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Geswin
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GameStop: Why The 'Blockbuster' Of Gaming Will Eventually Fail
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09:13","market":"us","language":"en","title":"Beware these risky tech stocks in your portfolio, strategist Parker warns","url":"https://stock-news.laohu8.com/highlight/detail?id=1183124175","media":"cnbc","summary":"As investors cycle back into growth stocks, one market strategist warns against certain technology names he believes are high risk.Growth stocks are shares of companies expected to grow at a faster rate than the rest of the market. However, these names are typically riskier and more volatile than the average stock.Adam Parker, former Morgan Stanley chief U.S. equity strategist and founder of Trivariate Research, said the time is right to buy growth shares, but investors should be cautious of a f","content":"<div>\n<p>As investors cycle back into growth stocks, one market strategist warns against certain technology names he believes are high risk.\nGrowth stocks are shares of companies expected to grow at a faster ...</p>\n\n<a href=\"https://www.cnbc.com/2021/06/19/tech-stocks-strategist-warns-of-risky-names.html\">Web Link</a>\n\n</div>\n","source":"cnbc_highlight","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Beware these risky tech stocks in your portfolio, strategist Parker warns</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nBeware these risky tech stocks in your portfolio, strategist Parker warns\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-06-20 09:13 GMT+8 <a href=https://www.cnbc.com/2021/06/19/tech-stocks-strategist-warns-of-risky-names.html><strong>cnbc</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>As investors cycle back into growth stocks, one market strategist warns against certain technology names he believes are high risk.\nGrowth stocks are shares of companies expected to grow at a faster ...</p>\n\n<a href=\"https://www.cnbc.com/2021/06/19/tech-stocks-strategist-warns-of-risky-names.html\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"AAPL":"苹果","NVDA":"英伟达","SQ":"Block","MCHP":"微芯科技","TWLO":"Twilio Inc"},"source_url":"https://www.cnbc.com/2021/06/19/tech-stocks-strategist-warns-of-risky-names.html","is_english":true,"share_image_url":"https://static.laohu8.com/72bb72e1b84c09fca865c6dcb1bbcd16","article_id":"1183124175","content_text":"As investors cycle back into growth stocks, one market strategist warns against certain technology names he believes are high risk.\nGrowth stocks are shares of companies expected to grow at a faster rate than the rest of the market. However, these names are typically riskier and more volatile than the average stock.\nAdam Parker, former Morgan Stanley chief U.S. equity strategist and founder of Trivariate Research, said the time is right to buy growth shares, but investors should be cautious of a few.\n“We think that portfolio managers should be buying growth stocks again, focusing on positive free cash flow and margin expansion, not earnings-based valuation,” Parker said in a note released Wednesday.\nTrivariate Research used a number of criteria to identify risky stocks, including low or negative correlation to inflation, high correlation to the economic reopening and high levels of company insiders selling their shares. The research firm then identified the eight riskiest names based on those measures.\n“Our view is that these are among the riskiest stocks to own today, so investors who own these names should have disproportionate upside to their base cases to compensate them for these risks,” Parker said.\nTake a look at five of the riskiest technology stocks, according to Trivariate.\nRISKIEST TECH STOCKS, ACCORDING TO TRIVARIATE\n\n\n\nTICKER\nCOMPANY\nPRICE\n%CHANGE\n\n\n\n\nMCHP\nMicrochip Technology Inc\n145.62\n-3.0686\n\n\nTWLO\nTwilio Inc\n367.61\n1.84\n\n\nSQ\nSquare Inc\n237.05\n0.39\n\n\nNVDA\nNVIDIA Corp\n745.55\n-0.0992\n\n\nAAPL\nApple Inc\n130.46\n-1.0092\n\n\n\nApple is on Trivariate’s list of riskiest stocks. The research firm identifies Apple as one of the stocks with the most negative correlation to inflation. Trivariate predicts that if bond yields rise or if fears of inflation continue, shares of Apple will underperform the market.\nNvidiaalso makes the list of risky tech stocks. Trivariate found the semiconductor stock has one of the most asymmetric beta — meaning the stock is consistently more volatile than the broader market during a market pullback compared with typical times.\nTrivariate also named payments companySquare, cloud communications platformTwilioand semiconductor manufacturerMicrochip Technologyamong the riskiest technology stocks.","news_type":1},"isVote":1,"tweetType":1,"viewCount":210,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":168729184,"gmtCreate":1623984379948,"gmtModify":1634024704960,"author":{"id":"3554876513636669","authorId":"3554876513636669","name":"Geswin","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":4,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3554876513636669","authorIdStr":"3554876513636669"},"themes":[],"htmlText":"???","listText":"???","text":"???","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/168729184","repostId":"1123762950","repostType":4,"isVote":1,"tweetType":1,"viewCount":613,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":169119175,"gmtCreate":1623821095497,"gmtModify":1634027561678,"author":{"id":"3554876513636669","authorId":"3554876513636669","name":"Geswin","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":4,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3554876513636669","authorIdStr":"3554876513636669"},"themes":[],"htmlText":"Ooo","listText":"Ooo","text":"Ooo","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/169119175","repostId":"1182315358","repostType":4,"repost":{"id":"1182315358","kind":"news","pubTimestamp":1623814338,"share":"https://www.laohu8.com/m/news/1182315358?lang=&edition=full","pubTime":"2021-06-16 11:32","market":"us","language":"en","title":"It’s time to be smart like Soros in the ‘blow-off’ stage of the bull market in stocks","url":"https://stock-news.laohu8.com/highlight/detail?id=1182315358","media":"MarketWatch","summary":"If you’re an investor, you need to be flexible, neither a bull nor a bear.\nIt takes brains and brawn","content":"<p>If you’re an investor, you need to be flexible, neither a bull nor a bear.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/724d1ea0bb18bddb367c79abf08c1af9\" tg-width=\"1260\" tg-height=\"841\"><span>It takes brains and brawn to be an investor these days. (Photo by Isaac Lawrence/AFP via Getty Images)</span></p>\n<p>I don’t know when what I call the Blow-Off Top of the Bubble-Blowing Bull Market will end.</p>\n<p>After 12 years being long and strong and having diamond hands without even knowing that term existed, maybe I’m wrong to turn more cautious.</p>\n<p>Maybe the economy will reopen and rejuvenate the country in such a strong manner that corporate earnings in 2022 and 2023 will make today’s prices seem like bargains.</p>\n<p>But I simply don’t think that’s the most likely outcome.</p>\n<p>And if I’m right that we’re in the throes of the Blow-Off Top of the Bubble-Blowing Bull Market, I do not want to be overly long and on the wrong side of the great unwind when it does start.</p>\n<p>I’m not calling for a near-term crash. I am saying that it’s likely going to be hard for the bulls to make as much money this year as they did last year.</p>\n<p>Trading and investing are tough. There’s always someone on the other side of every trade you make. Always think about who that is and why they are willing to take the other side of your transaction. When you buy, why are they selling it to you at that price? When you sell, who is buying it from you and what are their motivations? Remember, I’ve talked before about how good analysis starts with empathy.</p>\n<p><b>If I’m selling, who’s buying — and why?</b></p>\n<p>So let’s answer this question right now. Who is buying stocks and cryptos from me when I’ve trimmed and sold for the past month or so? Sure, there are banks and institutions and hedge funds and family offices investing and trading, just as always. On the other hand, remember two years ago when I got back from a hedge fund investment conference in Abu Dhabi and everybody was desperate for returns:</p>\n<p>Amid low interest rates and other investors’ focus on options, credit and currencies, “the lack of focus on traditional stocks and funds that invest in publicly traded stocks makes me think that there is probably more opportunity in such assets than people realize. I certainly see some very compelling long ideas in Revolutionary companies like WORK and TWTR and TSLA.”