BryanB's Gamestop story

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BryanB's Gamestop story

Post by Ice Cream Jonsey »

Taken from the dead people thread!
bryanb wrote:Post by bryanb » Fri Jan 29, 2021 11:12 am

True story: I was a Gamestop shareholder for a number of years until relatively recently. In my defense, it was a reliable dividend payer and an important gaming retailer during a certain period in our nation's history. I had long accepted that it was likely my investment would ultimately go to zero after a few particularly rough years, but I held on just in case the company somehow managed to successfully pivot away from brick and mortar. I still feel that there's no reason it can't continue to grow its online business. I was also hoping it would eventually become the American version of Tencent and start investing in gaming and tech companies. Ryan Cohen seems to envision it possibly becoming a PC parts seller and a custom PC builder. Mostly, though, it has kept selling physical products in physical stores which isn't a great model in an industry where digital distribution is dominant.

When the stock ran up and I saw an opportunity to make myself whole a few weeks ago, I grabbed it. It had been down for so long that I was relieved to see the light at the end of the tunnel. At one point I had thought it was the worst investment I had ever made. I even felt ashamed to tell anyone I owned the stock...not that I talk that much about my investments, but sometimes Gamestop would come up in conversation and there were insights I could have shared that I generally chose not to. When I sold, I was aware of the unreasonable level of short interest in the stock, and I was aware there were people on Wall Street Bets who were extremely bullish. I didn't think it would come to anything. If I had held just a bit longer, I could have bought a new car with the proceeds among other things. We're close to reaching new house levels now. It'll probably all come crashing down soon enough, but it's tough to not feel some regret.
Oh man, if you had just been able to hold a little longer - they are a SHIT company, though. I apologize if I have stated this too many times over the course of running this BBS. Gamestop has the same management philosophy as EB Games / Electroincs Boutique and it makes me wonder if - while Gamestop bought Babbages and EB, if somehow that philosophy was there in both places or if it "won out."

We had to "greet" each customer that walked in the door and we could not ask them yes or no questions. "HOW can I help you today?" "WHAT are you looking for?" Not, "Anything I can help you find?" Most people wanted to just browse games and I hated bugging them. Don't get me wrong, the general public are pieces of shit, Rochestarians more so, but being forced to talk to people in a non-human way was humiliating.

We had to answer the phone in a way meant to DRIVE UP SALES. So dumb. We didn't press the pre-order thing too much.

I didn't really get consistent hours. The number was consistent but the hours would change each week and I never understood why.

It wasn't all bad. We got free gaming magazines. I read 'em all back then. At least in 1998, EB had a pretty good warranty policy - if the console you are buying breaks, bring it in and exchange it for a new one, no questions ask. You needed to have the receipts and so forth, but still. I saw it with my own eyes. People had Playstations that broke. We'd send it back to Sony and take a new one off the shelf and give it to them. If even the controller broke you could technically exchange the entire console. I dunno if they still allow that. Oh! I forgot to say, getting this EB warranty cost money. I forget what it was, let's say $50 for two years? Pure profit for the most part for them.

I would also say that I had a string of Friday nights that weren't all that bad. At times, my manager was difficult to work with. He would get paranoid and worry about too much. But there were a stretch of Friday nights were the store would be busy but not overwhelming. There was a kid, Michael Bauer (who is registered here and I wish he would post!) who would hang out in the store looking at games and was a joy to be around. He probably should have just been hired. He was on good terms with my manager and was able to put him in a positive mood. He cracked him up in a way I could not. By that time I knew everything about video games, at least from the PC side, and what I didn't know, either my boss or Bauer did. And we'd sell video games to people and talk about games for six straight hours. I remember thinking, and I want to say this was a stretch in maybe 1997 from... I don't know, March to July? I remember thinking, "This is not the worst thing in the world, it really isn't."
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Re: BryanB's Gamestop story

Post by Ice Cream Jonsey »

Ok, writing all that out, for some reason I was able to more focus on the good times. There were good times. I am glad you posted, bryan. I might have been carrying around a little too much negativity regarding GME.
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Re: BryanB's Gamestop story

Post by bryanb »

I totally get why people don't have the best memories of Gamestop and its subsidiaries/sister companies/competitors. I didn't always enjoy shopping there, and even I sometimes found the other customers annoying so I completely understand why the workers often seemed like they didn't really want to be there. However, I tended to excuse the annoying aspects as just the price that had to be paid to have a video game store that actually make money occasionally. I've never been to a video game store that was a chill, relaxing, no-pressure place to shop. Just the presence of kids alone would make that tough to pull off. Even if I didn't always love the experience, it still makes me sad to think that that world is all going away and that it is taking physical games and the used game market right along with it. That feeling (along with my strong aversion for realized capital losses) is the main thing that made me hold Gamestop stock for as long as I did.

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Re: BryanB's Gamestop story

Post by Jizaboz »

"Hey welcome to Gamestop!"

Hey man.

...

"Can I help you fff.."

Nah man.

"Ready to check out?!"

Yeah man.

"Do you have a Gamestop crackhead card?!?"

Nah man.

"Oh, you can get.."

"Just the game. In a hurry."

"..."

"Ok, that will be 39.76!"

Thanks! Have a nice day, man.

"Hurrrr...."
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Re: BryanB's Gamestop story

Post by Jizaboz »

Thank you these stories!

On the stock thing, I made enough money selling off this madness for a PS5. I was in at 2 for around 30$. I've had investments for years thru 401k/roth, but only got into "actively" doing things after covid hit so I could buy up airplane and travel related shit at low prices.

