GameStop is one of the most compelling asymmetric opportunities in the market today.
Really, I understand how you could disagree with that.
That's why it's the top position of your portfolio and also dark for Mike Barry's portfolio.
But based on prevailing sentiment, the market and popular culture, many think it's a foolish investment.
Again, I'm more like the big short squeeze this time, right?
Anyway, let me show you what we're seeing.
Still, in 2020, GameStop maintains a healthy market share within the gaming industry.
It's the only major brick and mortar retailer dedicated to gaming,
and a recent survey indicated that over 25%
of people buy their new games at GameStop, and 40% of people buy their used games there.
It's reboot plan as well and away, in its comprised of two main components.
The first is optimizing the legacy business by right-sizing costs and improving the omni-channel experience.
This will boost near-term free cash flow, which in turn can be used to finance the second more important component.
Reinventing itself is a premier gaming hub within the thriving $150 billion gaming industry.
Game modernizing stores, partnering with vendors, and offering experiential products.
This is the potential upside in its enormous.
They've been testing four stores in Tulsa, Oklahoma that focus on live experiential concepts.
Clearly, the new management team has laser focused on gaming, and Frank Hamlin, the chief
customer officer, wants GameStop to become the cultural center for gaming.
They also teamed up with the Dallas Cowboys with the GameStop Performance Center.
This space was uniquely designed to be the premier facility for the next evolution of esports.
Imagine of these venues around the world where gamers could come together to train, perform and just hang out.
So could this new management team actually pull off the transformation?
They've been doing mostly the right things over the past year.
Post A of Michael Barry's support.
You're really going to question the guy who gets his haircut and supercuts and doesn't wear shoes?
But about the depth of physical discs you say?
Let me tell you something.
People been saying this shit for a decade.
And you know what Microsoft had to say about this at the start of this console cycle?
Millions of people still want discs.
It's a big reason these new consoles have disc drives.
And why physical will remain a part of Microsoft's future.
To be sure the shift to digital is happening, just not as quickly as many people think.
It's true to be long-term trends, but if stores are open and back up, people are buying physical discs again.
In quick reminder, at point, GameStop sells other items besides physical discs.
This helps drive traffic and will allow it to offer exclusive console bundles to its 60 million rewards members this fall.
That said, the youth games business has driven the lion's share of historical free cash flow, so let's focus there.
We how Microsoft feels about physical, now let's check in Nintendo.
pandemic-ridden quarter, a whopping 44% of game sales were still physical.
And this is huge for GameStop because the Switch has surged some popularity this year, and assume its used games have as well.
In Animal Crossing New Horizons was 50% physical.
And after having sold over 20 million units in just a few months, that's not one of the top-selling video games of all time.
During the same quarter, 26% of full- game sales were still physical.
Now the year over year decline is certainly notable, but two things here.
First, as doors reopen and new consoles roll out, this figure will likely bounce and stabilize for a few years.
physical share is still meaningful, considering GameStop generated over a billion dollars for free cash flow in the early years of the last cycle.
And it's important to remember, this is not a zero-sum game.
From April to June, video game specs was up 30% year-over-year.
That's a massive benefit to physical, digital, and the whole damn industry.
And that's why Sony and Nintendo have been boosting their expected output this year.
More and a much larger video game lineup than the last cycle means more software and accessory sales as well.
And is a boon to a specialized gaming retailer like GameStop,
who will also benefit as the go-to destination for folks trading in old consoles and games as
their upgrade to the new consoles now obviously this thesis is based largely on the fundamentals
but shit GameStop's chart is looking increasingly compelling and this matters because if the price
breaks out technical analysts or even give a shit about the fundamentals will start piling on
the ads of this GameStop is by far the most heavily shorted company in the market with short interest of around 100%
can you believe that shit the A of positive fundamental developments,
a potentially massively bullish chart in an exorbitant short interest suggests to me that an upward move could be explosive, maybe.
What the hell do we know?