</p>\n<p>Since that post, back a year and a half ago, Slack went from $21 to being bought out at $45, Twitter went from $27 to $61, and Tesla went from $81 to $616. And funds that were looking everywhere but in the stock market for big gains are … well, pretty much in the markets now and long a bunch of stocks and even long a few cryptos.</p>\n<p>And now that those stocks and cryptos and most other assets have gone parabolic in the past year — coming on top of the 10-year bull market — the billion-dollar fund managers are joined by 23-year-old TikTok influencers doing bitcoin trading astrology.</p>\n<p>Yes, for real, and she’s very popular. She’s even been right about some of bitcoin’s action in the past few months! If you’re selling cryptos and fintech stocks right now, you’re selling to her and her followers. And also to my friend’s son, who just graduated from a tiny, rural school and whose unemployed uncle gave him $500 to “buy some cryptos. And make sure you get some fintech. I don’t know the symbol, but just look it up and you’ll do fine over the long run.” Bearish anecdotes everywhere I look, as I wrote recently.</p>\n<p><b>Mr. Market</b></p>\n<p>The other thing to remember about who’s on the other side of your trade is always to remember that there are smart, cutthroat traders and investors who went to the best schools and have access to more research and real-time data and instant trading access to all kinds of derivatives to layer into their bets. And the only thing they do all day, every day, is figure out how to take your money in mostly legal ways. They’re not playing around. They have no sympathy for you, even if they might empathize with you to better understand your motivations to better take your money.</p>\n<p>Mr. Market is mean. He’s not nice. He can be cruel. He can force liquidations that create other liquidations. He can shut off access to capital. He can take down 200-year-old banks in a day. In one day.</p>\n<p>Sometimes the markets lead the economy and not the other way around. Ironically, when we were young, we were taught that the Great Depression started when the stock market crashed on Black Friday in 1929. But then when we get older, we were taught that it wasn’t actually the crash that created the Great Depression, rather the economy was already crashing and the stock market just didn’t realize it as it continued on its merry way toward a terrible Blow-Off Top of a nine-year Bubble-Blowing Bull Market that culminated with the Dow Jones Industrial Average up 400% from the 1921 lows to the 1929 highs.</p>\n<p><img src=\"https://static.tigerbbs.com/3a6516337aacc614d83584ea90e174f2\" tg-width=\"1260\" tg-height=\"870\"></p>\n<p><b>Learning from Soros</b></p>\n<p>But looking back, it’s clear that both theories are equally right and wrong — the market crashed because the economy wasn’t as good as the market thought it was,<i>and</i>the economy crashed because the markets shut down access to capital for investment and growth.</p>\n<p>It was “reflexive,” to borrow a term from the great hedge fund manager George Soros.</p>\n<p>He wrote, and the concept is important to understand:</p>\n<p>“I continued to consider myself a failed philosopher. All this changed as a result of the financial crisis of 2008. My conceptual framework enabled me both to anticipate the crisis and to deal with it when it finally struck…</p>\n<p>“I can state the core idea in two relatively simple propositions. One is that in situations that have thinking participants, the participants’ view of the world is always partial and distorted. That is the principle of fallibility. The other is that these distorted views can influence the situation to which they relate because false views lead to inappropriate actions. That is the principle of reflexivity…</p>\n<p>“Recognizing reflexivity has been sacrificed to the vain pursuit of certainty in human affairs, most notably in economics, and yet, uncertainty is the key feature of human affairs. Economic theory is built on the concept of equilibrium, and that concept is in direct contradiction with the concept of reflexivity…</p>\n<p>“A positive feedback process is self-reinforcing. It cannot go on forever because eventually the participants’ views would become so far removed from objective reality that the participants would have to recognize them as unrealistic. Nor can the iterative process occur without any change in the actual state of affairs, because it is in the nature of positive feedback that it reinforces whatever tendency prevails in the real world. Instead of equilibrium, we are faced with a dynamic disequilibrium or what may be described as far-from-equilibrium conditions. Usually in far-from-equilibrium situations the divergence between perceptions and reality leads to a climax which sets in motion a positive feedback process in the opposite direction. Such initially self-reinforcing but eventually self-defeating boom-bust processes or bubbles are characteristic of financial markets, but they can also be found in other spheres. There, I call them fertile fallacies—interpretations of reality that are distorted, yet produce results which reinforce the distortion.”</p>\n<p>Stay flexible</p>\n<p>Far-from-equilibrium conditions was what we had in 2010-2013 when we loaded up on Revolutionary stocks and started buying cryptos like bitcoin. Far-from-equilibrium conditions might be what we have in front of us right now when I suggest getting cautious instead.</p>\n<p>We don’t want to be permabulls. (You for sure don’t want to be a permabear!) We have to be flexible. We have to let our analysis and risk/reward scenarios dictate how much risk we’re taking and when. We have to pay attention to the cycles, the self-reinforcing cycles that drive economies and markets and valuations and earnings and societal interactions and bailouts and financial crises and bubbles and busts and, heaven forbid, just simple stagnation.</p>\n<p>It’s as if everybody forgets that markets can bubble and crash and stagnate. They forget that markets can grind for years on end without making new highs, or without even making higher highs. Do you not remember telling your money manager sometime in 2010-2012 that “If I’d just handled the Great Financial Crisis (and/or the Dot-Com Crash) a little better, I’d be in better shape.” I used to hear people say that to me all the time. I haven’t heard anybody say that lately. Everybody’s having fun in this market … at least for now.</p>\n<p>Most traders will tell you that they are “just trading the market that is in front of them.” Well, I don’t know when the bubble will pop, but I do know that I don’t want to be on the wrong side of this market when it does. And I do know that we won’t know the bubble has really popped until the self-reinforcing reflexive feedback loop has made it painful for the vast majority of people who are right now feeling wealthy, feeling secure, feeling like they’ve got this trading and investing thing all figured out.</p>\n<p>We are all fallible. Be careful while it’s fun. Be bold when it’s painful. That’s how I’ve done it for the last 25 years. We were boldly buying these assets when it was painful for others. I’m careful right now because everybody else is having fun.</p>\n<p>I spend a lot of time looking for new ideas and I won’t let my overall market outlook deter me from buying a new name or two. But I want to remain overall cautious and less aggressive than I have been for most of the last decade.</p>\n<p>As a matter of fact, I might have at least a couple Trade Alerts that I’ll be sending out this week, one long and one short idea. Being flexible, see?</p>","source":"lsy1603348471595","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>It’s time to be smart like Soros in the ‘blow-off’ stage of the bull market in stocks</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIt’s time to be smart like Soros in the ‘blow-off’ stage of the bull market in stocks\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-06-16 11:32 GMT+8 <a href=https://www.marketwatch.com/story/its-time-to-be-smart-like-soros-in-the-blow-off-stage-of-the-bull-market-in-stocks-11623788897?siteid=yhoof2><strong>MarketWatch</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>If you’re an investor, you need to be flexible, neither a bull nor a bear.\nIt takes brains and brawn to be an investor these days. (Photo by Isaac Lawrence/AFP via Getty Images)\nI don’t know when what...</p>\n\n<a href=\"https://www.marketwatch.com/story/its-time-to-be-smart-like-soros-in-the-blow-off-stage-of-the-bull-market-in-stocks-11623788897?siteid=yhoof2\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".IXIC":"NASDAQ Composite",".DJI":"道琼斯",".SPX":"S&P 500 Index"},"source_url":"https://www.marketwatch.com/story/its-time-to-be-smart-like-soros-in-the-blow-off-stage-of-the-bull-market-in-stocks-11623788897?siteid=yhoof2","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1182315358","content_text":"If you’re an investor, you need to be flexible, neither a bull nor a bear.