to do that to NFTs.
Then Amazon solved that, which helped accelerate the entire e-commerce boom?
Gamestop is going to do that to NFTs.
Click /58 to see the rest. It goes to 106.
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