SUCK IT, WALLSTREET lololol

Attn Fedz: Taxes PAID. And since I can't even BUY a PS5 now, I guess I have no choice but to re-invest, eh?
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Re: BryanB's Gamestop story

Post by Flack »

There's a GameStop about five miles away from me, in a little strip mall in front of Sam's Club.

A few years back, I saw PlayStation was releasing a Star Wars-themed PS4. It had Darth Vader on the top of the console and was either bundled or came out the same day as Star Wars Battlefront. I drove down to GameStop and walked in and asked if they had the PS4. The two guys behind the counter began laughing -- no, guffawing! -- at me. "This guy thinks he can just walk in on launch day and buy a console!" The other guy, who looked like a dejected roadie from Green Day, mumbled something about "shoulda pre-ordered."

I left GameStop dejected and embarrassed, but decided to try Sam's Club. The first thing I saw when I walked through the front door of Sam's was a giant display of Star Wars-themed PS4s. They must have had 30 of them in a pile. I proceeded to buy one, a second controller, and Battlefront. (Yeah, on launch day.)

After leaving Sam's, I drove back over to GameStop, backed up to their front door, opened my truck's tailgate, and sat on the back of my truck with the PS4 box in my lap. Through the glass I could see the employees looking at me. I sat there for five minutes, just staring at them through the glass. Fuck your pre-orders, neck beard.

When I got home I told Susan I was going to use a power inverter to put a flat screen television in the back of my truck and go back to GameStop and sit outside their front door playing the PS4 in the back of my truck and telling their customers you could get them at Sam's. My wife did what wives do and talked me out of it.
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Re: BryanB's Gamestop story

Post by Ice Cream Jonsey »

That's the thing about them that is so worthy of contempt. While the management practices are awful and cult-like (how dumb do you have to be to not understand you are turning off people every time you do your little "shoulda pre-ordered" shit) there are so many people who are 100% into the cult of Gamestop that they actually believe the tripe. That one interaction you had probably turned you off to ever going there again in your life.

I am going to admit that during the worst of the pandemic last year it was pretty funny to go to GameStop employee forums and see employees who were obnoxious about sucking down corporate nonsense come to the realization that upper management doesn't give a fuck about them.
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Re: BryanB's Gamestop story

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You're right, I haven't been back. I have a couple of gift cards sitting here that I may end up using online. They carry vintage controllers and stuff.

We used to have a different GameStop that was located right next door to a Radio Shack. I used to go there on occasion just to look around. When Radio Shack closed, I quit going.
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Re: BryanB's Gamestop story

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Ha, Flack your last Gamestop experience was much like mine. Coronamania had just started to kick in. Went to get the FF7 remake on launch day. The door is locked. A lady walks up and yells at me through the door "Do you have a pre-order?" then looks at me like I am completely insane when I say no. Walked over to Walmart in the same parking lot and bought it out of the display case instantly.
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Re: BryanB's Gamestop story

Post by The Happiness Engine »

What really got run over in all this is why people bought into the stock in the first place:
One braindead simple way to calculate a fair stock price for a company is to use a "times-revenue" valuation. You take the company's revenue ($6.466B in 2020) and multiply by some magic number (often 0.5 for low-growth companies and 2 for high-growth companies), then divide by the float (number of shares available to trade, 50.65M). A times-revenue multiplier of 0.5 gives a GME stock price of $64, while a multiplier of 2 gives $255.

This isn't a particularly sophisticated method but whatever, I'm not a particularly sophisticated investor.

Working backwards, if Melvin Capital thinks that GME is overpriced at $20 then a times-revenue valuation would suggest a multiplier of 0.16. That's extraordinarily low for a retail business. If you applied that multiplier to Best Buy ($43B revenue in 2020, 231.59M float) you would get a stock price of $30. Best Buy currently trades for $115, which works out to a much more reasonable multiplier of 0.62.

What multiplier is correct? Well, the bulls point out:

Ryan Cohen (13% stake in GME, sits on the board) has a great e-commerce success story with Chewy, his previous company.

Three new successful e-commerce board members from Cohen's firm were added to the board in 2020.

Despite being a brick-and-mortar business and the pandemic, Gamestop's balance sheet isn't bad. They have approx. $550M in debt, but more than that in cash (net cash positive). They have minimal risk of default or bankruptcy in the near future, even without any change to company direction.

Their traditional core business of game and console sales is not shrinking as fast as many people expected, with major new consoles still supporting optical discs and digital game downloads not accelerating as fast as feared, possibly due to stagnation in the ISP industry. So even if Cohen and his board seats take a long time to roll out new changes, the company is in little danger of any sudden spiral.
Being %140 shorted was just extra. So there are two things going on: what is the "real" value of Gamestop, and completely apart from that do we have enough clout to just fuck someone on a risky bet? For every media bleat about a bubble it's not really bad to own 1 of 10 tulips if there are 14 tulips being rented at per-day costs.


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Re: BryanB's Gamestop story

Post by Ice Cream Jonsey »

The Redditors talking about how GameStop the company isn't THAT bad are wrong. They are the perfect stock for this because 140% of available shares were shorted, but they don't know what they're talking about. Everyone who goes in there, either to work or buy, leaves more angry or frustrated than they were before.
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Re: BryanB's Gamestop story

Post by Jizaboz »

I mean.. I don't give a shit about the company. I just bought 2 stocks at roughly 30 bucks then sold for a 400$ profit when it was all said and done. People on that reddit sub are circle jerks lol
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