\nIt takes brains and brawn to be an investor these days. (Photo by Isaac Lawrence/AFP via Getty Images)\nI don’t know when what I call the Blow-Off Top of the Bubble-Blowing Bull Market will end.\nAfter 12 years being long and strong and having diamond hands without even knowing that term existed, maybe I’m wrong to turn more cautious.\nMaybe the economy will reopen and rejuvenate the country in such a strong manner that corporate earnings in 2022 and 2023 will make today’s prices seem like bargains.\nBut I simply don’t think that’s the most likely outcome.\nAnd if I’m right that we’re in the throes of the Blow-Off Top of the Bubble-Blowing Bull Market, I do not want to be overly long and on the wrong side of the great unwind when it does start.\nI’m not calling for a near-term crash. I am saying that it’s likely going to be hard for the bulls to make as much money this year as they did last year.\nTrading and investing are tough. There’s always someone on the other side of every trade you make. Always think about who that is and why they are willing to take the other side of your transaction. When you buy, why are they selling it to you at that price? When you sell, who is buying it from you and what are their motivations? Remember, I’ve talked before about how good analysis starts with empathy.\nIf I’m selling, who’s buying — and why?\nSo let’s answer this question right now. Who is buying stocks and cryptos from me when I’ve trimmed and sold for the past month or so? Sure, there are banks and institutions and hedge funds and family offices investing and trading, just as always. On the other hand, remember two years ago when I got back from a hedge fund investment conference in Abu Dhabi and everybody was desperate for returns:\nAmid low interest rates and other investors’ focus on options, credit and currencies, “the lack of focus on traditional stocks and funds that invest in publicly traded stocks makes me think that there is probably more opportunity in such assets than people realize. I certainly see some very compelling long ideas in Revolutionary companies like WORK and TWTR and TSLA.”\nSince that post, back a year and a half ago, Slack went from $21 to being bought out at $45, Twitter went from $27 to $61, and Tesla went from $81 to $616. And funds that were looking everywhere but in the stock market for big gains are … well, pretty much in the markets now and long a bunch of stocks and even long a few cryptos.\nAnd now that those stocks and cryptos and most other assets have gone parabolic in the past year — coming on top of the 10-year bull market — the billion-dollar fund managers are joined by 23-year-old TikTok influencers doing bitcoin trading astrology.\nYes, for real, and she’s very popular. She’s even been right about some of bitcoin’s action in the past few months! If you’re selling cryptos and fintech stocks right now, you’re selling to her and her followers. And also to my friend’s son, who just graduated from a tiny, rural school and whose unemployed uncle gave him $500 to “buy some cryptos. And make sure you get some fintech. I don’t know the symbol, but just look it up and you’ll do fine over the long run.” Bearish anecdotes everywhere I look, as I wrote recently.\nMr. Market\nThe other thing to remember about who’s on the other side of your trade is always to remember that there are smart, cutthroat traders and investors who went to the best schools and have access to more research and real-time data and instant trading access to all kinds of derivatives to layer into their bets. And the only thing they do all day, every day, is figure out how to take your money in mostly legal ways. They’re not playing around. They have no sympathy for you, even if they might empathize with you to better understand your motivations to better take your money.\nMr. Market is mean. He’s not nice. He can be cruel. He can force liquidations that create other liquidations. He can shut off access to capital. He can take down 200-year-old banks in a day. In one day.\nSometimes the markets lead the economy and not the other way around. Ironically, when we were young, we were taught that the Great Depression started when the stock market crashed on Black Friday in 1929. But then when we get older, we were taught that it wasn’t actually the crash that created the Great Depression, rather the economy was already crashing and the stock market just didn’t realize it as it continued on its merry way toward a terrible Blow-Off Top of a nine-year Bubble-Blowing Bull Market that culminated with the Dow Jones Industrial Average up 400% from the 1921 lows to the 1929 highs.\n\nLearning from Soros\nBut looking back, it’s clear that both theories are equally right and wrong — the market crashed because the economy wasn’t as good as the market thought it was,andthe economy crashed because the markets shut down access to capital for investment and growth.\nIt was “reflexive,” to borrow a term from the great hedge fund manager George Soros.\nHe wrote, and the concept is important to understand:\n“I continued to consider myself a failed philosopher. All this changed as a result of the financial crisis of 2008. My conceptual framework enabled me both to anticipate the crisis and to deal with it when it finally struck…\n“I can state the core idea in two relatively simple propositions. One is that in situations that have thinking participants, the participants’ view of the world is always partial and distorted. That is the principle of fallibility. The other is that these distorted views can influence the situation to which they relate because false views lead to inappropriate actions. That is the principle of reflexivity…\n“Recognizing reflexivity has been sacrificed to the vain pursuit of certainty in human affairs, most notably in economics, and yet, uncertainty is the key feature of human affairs. Economic theory is built on the concept of equilibrium, and that concept is in direct contradiction with the concept of reflexivity…\n“A positive feedback process is self-reinforcing. It cannot go on forever because eventually the participants’ views would become so far removed from objective reality that the participants would have to recognize them as unrealistic. Nor can the iterative process occur without any change in the actual state of affairs, because it is in the nature of positive feedback that it reinforces whatever tendency prevails in the real world. Instead of equilibrium, we are faced with a dynamic disequilibrium or what may be described as far-from-equilibrium conditions. Usually in far-from-equilibrium situations the divergence between perceptions and reality leads to a climax which sets in motion a positive feedback process in the opposite direction. Such initially self-reinforcing but eventually self-defeating boom-bust processes or bubbles are characteristic of financial markets, but they can also be found in other spheres. There, I call them fertile fallacies—interpretations of reality that are distorted, yet produce results which reinforce the distortion.”\nStay flexible\nFar-from-equilibrium conditions was what we had in 2010-2013 when we loaded up on Revolutionary stocks and started buying cryptos like bitcoin. Far-from-equilibrium conditions might be what we have in front of us right now when I suggest getting cautious instead.\nWe don’t want to be permabulls. (You for sure don’t want to be a permabear!) We have to be flexible. We have to let our analysis and risk/reward scenarios dictate how much risk we’re taking and when. We have to pay attention to the cycles, the self-reinforcing cycles that drive economies and markets and valuations and earnings and societal interactions and bailouts and financial crises and bubbles and busts and, heaven forbid, just simple stagnation.\nIt’s as if everybody forgets that markets can bubble and crash and stagnate. They forget that markets can grind for years on end without making new highs, or without even making higher highs. Do you not remember telling your money manager sometime in 2010-2012 that “If I’d just handled the Great Financial Crisis (and/or the Dot-Com Crash) a little better, I’d be in better shape.” I used to hear people say that to me all the time. I haven’t heard anybody say that lately. Everybody’s having fun in this market … at least for now.\nMost traders will tell you that they are “just trading the market that is in front of them.” Well, I don’t know when the bubble will pop, but I do know that I don’t want to be on the wrong side of this market when it does. And I do know that we won’t know the bubble has really popped until the self-reinforcing reflexive feedback loop has made it painful for the vast majority of people who are right now feeling wealthy, feeling secure, feeling like they’ve got this trading and investing thing all figured out.