I mean Gamestop's stock and market cap exploded because of investing hype, not because it changed anything in its strategy.
> Gamestop's stock
Any stock is priced on multiple factors, one of which is the fundamentals, or the real value of assets and the company's ability to generate revenue. Another factor includes sentiment or guesses about the company's ability to accumulate assets and continue to generate revenue. And the third would be the general state of the investment market, and how equities are valued against other asset classes.
So sure, sentiment can absolutely be bonkers in relation to fundamentals, which is what the parent comment is saying.
Company strategy and achievement are very much relevant to assessing the fundamentals, and attempting to identify the underlying value of a stock, while seeing past the bonkers, irrational valuations.
While it's only "in theory", over a longer timeline, in general, any individual stock will "revert to the mean", that is to say, end up closer to the fundamentals, rather than remain bonkers indefinitely.
Of course you don't have to invest merely on fundamentals. You can use bonkers speculative valuations to your advantage. But to do so, you kind of have to evaluate all the components of an individual stock's pricing.
"The market can remain irrational longer than your can remain solvent" is the relevant platitude.
I worked in prop trading for half a decade and the number of really catchy, pithy sayings they have NEVER ceased to amuse me. My firm was very much on the "voting machine" time horizon so at that time granularity all the notions of company value mostly end up being 0 effect and everything is totally dominated by statistics, but that never stopped us from all joking about these catch-phrases and nodding sagely (as the computers do all the work of actually trading the stocks).
Today's "short run" is last year's "long run" so either that statement is false or voting and weighing machines are the same thing.
It sounds profound though.
Some intellectual honesty would go a long way here.
From Gamestop's latest 10-Q filing on December 8, 2021, page 15 [1]:
> BUSINESS PRIORITIES
> GameStop has two long-term goals: delighting customers and delivering value for stockholders. We are evolving from a video game retailer to a technology company that connects customers with games, entertainment and a wide assortment of products. We are focused on offering vast product selection, competitive pricing and fast shipping – supported by high-touch customer service and a frictionless e-commerce and in-store experience. Accordingly, we prioritize long-term revenue growth and market leadership over short-term margins. We are taking steps that include: 1) Increasing the size of our addressable market by growing our product catalog across consumer electronics, PC gaming, collectibles, toys and other categories that represent natural extensions of our business; 2) Expanding fulfillment operations to improve speed of delivery and service to our customers; 3) Building a superior customer experience, including by establishing a U.S.-based customer care operation, and; 4) Strengthening technology capabilities, including by investing in new systems, modernized e-commerce assets and an expanded, experienced talent base. The Company will continue to invest in growth initiatives, while continuing to prioritize maintaining a strong balance sheet.
Pages 15 and 16:
Net sales and gross profits are up YoY.
From Page 17:
> 2021 Debt Payments
> On March 15, 2021, we repaid at maturity $73.2 million outstanding principal amount of our 2021 Senior Notes. On April 30, 2021, we completed the voluntary early redemption of $216.4 million outstanding principal amount of our 10.00% Senior Notes due 2023 ("2023 Senior Notes"). This voluntary early redemption covered the entire amount of then outstanding 2023 Senior Notes, which represented all of our long-term debt. In connection with the voluntary early redemption of our 2023 Senior Notes, we paid approximately $219.1 million in aggregate consideration, including accrued and unpaid interest. In connection with the voluntary early redemption of our 2023 Senior Notes, we paid a $17.8 million make-whole premium which is recognized in interest expense in our Consolidated Statements of Operations. Additionally, we accelerated amortization of $0.4 million deferred financing costs associated with our 2023 Senior Notes.
From Page 18:
> Our principal sources of liquidity are cash from operations, cash on hand, and borrowings from the capital markets, which include our revolving credit facilities. As of October 30, 2021, we had total unrestricted cash on hand of $1.4 billion and an additional $202.4 million of available borrowing capacity under our revolving credit facilities. On March 15, 2021, we repaid our outstanding borrowings of $25.0 million under our asset-based revolving credit facility due November 2022 ("Revolver").
Nothing has changed in Gamestop's strategy? Really?
Did you perhaps get taken in by "We are evolving from a video game retailer to a technology company that connects customers with games, entertainment and a wide assortment of products"?
Everybody and their grandmother is claiming that they are evolving into a technology company if they aren't already one. Doesn't actually mean they are. "Connecting customers with games, entertainment and a wide assortment of products" would have been a reasonable description of gamestop's business since I first went to one in the 90s. I can't read the following 4 points after that statement, which go slightly into specifics, any way other than "we're going to keep doing what we've always done, but even harder".
So yes, their strategy seems effectively unchanged to me. Not sure how all the pablum about their financial juggling is relevant to their change in strategy, or lack thereof.
What significant change to their business model did they announce + demonstrate the value of around the time of the stock price explosion to justify the increased price? I see absolutely nothing. GP seems obviously correct in the assessment that it's hype. Everything you quoted seems like irrelevant corporate speak malarkey to me.