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Comment by kzrdude | Hacker News Reader

Obviously no easy answer, but isn't the GME stock still overvalued? Right now it's at $53.

Instead of admitting they got manipulated into a pump and dump, many will try to rationalize their loss saying things like "I'm not selling, MSM badly wants the stock to tank so the shorts get covered." (in a comment below). This is the disbelief phase.

I'm honored that you quoted me! I'm down like $800 with a 7 figure net worth. And I like the stock to boot! Why would I sell?

Edit: I have plenty of karma to burn. Stay mad (though what has you people so worked up? I have no idea)

Edit2 since I'm throttled: I think the idea that it's time for me to make a judgment one way or another on the effectiveness of the investment is a fallacy in itself. I don't invest that way. It would take at least a year for me to reach a point where I am ready to say whether any given investment was a bad or good one.

Are you sure you represent the average?

I would certainly hope I don't!

I believe the point stands regardless of your net worth. People come up with rationalizations to smooth over the ego-stinging admission that they were somebody else's greater fool. Your net worth relative to your loss may be yet another rationalization. Instead of, "I was wrong," it's, "Well, it's only $X anyway."

But maybe time will prove you right. If you truly believe that, should you risk more of your money on $GME?

It is. It was less than $10 6 months ago and in those 6 months there is nothing Gamestop did to increase the value of their company by nearly five fold, other than be the focal point of a massive pump and dump.

Gamestop was undervalued, and this was a market correction

I wouldn't bet your paycheck on that guess. Many did. Almost all of them lost.

On a somewhat more pleasant note wrt the company, they've been picking up ex-Amazon(AWS specifically) leadership to try and transform the company for the modern digital gaming market.

Whether this'll be successful or not we'll have to see but I think the company definitely has the potential to turn around and offer themselves as a decent digital storefront.

https://www.datacenterdynamics.com/en/news/gamestop-hires-aw...

I don't see why microsoft, playstation, or nintendo need the middleman of gamestop when they all each have their own digital storefronts directly under their own control. If you are gamestop, this is the line you have to tow and tell shareholders, because there isn't a viable route otherwise. that doesn't necessarily mean what they say they are working on is going to work, or that they even believe it will work for much longer than it takes for the C-level team to have one good quarter under their belt and find a new job before the thumbs they put in the dam can no longer keep it from bursting.

As a total investor layperson who doesn't own any stock†, I don't think so. The current price seems about right.

• The pandemic is temporary and retail stores will re-open.

• Gamestop isn't bankrupt and doesn't have mountains of debt.

• There will be people who still want to buy physical games—whether for their resale value, or as collectibles, or because downloading 100GB on a slow internet connection sucks.

• Gamestop should be able to leverage their brand to increase their online presence.

I don't understand why they were so heavily shorted before, and I do think the redditors had a good investment case (early-on, before things went nuts).

---

† I have some money in index funds, and some in an account managed by a professional broker. But nothing I personally selected.

I think the short case is pretty obvious - basically a re-run of blockbuster.

I do think they can adapt and survive as a business, but i doubt they have a future of growth or big profitability.

> i doubt they have a future of growth or big profitability.

Oh, I agree. But prior to the recent craze it seems as though many were treating them as a failed company. Gamestop isn't Blackberry, or JCPenny.

>Gamestop isn't Blackberry

You'll never guess what other company WSB loves pumping

It's twice its value in 2016 despite revenue falling significantly pre-covid and accumulating a lot of debt.

Reddit investors may have had a good investment case at 4 dollars (basically assuming it won't go bankrupt). But it could right-size and enjoy modest growth in online sales and still not be worth what it is now.

People buying physical games don't need gamestop to keep buying physical games. They can buy them at target or walmart when they are there grocery shopping, or ship them for free from amazon. People buying used games and systems also aren't generally going to turn to gamestop and their overpriced junk, like they would have 15 years ago, now that online marketplaces, both local and national, have matured. Consider used games with an active market, like Super Smash Brothers Melee which still commands $50 used, aren't even sold at gamestop anymore and haven't been for years. They don't have anything older than the previous generation system, and of that past generation they will probably not have great inventory of popular titles, so retro buyers aren't even going there to begin with. It's dead retail walking and they do nothing unique.

> People buying physical games don't need gamestop to keep buying physical games. They can buy them at target or walmart when they are there grocery shopping, or ship them for free from amazon.

Sure, but what has changed between now and five years ago?

Offerup, letgo, swappa, venmo, cash app.

Very rational explanation of your position. Unfortunately, it goes against the approved narrative of the thread. So take your downvotes and move on.

By the fundamentals yes.

Are people betting the long game? Trend from digital to physical game is going to reverse and raise the used market again? I think that’s a big jump..

It is, but so is Tesla, Apple, Amazon and others. Value stocks are almost always driven by cult believers.

One of these is not like the other. I'd argue that AAPL and AMZN are far more fairly valued than TSLA, a stock that moves by two percentage points whenever Elon Musk tweets erratically, and somehow has a larger market cap than diversified automakers with multiple factories around the world versus a tent in Freemont.

The funny thing about "value" stocks is that they go up only if someone desires to buy them more then you want to hold them. In the case of "income" stocks, their value is intrinsic in their dividend yields. Buying "value" stocks of any company is just gambling in my view, unless they have a strong potential of returning dividends in the near term.

That assumes it wasn't undervalued before. I remember seeing one estimate from December-ish that it should have been around $60, though I don't remember how they came up with that.

They probably came up with that by buying at a price less than that

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