\nWe are all fallible. Be careful while it’s fun. Be bold when it’s painful. That’s how I’ve done it for the last 25 years. We were boldly buying these assets when it was painful for others. I’m careful right now because everybody else is having fun.\nI spend a lot of time looking for new ideas and I won’t let my overall market outlook deter me from buying a new name or two. But I want to remain overall cautious and less aggressive than I have been for most of the last decade.\nAs a matter of fact, I might have at least a couple Trade Alerts that I’ll be sending out this week, one long and one short idea. Being flexible, see?","news_type":1},"isVote":1,"tweetType":1,"viewCount":501,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":118196202,"gmtCreate":1622722158906,"gmtModify":1634098770931,"author":{"id":"3554876513636669","authorId":"3554876513636669","name":"Geswin","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":4,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3554876513636669","authorIdStr":"3554876513636669"},"themes":[],"htmlText":"HODL","listText":"HODL","text":"HODL","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/118196202","repostId":"1154735458","repostType":2,"repost":{"id":"1154735458","kind":"news","pubTimestamp":1620820511,"share":"https://www.laohu8.com/m/news/1154735458?lang=&edition=full","pubTime":"2021-05-12 19:55","market":"us","language":"en","title":"GameStop: Why The 'Blockbuster' Of Gaming Will Eventually Fail","url":"https://stock-news.laohu8.com/highlight/detail?id=1154735458","media":"seekingalpha","summary":"Summary\n\nGameStop has been a highly debated stock after a surge of retail interest turned the compan","content":"<p><b>Summary</b></p>\n<ul>\n <li>GameStop has been a highly debated stock after a surge of retail interest turned the company into a \"meme stock\" and drove shares into triple figures.</li>\n <li>The company is pivoting to e-commerce and has admittedly cleaned up its balance sheet nicely.</li>\n <li>The long-term problem is that the company faces margin pressures from a number of angles. The current valuation and business challenges present a \"lose/lose\" outcome to investors.</li>\n</ul>\n<p>Now considered a \"meme stock\"; gaming retail company GameStop Corp.(NYSE:GME)has seen volatility in its share price over the past year. The stock has bounced between a vast range from low single digits, to more than $480 per share. While much of the excitement has faded away, the stock still trades at more than $140 per share. A business transformation is underway, led by Ryan Cohen, the former CEO and co-founder of animal products e-commerce leader Chewy(NYSE:CHWY). This has many retail investors holding shares in anticipation of a long term rebirth, with GameStop becoming an e-commerce titan of the gaming industry.</p>\n<p>Unfortunately, the data doesn't point to this outcome. While the company has stabilized itself and now operates on a debt free basis, the company's needed capital investments to flesh out an e-commerce strategy in addition to secular tailwinds lead me to believe that GameStop will be unable to sustain long term profitability. In the event of successful execution, the valuation will take many years to be justified. For these reasons, GameStop is a very poor long term investment. We will outline our bearish thesis below.</p>\n<p><b>GameStop Forced To Go To E-Commerce</b></p>\n<p>GameStop has long been known among consumers as a brick and mortar centric video game retailer. When I was growing up (I'm now in my early 30s), I used to camp out in front of GameStop at midnight, waiting with friends for the latest release of our favorite games. While you could get games at nearly any retailer, the ability to trade in old games for store credit, and large product selection found at a gaming focused store such as GameStop was compelling for me as a gamer.</p>\n<p>Today, the way in which gaming is delivered to the consumer is far different. In many cases, games can be purchased (and pre-ordered) digitally. Fast internet speeds mean that games can be downloaded and played within minutes or sometimes a few hours. The rise of Amazon has brought the shopping experience to one's fingertips.</p>\n<p>These secular changes have slowly deteriorated GameStop's store traffic and resulting revenues.</p>\n<p><img src=\"https://static.tigerbbs.com/d0690d871cc1287d7d877083b48b74d0\" tg-width=\"640\" tg-height=\"377\">source: YCharts</p>\n<p>This significant decline in GameStop's business has forced the company to evolve, and begin the journey of shifting towards an e-commerce model. This has been led by an activist investor in Chewy co-founder Ryan Cohen, who got involved with GameStop in September of 2020.</p>\n<p><img src=\"https://static.tigerbbs.com/084ae308b6cc58704e8982e61b213408\" tg-width=\"640\" tg-height=\"162\">source: GameStop Corp.</p>\n<p>The company's plan is to strip costs out of the business by closing stores, cutting expenses, and devoting its resources to optimizing its product footprint while fleshing out the logistics needed for an e-commerce centric market strategy. These efforts remain in-motion. The company has closed roughly 1,000 stores through the end of 2020, andrecently leaseda 700K square-foot facility that will serve as a fulfillment center.</p>\n<p>To GameStop's credit, the business has seen signs of improvement. The company is currently debt free.</p>\n<p><img src=\"https://static.tigerbbs.com/575ba6c4954d66961e0a8550dcf561af\" tg-width=\"640\" tg-height=\"369\">source: YCharts</p>\n<p>The company has also raised capital with a timely equity raise in early 2021. GameStop raised $551 million on 3.5 million shares, averaging a price per share of $157. Considering the company has repurchased more than a third of its stock since spring 2019 at an average of $5.21/share, this is a phenomenal move on GameStop's part. This newfound capital will be needed as the company's transformation efforts are far from over.</p>\n<p>Multiple Margin Pressures Threaten Profitability</p>\n<p>While successful e-commerce models can be powerful, the formation of the e-commerce model can be costly. Infrastructure needs to be put into place, and the digital marketplace brings competition from all over.</p>\n<p>GameStop's financials are in a much better place at present. However over the long term, its largest challenge in pivoting to e-commerce is making the model profitable over the long term. There are a number of concerns I have about GameStop's ability to do this.</p>\n<p><b>Smaller Scale</b></p>\n<p>E-commerce is a \"cut-throat\" business, where scale is your friend. GameStop is seeking an e-commerce model that will pit it against much larger competitors such as Amazon (AMZN), Walmart (WMT), and Target (TGT). These companies have significantly higher scale than GameStop, including larger revenues (and balance sheets).</p>\n<p>In a retail space where the product is commoditized (gaming hardware/software is the same regardless of where you buy from unless a developer partnership is in place), there is not room for much mark-up and the larger players can take more \"pain\" to take/protect market share.</p>\n<p><b>Product Mix</b></p>\n<p>Another concern I have with GameStop is the company's product mix moving forward. Game distribution continues to move increasingly digital, and is a trend that I don't see reversing. It's simply far too convenient for gamers because they can buy/pre-order a game, and it can be downloaded relatively quickly thanks to faster internet speeds available today.</p>\n<p>This has been reinforced by console makers. The Xbox Series S lacks a disc drive, and the PlayStation 5 also offers a variant that does not include a disc drive.</p>\n<p>GameStop knows that software sales are in secular decline, and has indicated an intention to focus on hardware and accessories including:</p>\n<ul>\n <li>Computers</li>\n <li>Monitors</li>\n <li>Game Tables</li>\n <li>Mobile Gaming</li>\n <li>Gaming TVs</li>\n</ul>\n<p>The problem for GameStop, is that these declining software sales carried the highest margins for the company.</p>\n<p>From GameStop's 2020Q4 earnings call:</p>\n<blockquote>\n <i>\"From a product margin standpoint, overall gross margins were 21.1%, down 610 basis points from our more software-led 27.2% gross margin in the fiscal fourth quarter last year. The decline was driven by an expected increase in mix of lower margin hardware sales, a continued increase in industry-wide freight costs, credit card processing fees driven by our higher penetration of e-commerce sales, and a broader promotional stance.\"</i>\n</blockquote>\n<p>So GameStop is pivoting to lower margin, higher cost items - probably because it knows it has to. This isn't to say that GameStop can't pull it off, but the conflict is quite obvious.