The r/WSB Gamestop Saga Continues

It’s been half a year since the ladies and gents over at r/WSB started squeezing the short positions on Gamestop to death, and the price of the company, while not the $325 peak it topped off at, is still holding strong at $160 per share.

The only thing more surprising to me than the fact that a collection of retail investors on the internet played the market is that they’ve managed to do it for longer than a couple weeks. When AMC and GME started to pop, I felt that a continued growth or stabilization over the ensuing weeks was impossible. Despite the welcome increase in price in AMC, I still feel more the fool for not jumping on the GME train when I had the chance. You live and you learn.

Gamestop Store

Still, this success and continued strength begs the question, what actual asset does Gamestop represent for investors, aside from a play on the market? Because from where I’m standing, the company doesn’t actually have any business model worthy of an $11 billion market cap. Especially not with a negative price to earnings ratio. I say this, by the way, not being against crafty plays on certain markets.

These Measurements of Evaluation

are substandard on their own, and I understand that. But factoring in those two variables in tandem with the overwhelming doom that is Gamestop’s inability to actually offer a service people need, it seems to be a company that’s being held afloat merely be the will of the people. Or, more accurately, by r/WSB people.

And I understand, by the way, that the will of the people voting with their money is enough to keep a company afloat indefinitely, even if the company doesn’t warrant that treatment from a purely profit driven mindset.

That said, there hasn’t been any good news about the restructuring of the company in the past year, and I cannot for the life of me figure out how GME is going to save their sinking ship. And I do believe it is a sinking ship.

Video games are a commodity that are increasingly distributed over the internet. Consoles can be purchased for retailers that offer services non-video game related (meaning their business model spans a far broader reach), and trading in old games for a 5% reimbursement has become less than attractive, both because the gas money required to travel to a Gamestop is more expensive than the amount of money you’ll get for a trade-in, and because nobody wants to trade in their old games of the past since reverse compatibility is a feature of modern consoles.

And trading in modern games? As aforementioned, those are purchased through the internet. Consumers either have ’em permanently or they got a refund within a few hours of gameplay.

“But wait!” I hear you saying. “Gamestop offers a selection of Funko Pops!”

Funko pops. End me.

I realize people who are betting on Gamestop believe the company is going to be restructured for the better sooner rather than later and make their evaluation off of speculation and not current standards like Funko Pops, but the thought of a company with as much debt as GME succeeding because they offer a collector’s toy is hilarious.

Don’t touch this company. As someone who has a lifetime’s worth of experience in the video game market, I can say with confidence that the odds are not in the favor of the holders.

GLHF, r/WSB. Despite my reservations, I’m rooting for you.