Quote:
Originally Posted by BishopMVP
My contention is not that it's worth it's stock price (or where it's going - hey look, up to $236 already in pre-market), but that yes the underlying company and Cohen alone are worth a 3 figure price, so the downside isn't as egregious as it appeared when Wall Street was yelling it was a $20 stock at best. Chewy has a $36b market cap - with its limited shares Gamestop would need to be over $500/share to match that, you think he can't do with computers & gaming what he did with pet food?
Concrete things they've already committed to
- closing most physical locations and transferring to a delivery based model. They've partnered with Doordash for same day delivery, and they were spending wayyyyy too much $$$ on physical retail space. Luckily most of that was 1-2 year leases so they weren't locked in, but there are like 30% more Gamestop locations than Chipotle's or Pizza Hut's in the US. (I wish I could find the graphic, too lazy to look up exact #'s)
- They've started focusing more on the hardware side of things. Nvidia graphics cards etc, the type of stuff that can't be digital.
- Why would someone order from Gamestop over say, Amazon? Brand loyalty, which is exactly why GME won't(/shouldn't) issue stock like AMC did. (Plus they're also cash rich and - again unlike AMC - they have no debt.) They're not only getting millions in free marketing, they're also being loyal to exactly the type of customer base who can make them successful - Reddit/internet savvy people who by the way just came into a fuckton more money than they've had before.
- You mention Microsoft would like to cut ties, but yet in October they entered into an agreement with Gamestop that gives GME a share of all the future digital sales from consoles sold through a Gamestop. There's a place in the ecosystem as an e-commerce distribution hub for companies like Microsoft and Sony that don't have or want retail space. E-commerce means they're trying to carve a niche out of Amazon's space with the loyal customer base and excellent customer service Chewy was known for, not go up against Steam or Epic.
|
Microsoft understands that while they would prefer to sell all their games digitally at a higher margin, SOMEONE needs to sell their consoles in stores. At the moment you can't buy a digital controller, you still need accessories and hardware. I know what margins they make off hardware (little to none), so I'm sure that some major chains have already threatened to stop selling consoles if the digital trend continues. If the customer comes in, buys a console on credit card, you end up losing money. If they don't buy any games with it, and there isn't this stream of profit that will come from making that one time loss, what's the point? Obviously Microsoft is trying to make it worthwhile for at least that one retailer.