</p>\n<p><b>GameStop Needs To Repair Its Brand Image</b></p>\n<p>Perhaps the largest question mark I have about GameStop - even more than the economics of its future business model, is the company's branding. GameStop talks about being this gamer-centric, customer driven model that consumers love.</p>\n<p>However, this doesn't seem to be the current state of GameStop's brand. The company has been poked fun at on the internet for its \"low-ball\" offers on gamer trade-ins.</p>\n<p>GameStop also possesses a NPS (net promoter score) of -6according to Comparably. As a gamer myself, I had a \"bad taste\" in my mouth when sourcing my Xbox Series X. GameStop often tied its inventory of next-generation consoles to large expansive bundles that included high margin games and accessories that many consumers didn't want. If GameStop expects to become a modernized \"go-to\" shopping experience for gamers, they have work to do in the brand power department.</p>\n<p><b>The Long Path To Profitability Is Too Large A Risk</b></p>\n<p>GameStop can certainly address these concerns over time. The company's recent equity raise if anything, buys them time to try and execute this transition. This is also asking investors in GameStop to take on risk. While shares of GameStop have pulled back considerably, the stock still trades at $143 per share, multiples of what it did as recently as the beginning of the year.</p>\n<p><img src=\"https://static.tigerbbs.com/fcc11261f3b8202eaa6b86d9f99c97b0\" tg-width=\"640\" tg-height=\"375\">source: YCharts</p>\n<p>The company is not a growth stock, and therefore should be valued on earnings. But GameStop is losing money, and will not turn a profit anytime soon. Analysts see the company steadily getting closer to break even, breaking that barrier in FY2024 (three years from now).</p>\n<p><img src=\"https://static.tigerbbs.com/fa4040ac389c6925d97545645ac30c98\" tg-width=\"640\" tg-height=\"226\">source: Seeking Alpha</p>\n<p>But if GameStop achieves 2024 estimates of earning $1.35 per share, that means that the stock's current valuation is a whopping 106X 2024 earnings(!). Investing is about risk and reward, and I can't make the case to pay that valuation. Investors have to essentially give up the opportunity cost of investing elsewhere over this time frame, hope that GameStop can execute successfully, and then wait longer for the business to grow into its valuation over a 5+ year time horizon. Frankly, it seems silly.</p>\n<p><b>Wrapping Up</b></p>\n<p>When you put all of this together, GameStop offers a terrible risk/reward to investors. In a worst case scenario, GameStop fails to execute its e-commerce model and goes out of business. In a best case scenario, investors will wait years to justify the current valuation. When the outcome is lose/lose, I would rather not play at all.</p>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>GameStop: Why The 'Blockbuster' Of Gaming Will Eventually Fail</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nGameStop: Why The 'Blockbuster' Of Gaming Will Eventually Fail\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-05-12 19:55 GMT+8 <a href=https://seekingalpha.com/article/4427260-gamestop-why-blockbuster-gaming-eventually-fail><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nGameStop has been a highly debated stock after a surge of retail interest turned the company into a \"meme stock\" and drove shares into triple figures.\nThe company is pivoting to e-commerce ...</p>\n\n<a href=\"https://seekingalpha.com/article/4427260-gamestop-why-blockbuster-gaming-eventually-fail\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"GME":"游戏驿站"},"source_url":"https://seekingalpha.com/article/4427260-gamestop-why-blockbuster-gaming-eventually-fail","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1154735458","content_text":"Summary\n\nGameStop has been a highly debated stock after a surge of retail interest turned the company into a \"meme stock\" and drove shares into triple figures.\nThe company is pivoting to e-commerce and has admittedly cleaned up its balance sheet nicely.\nThe long-term problem is that the company faces margin pressures from a number of angles. The current valuation and business challenges present a \"lose/lose\" outcome to investors.\n\nNow considered a \"meme stock\"; gaming retail company GameStop Corp.(NYSE:GME)has seen volatility in its share price over the past year. The stock has bounced between a vast range from low single digits, to more than $480 per share. While much of the excitement has faded away, the stock still trades at more than $140 per share. A business transformation is underway, led by Ryan Cohen, the former CEO and co-founder of animal products e-commerce leader Chewy(NYSE:CHWY). This has many retail investors holding shares in anticipation of a long term rebirth, with GameStop becoming an e-commerce titan of the gaming industry.\nUnfortunately, the data doesn't point to this outcome. While the company has stabilized itself and now operates on a debt free basis, the company's needed capital investments to flesh out an e-commerce strategy in addition to secular tailwinds lead me to believe that GameStop will be unable to sustain long term profitability. In the event of successful execution, the valuation will take many years to be justified. For these reasons, GameStop is a very poor long term investment. We will outline our bearish thesis below.\nGameStop Forced To Go To E-Commerce\nGameStop has long been known among consumers as a brick and mortar centric video game retailer. When I was growing up (I'm now in my early 30s), I used to camp out in front of GameStop at midnight, waiting with friends for the latest release of our favorite games. While you could get games at nearly any retailer, the ability to trade in old games for store credit, and large product selection found at a gaming focused store such as GameStop was compelling for me as a gamer.\nToday, the way in which gaming is delivered to the consumer is far different. In many cases, games can be purchased (and pre-ordered) digitally. Fast internet speeds mean that games can be downloaded and played within minutes or sometimes a few hours. The rise of Amazon has brought the shopping experience to one's fingertips.\nThese secular changes have slowly deteriorated GameStop's store traffic and resulting revenues.\nsource: YCharts\nThis significant decline in GameStop's business has forced the company to evolve, and begin the journey of shifting towards an e-commerce model. This has been led by an activist investor in Chewy co-founder Ryan Cohen, who got involved with GameStop in September of 2020.\nsource: GameStop Corp.\nThe company's plan is to strip costs out of the business by closing stores, cutting expenses, and devoting its resources to optimizing its product footprint while fleshing out the logistics needed for an e-commerce centric market strategy. These efforts remain in-motion. The company has closed roughly 1,000 stores through the end of 2020, andrecently leaseda 700K square-foot facility that will serve as a fulfillment center.\nTo GameStop's credit, the business has seen signs of improvement. The company is currently debt free.\nsource: YCharts\nThe company has also raised capital with a timely equity raise in early 2021. GameStop raised $551 million on 3.5 million shares, averaging a price per share of $157. Considering the company has repurchased more than a third of its stock since spring 2019 at an average of $5.21/share, this is a phenomenal move on GameStop's part. This newfound capital will be needed as the company's transformation efforts are far from over.\nMultiple Margin Pressures Threaten Profitability\nWhile successful e-commerce models can be powerful, the formation of the e-commerce model can be costly. Infrastructure needs to be put into place, and the digital marketplace brings competition from all over.\nGameStop's financials are in a much better place at present. However over the long term, its largest challenge in pivoting to e-commerce is making the model profitable over the long term. There are a number of concerns I have about GameStop's ability to do this.\nSmaller Scale\nE-commerce is a \"cut-throat\" business, where scale is your friend. GameStop is seeking an e-commerce model that will pit it against much larger competitors such as Amazon (AMZN), Walmart (WMT), and Target (TGT). These companies have significantly higher scale than GameStop, including larger revenues (and balance sheets).\nIn a retail space where the product is commoditized (gaming hardware/software is the same regardless of where you buy from unless a developer partnership is in place), there is not room for much mark-up and the larger players can take more \"pain\" to take/protect market share.