GamestopWhat do you think of what is going on with this stock. I understand vaguely that the shares have been shorted to the point where more were sold than were available. I understand that if you bought shares and put them in your name this would prevent loans to create further shorts on those shares. Now they seem to be manipulating holdings in IRA accounts to free up shares for further shorts. What is your feelings on this investment? Thanks Travis
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I think it’s a slowly-dying company whose revenue will continue to decline, and I’d be surprised if it ever becomes meaningfully profitable again. This is an established company with the leading brand in its space, but the stores are approaching irrelevance now and they haven’t posted a profit in five years.
That doesn’t necessarily mean anything for the stock, though. The stock is just a trading battleground, and traders love it, so there may be opportunities to catch “short squeezes” or profit from the enthusiasm of day traders… but it’s about as predictable as a Mexican jumping bean. Trying to assess whether more shares could be shorted, or what the rules or or how the Man is trying to keep the small traders down is a losing game — some people will get lucky, again, and maybe there will be another Reddit moment, but I think the fact that GameStop is trading as a $7 billion company is silly.
The short sellers are right about the company, I expect, though I have no idea when traders might give up on trying to spike another short squeeze and get the stock to soar again, and they did raise enough cash in 2021 to keep the story going for a while. The daydreams about having another moment for GME and the other meme stocks that mimics 2021 are persistent, and who knows, maybe it will happen again. Wading into the GME story is like walking into a casino, not like analyzing a company’s prospects or its income statement, and you should never walk into a casino and assume that you have an edge.