\nProduct Mix\nAnother concern I have with GameStop is the company's product mix moving forward. Game distribution continues to move increasingly digital, and is a trend that I don't see reversing. It's simply far too convenient for gamers because they can buy/pre-order a game, and it can be downloaded relatively quickly thanks to faster internet speeds available today.\nThis has been reinforced by console makers. The Xbox Series S lacks a disc drive, and the PlayStation 5 also offers a variant that does not include a disc drive.\nGameStop knows that software sales are in secular decline, and has indicated an intention to focus on hardware and accessories including:\n\nComputers\nMonitors\nGame Tables\nMobile Gaming\nGaming TVs\n\nThe problem for GameStop, is that these declining software sales carried the highest margins for the company.\nFrom GameStop's 2020Q4 earnings call:\n\n\"From a product margin standpoint, overall gross margins were 21.1%, down 610 basis points from our more software-led 27.2% gross margin in the fiscal fourth quarter last year. The decline was driven by an expected increase in mix of lower margin hardware sales, a continued increase in industry-wide freight costs, credit card processing fees driven by our higher penetration of e-commerce sales, and a broader promotional stance.\"\n\nSo GameStop is pivoting to lower margin, higher cost items - probably because it knows it has to. This isn't to say that GameStop can't pull it off, but the conflict is quite obvious.\nGameStop Needs To Repair Its Brand Image\nPerhaps the largest question mark I have about GameStop - even more than the economics of its future business model, is the company's branding. GameStop talks about being this gamer-centric, customer driven model that consumers love.\nHowever, this doesn't seem to be the current state of GameStop's brand. The company has been poked fun at on the internet for its \"low-ball\" offers on gamer trade-ins.\nGameStop also possesses a NPS (net promoter score) of -6according to Comparably. As a gamer myself, I had a \"bad taste\" in my mouth when sourcing my Xbox Series X. GameStop often tied its inventory of next-generation consoles to large expansive bundles that included high margin games and accessories that many consumers didn't want. If GameStop expects to become a modernized \"go-to\" shopping experience for gamers, they have work to do in the brand power department.\nThe Long Path To Profitability Is Too Large A Risk\nGameStop can certainly address these concerns over time. The company's recent equity raise if anything, buys them time to try and execute this transition. This is also asking investors in GameStop to take on risk. While shares of GameStop have pulled back considerably, the stock still trades at $143 per share, multiples of what it did as recently as the beginning of the year.\nsource: YCharts\nThe company is not a growth stock, and therefore should be valued on earnings. But GameStop is losing money, and will not turn a profit anytime soon. Analysts see the company steadily getting closer to break even, breaking that barrier in FY2024 (three years from now).\nsource: Seeking Alpha\nBut if GameStop achieves 2024 estimates of earning $1.35 per share, that means that the stock's current valuation is a whopping 106X 2024 earnings(!). Investing is about risk and reward, and I can't make the case to pay that valuation. Investors have to essentially give up the opportunity cost of investing elsewhere over this time frame, hope that GameStop can execute successfully, and then wait longer for the business to grow into its valuation over a 5+ year time horizon. Frankly, it seems silly.\nWrapping Up\nWhen you put all of this together, GameStop offers a terrible risk/reward to investors. In a worst case scenario, GameStop fails to execute its e-commerce model and goes out of business. In a best case scenario, investors will wait years to justify the current valuation. When the outcome is lose/lose, I would rather not play at all.","news_type":1},"isVote":1,"tweetType":1,"viewCount":507,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"hots":[{"id":169119175,"gmtCreate":1623821095497,"gmtModify":1634027561678,"author":{"id":"3554876513636669","authorId":"3554876513636669","name":"Geswin","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":4,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3554876513636669","authorIdStr":"3554876513636669"},"themes":[],"htmlText":"Ooo","listText":"Ooo","text":"Ooo","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/169119175","repostId":"1182315358","repostType":4,"isVote":1,"tweetType":1,"viewCount":501,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":164968893,"gmtCreate":1624166344112,"gmtModify":1634009898372,"author":{"id":"3554876513636669","authorId":"3554876513636669","name":"Geswin","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":4,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3554876513636669","authorIdStr":"3554876513636669"},"themes":[],"htmlText":"😿","listText":"😿","text":"😿","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/164968893","repostId":"1183124175","repostType":4,"isVote":1,"tweetType":1,"viewCount":210,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":168729184,"gmtCreate":1623984379948,"gmtModify":1634024704960,"author":{"id":"3554876513636669","authorId":"3554876513636669","name":"Geswin","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":4,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3554876513636669","authorIdStr":"3554876513636669"},"themes":[],"htmlText":"???","listText":"???","text":"???","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/168729184","repostId":"1123762950","repostType":4,"isVote":1,"tweetType":1,"viewCount":613,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":118196202,"gmtCreate":1622722158906,"gmtModify":1634098770931,"author":{"id":"3554876513636669","authorId":"3554876513636669","name":"Geswin","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":4,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3554876513636669","authorIdStr":"3554876513636669"},"themes":[],"htmlText":"HODL","listText":"HODL","text":"HODL","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/118196202","repostId":"1154735458","repostType":2,"repost":{"id":"1154735458","kind":"news","pubTimestamp":1620820511,"share":"https://www.laohu8.com/m/news/1154735458?lang=&edition=full","pubTime":"2021-05-12 19:55","market":"us","language":"en","title":"GameStop: Why The 'Blockbuster' Of Gaming Will Eventually Fail","url":"https://stock-news.laohu8.com/highlight/detail?id=1154735458","media":"seekingalpha","summary":"Summary\n\nGameStop has been a highly debated stock after a surge of retail interest turned the compan","content":"<p><b>Summary</b></p>\n<ul>\n <li>GameStop has been a highly debated stock after a surge of retail interest turned the company into a \"meme stock\" and drove shares into triple figures.</li>\n <li>The company is pivoting to e-commerce and has admittedly cleaned up its balance sheet nicely.</li>\n <li>The long-term problem is that the company faces margin pressures from a number of angles. The current valuation and business challenges present a \"lose/lose\" outcome to investors.</li>\n</ul>\n<p>Now considered a \"meme stock\"; gaming retail company GameStop Corp.(NYSE:GME)has seen volatility in its share price over the past year. The stock has bounced between a vast range from low single digits, to more than $480 per share. While much of the excitement has faded away, the stock still trades at more than $140 per share. A business transformation is underway, led by Ryan Cohen, the former CEO and co-founder of animal products e-commerce leader Chewy(NYSE:CHWY). This has many retail investors holding shares in anticipation of a long term rebirth, with GameStop becoming an e-commerce titan of the gaming industry.</p>\n<p>Unfortunately, the data doesn't point to this outcome. While the company has stabilized itself and now operates on a debt free basis, the company's needed capital investments to flesh out an e-commerce strategy in addition to secular tailwinds lead me to believe that GameStop will be unable to sustain long term profitability. In the event of successful execution, the valuation will take many years to be justified. For these reasons, GameStop is a very poor long term investment. We will outline our bearish thesis below.</p>\n<p><b>GameStop Forced To Go To E-Commerce</b></p>\n<p>GameStop has long been known among consumers as a brick and mortar centric video game retailer. When I was growing up (I'm now in my early 30s), I used to camp out in front of GameStop at midnight, waiting with friends for the latest release of our favorite games. While you could get games at nearly any retailer, the ability to trade in old games for store credit, and large product selection found at a gaming focused store such as GameStop was compelling for me as a gamer.</p>\n<p>Today, the way in which gaming is delivered to the consumer is far different. In many cases, games can be purchased (and pre-ordered) digitally. Fast internet speeds mean that games can be downloaded and played within minutes or sometimes a few hours. The rise of Amazon has brought the shopping experience to one's fingertips.</p>\n<p>These secular changes have slowly deteriorated GameStop's store traffic and resulting revenues.</p>\n<p><img src=\"https://static.tigerbbs.com/d0690d871cc1287d7d877083b48b74d0\" tg-width=\"640\" tg-height=\"377\">source: YCharts</p>\n<p>This significant decline in GameStop's business has forced the company to evolve, and begin the journey of shifting towards an e-commerce model. This has been led by an activist investor in Chewy co-founder Ryan Cohen, who got involved with GameStop in September of 2020.</p>\n<p><img src=\"https://static.tigerbbs.com/084ae308b6cc58704e8982e61b213408\" tg-width=\"640\" tg-height=\"162\">source: GameStop Corp.</p>\n<p>The company's plan is to strip costs out of the business by closing stores, cutting expenses, and devoting its resources to optimizing its product footprint while fleshing out the logistics needed for an e-commerce centric market strategy. These efforts remain in-motion. The company has closed roughly 1,000 stores through the end of 2020, andrecently leaseda 700K square-foot facility that will serve as a fulfillment center.</p>\n<p>To GameStop's credit, the business has seen signs of improvement. The company is currently debt free.</p>\n<p><img src=\"https://static.tigerbbs.com/575ba6c4954d66961e0a8550dcf561af\" tg-width=\"640\" tg-height=\"369\">source: YCharts</p>\n<p>The company has also raised capital with a timely equity raise in early 2021. GameStop raised $551 million on 3.5 million shares, averaging a price per share of $157. Considering the company has repurchased more than a third of its stock since spring 2019 at an average of $5.21/share, this is a phenomenal move on GameStop's part. This newfound capital will be needed as the company's transformation efforts are far from over.</p>\n<p>Multiple Margin Pressures Threaten Profitability</p>\n<p>While successful e-commerce models can be powerful, the formation of the e-commerce model can be costly. Infrastructure needs to be put into place, and the digital marketplace brings competition from all over.</p>\n<p>GameStop's financials are in a much better place at present. However over the long term, its largest challenge in pivoting to e-commerce is making the model profitable over the long term. There are a number of concerns I have about GameStop's ability to do this.</p>\n<p><b>Smaller Scale</b></p>\n<p>E-commerce is a \"cut-throat\" business, where scale is your friend. GameStop is seeking an e-commerce model that will pit it against much larger competitors such as Amazon (AMZN), Walmart (WMT), and Target (TGT). These companies have significantly higher scale than GameStop, including larger revenues (and balance sheets).</p>\n<p>In a retail space where the product is commoditized (gaming hardware/software is the same regardless of where you buy from unless a developer partnership is in place), there is not room for much mark-up and the larger players can take more \"pain\" to take/protect market share.</p>\n<p><b>Product Mix</b></p>\n<p>Another concern I have with GameStop is the company's product mix moving forward. Game distribution continues to move increasingly digital, and is a trend that I don't see reversing. It's simply far too convenient for gamers because they can buy/pre-order a game, and it can be downloaded relatively quickly thanks to faster internet speeds available today.</p>\n<p>This has been reinforced by console makers. The Xbox Series S lacks a disc drive, and the PlayStation 5 also offers a variant that does not include a disc drive.</p>\n<p>GameStop knows that software sales are in secular decline, and has indicated an intention to focus on hardware and accessories including:</p>\n<ul>\n <li>Computers</li>\n <li>Monitors</li>\n <li>Game Tables</li>\n <li>Mobile Gaming</li>\n <li>Gaming TVs</li>\n</ul>\n<p>The problem for GameStop, is that these declining software sales carried the highest margins for the company.</p>\n<p>From GameStop's 2020Q4 earnings call:</p>\n<blockquote>\n <i>\"From a product margin standpoint, overall gross margins were 21.1%, down 610 basis points from our more software-led 27.2% gross margin in the fiscal fourth quarter last year. The decline was driven by an expected increase in mix of lower margin hardware sales, a continued increase in industry-wide freight costs, credit card processing fees driven by our higher penetration of e-commerce sales, and a broader promotional stance.\"</i>\n</blockquote>\n<p>So GameStop is pivoting to lower margin, higher cost items - probably because it knows it has to. This isn't to say that GameStop can't pull it off, but the conflict is quite obvious.</p>\n<p><b>GameStop Needs To Repair Its Brand Image</b></p>\n<p>Perhaps the largest question mark I have about GameStop - even more than the economics of its future business model, is the company's branding. GameStop talks about being this gamer-centric, customer driven model that consumers love.</p>\n<p>However, this doesn't seem to be the current state of GameStop's brand. The company has been poked fun at on the internet for its \"low-ball\" offers on gamer trade-ins.</p>\n<p>GameStop also possesses a NPS (net promoter score) of -6according to Comparably. As a gamer myself, I had a \"bad taste\" in my mouth when sourcing my Xbox Series X. GameStop often tied its inventory of next-generation consoles to large expansive bundles that included high margin games and accessories that many consumers didn't want. If GameStop expects to become a modernized \"go-to\" shopping experience for gamers, they have work to do in the brand power department.</p>\n<p><b>The Long Path To Profitability Is Too Large A Risk</b></p>\n<p>GameStop can certainly address these concerns over time. The company's recent equity raise if anything, buys them time to try and execute this transition. This is also asking investors in GameStop to take on risk. While shares of GameStop have pulled back considerably, the stock still trades at $143 per share, multiples of what it did as recently as the beginning of the year.</p>\n<p><img src=\"https://static.tigerbbs.com/fcc11261f3b8202eaa6b86d9f99c97b0\" tg-width=\"640\" tg-height=\"375\">source: YCharts</p>\n<p>The company is not a growth stock, and therefore should be valued on earnings. But GameStop is losing money, and will not turn a profit anytime soon. Analysts see the company steadily getting closer to break even, breaking that barrier in FY2024 (three years from now).</p>\n<p><img src=\"https://static.tigerbbs.com/fa4040ac389c6925d97545645ac30c98\" tg-width=\"640\" tg-height=\"226\">source: Seeking Alpha</p>\n<p>But if GameStop achieves 2024 estimates of earning $1.35 per share, that means that the stock's current valuation is a whopping 106X 2024 earnings(!). Investing is about risk and reward, and I can't make the case to pay that valuation. Investors have to essentially give up the opportunity cost of investing elsewhere over this time frame, hope that GameStop can execute successfully, and then wait longer for the business to grow into its valuation over a 5+ year time horizon. Frankly, it seems silly.</p>\n<p><b>Wrapping Up</b></p>\n<p>When you put all of this together, GameStop offers a terrible risk/reward to investors. In a worst case scenario, GameStop fails to execute its e-commerce model and goes out of business. In a best case scenario, investors will wait years to justify the current valuation. When the outcome is lose/lose, I would rather not play at all.</p>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>GameStop: Why The 'Blockbuster' Of Gaming Will Eventually Fail</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nGameStop: Why The 'Blockbuster' Of Gaming Will Eventually Fail\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-05-12 19:55 GMT+8 <a href=https://seekingalpha.com/article/4427260-gamestop-why-blockbuster-gaming-eventually-fail><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nGameStop has been a highly debated stock after a surge of retail interest turned the company into a \"meme stock\" and drove shares into triple figures.\nThe company is pivoting to e-commerce ...</p>\n\n<a href=\"https://seekingalpha.com/article/4427260-gamestop-why-blockbuster-gaming-eventually-fail\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"GME":"游戏驿站"},"source_url":"https://seekingalpha.com/article/4427260-gamestop-why-blockbuster-gaming-eventually-fail","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1154735458","content_text":"Summary\n\nGameStop has been a highly debated stock after a surge of retail interest turned the company into a \"meme stock\" and drove shares into triple figures.\nThe company is pivoting to e-commerce and has admittedly cleaned up its balance sheet nicely.\nThe long-term problem is that the company faces margin pressures from a number of angles. The current valuation and business challenges present a \"lose/lose\" outcome to investors.\n\nNow considered a \"meme stock\"; gaming retail company GameStop Corp.(NYSE:GME)has seen volatility in its share price over the past year. The stock has bounced between a vast range from low single digits, to more than $480 per share. While much of the excitement has faded away, the stock still trades at more than $140 per share. A business transformation is underway, led by Ryan Cohen, the former CEO and co-founder of animal products e-commerce leader Chewy(NYSE:CHWY). This has many retail investors holding shares in anticipation of a long term rebirth, with GameStop becoming an e-commerce titan of the gaming industry.\nUnfortunately, the data doesn't point to this outcome. While the company has stabilized itself and now operates on a debt free basis, the company's needed capital investments to flesh out an e-commerce strategy in addition to secular tailwinds lead me to believe that GameStop will be unable to sustain long term profitability. In the event of successful execution, the valuation will take many years to be justified. For these reasons, GameStop is a very poor long term investment. We will outline our bearish thesis below.\nGameStop Forced To Go To E-Commerce\nGameStop has long been known among consumers as a brick and mortar centric video game retailer. When I was growing up (I'm now in my early 30s), I used to camp out in front of GameStop at midnight, waiting with friends for the latest release of our favorite games. While you could get games at nearly any retailer, the ability to trade in old games for store credit, and large product selection found at a gaming focused store such as GameStop was compelling for me as a gamer.\nToday, the way in which gaming is delivered to the consumer is far different. In many cases, games can be purchased (and pre-ordered) digitally. Fast internet speeds mean that games can be downloaded and played within minutes or sometimes a few hours. The rise of Amazon has brought the shopping experience to one's fingertips.\nThese secular changes have slowly deteriorated GameStop's store traffic and resulting revenues.\nsource: YCharts\nThis significant decline in GameStop's business has forced the company to evolve, and begin the journey of shifting towards an e-commerce model. This has been led by an activist investor in Chewy co-founder Ryan Cohen, who got involved with GameStop in September of 2020.\nsource: GameStop Corp.\nThe company's plan is to strip costs out of the business by closing stores, cutting expenses, and devoting its resources to optimizing its product footprint while fleshing out the logistics needed for an e-commerce centric market strategy. These efforts remain in-motion. The company has closed roughly 1,000 stores through the end of 2020, andrecently leaseda 700K square-foot facility that will serve as a fulfillment center.\nTo GameStop's credit, the business has seen signs of improvement. The company is currently debt free.\nsource: YCharts\nThe company has also raised capital with a timely equity raise in early 2021. GameStop raised $551 million on 3.5 million shares, averaging a price per share of $157. Considering the company has repurchased more than a third of its stock since spring 2019 at an average of $5.21/share, this is a phenomenal move on GameStop's part. This newfound capital will be needed as the company's transformation efforts are far from over.\nMultiple Margin Pressures Threaten Profitability\nWhile successful e-commerce models can be powerful, the formation of the e-commerce model can be costly. Infrastructure needs to be put into place, and the digital marketplace brings competition from all over.\nGameStop's financials are in a much better place at present. However over the long term, its largest challenge in pivoting to e-commerce is making the model profitable over the long term. There are a number of concerns I have about GameStop's ability to do this.\nSmaller Scale\nE-commerce is a \"cut-throat\" business, where scale is your friend. GameStop is seeking an e-commerce model that will pit it against much larger competitors such as Amazon (AMZN), Walmart (WMT), and Target (TGT). These companies have significantly higher scale than GameStop, including larger revenues (and balance sheets).\nIn a retail space where the product is commoditized (gaming hardware/software is the same regardless of where you buy from unless a developer partnership is in place), there is not room for much mark-up and the larger players can take more \"pain\" to take/protect market share.\nProduct Mix\nAnother concern I have with GameStop is the company's product mix moving forward. Game distribution continues to move increasingly digital, and is a trend that I don't see reversing. It's simply far too convenient for gamers because they can buy/pre-order a game, and it can be downloaded relatively quickly thanks to faster internet speeds available today.\nThis has been reinforced by console makers. The Xbox Series S lacks a disc drive, and the PlayStation 5 also offers a variant that does not include a disc drive.\nGameStop knows that software sales are in secular decline, and has indicated an intention to focus on hardware and accessories including:\n\nComputers\nMonitors\nGame Tables\nMobile Gaming\nGaming TVs\n\nThe problem for GameStop, is that these declining software sales carried the highest margins for the company.\nFrom GameStop's 2020Q4 earnings call:\n\n\"From a product margin standpoint, overall gross margins were 21.1%, down 610 basis points from our more software-led 27.2% gross margin in the fiscal fourth quarter last year. The decline was driven by an expected increase in mix of lower margin hardware sales, a continued increase in industry-wide freight costs, credit card processing fees driven by our higher penetration of e-commerce sales, and a broader promotional stance.\"\n\nSo GameStop is pivoting to lower margin, higher cost items - probably because it knows it has to. This isn't to say that GameStop can't pull it off, but the conflict is quite obvious.\nGameStop Needs To Repair Its Brand Image\nPerhaps the largest question mark I have about GameStop - even more than the economics of its future business model, is the company's branding. GameStop talks about being this gamer-centric, customer driven model that consumers love.\nHowever, this doesn't seem to be the current state of GameStop's brand. The company has been poked fun at on the internet for its \"low-ball\" offers on gamer trade-ins.\nGameStop also possesses a NPS (net promoter score) of -6according to Comparably. As a gamer myself, I had a \"bad taste\" in my mouth when sourcing my Xbox Series X. GameStop often tied its inventory of next-generation consoles to large expansive bundles that included high margin games and accessories that many consumers didn't want. If GameStop expects to become a modernized \"go-to\" shopping experience for gamers, they have work to do in the brand power department.\nThe Long Path To Profitability Is Too Large A Risk\nGameStop can certainly address these concerns over time. The company's recent equity raise if anything, buys them time to try and execute this transition. This is also asking investors in GameStop to take on risk. While shares of GameStop have pulled back considerably, the stock still trades at $143 per share, multiples of what it did as recently as the beginning of the year.\nsource: YCharts\nThe company is not a growth stock, and therefore should be valued on earnings. But GameStop is losing money, and will not turn a profit anytime soon. Analysts see the company steadily getting closer to break even, breaking that barrier in FY2024 (three years from now).\nsource: Seeking Alpha\nBut if GameStop achieves 2024 estimates of earning $1.35 per share, that means that the stock's current valuation is a whopping 106X 2024 earnings(!). Investing is about risk and reward, and I can't make the case to pay that valuation. Investors have to essentially give up the opportunity cost of investing elsewhere over this time frame, hope that GameStop can execute successfully, and then wait longer for the business to grow into its valuation over a 5+ year time horizon. Frankly, it seems silly.\nWrapping Up\nWhen you put all of this together, GameStop offers a terrible risk/reward to investors. In a worst case scenario, GameStop fails to execute its e-commerce model and goes out of business. In a best case scenario, investors will wait years to justify the current valuation. When the outcome is lose/lose, I would rather not play at all.","news_type":1},"isVote":1,"tweetType":1,"viewCount":507,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"lives":[]}
