Author Topic: GME - Game Stop Corp  (Read 15258 times)

IanBezek

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Re: GME - Game Stop Corp
« Reply #50 on: January 10, 2019, 05:56:56 AM »
I just sold my GME for a 15% loss including dividends. Happy to get out on this decent M&A bump. Company has clearly been for sale for a year now and there hasn't been a rush by PE to buy it. Business is eroding, the mobility acquisition was really bad, and malls are dying faster than I anticipated when I put this position on (2017). GME is in a LOT of bad malls. With Bon-Ton and Sears dead and JCP likely following soon, hundreds of low-end malls are closing within a few years now.


Foreign Tuffett

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Re: GME - Game Stop Corp
« Reply #51 on: January 18, 2019, 09:51:51 AM »
9W holiday season results announced today. A close inspection of the press release reveals that it doesn't have sufficient info to enable true Y/Y comparisons. Market clearly likes that management reaffirmed adjusted EPS guidance. I'm significantly more circumspect, for the following reasons:

- Used/value segment Y/Y sales declines continue to accelerate. I continue to believe this segment is in secular decline.

- GME's accessories segment has been a huge beneficiary of the gaming headset boom. While these do have a tendency to break and need replacement, at some point the market is going to be saturated and growth will decline, or even halt entirely

- Growth in collectibles revenue is decelerating rapidly

- 2018 adjusted EPS guidance includes the Spring Mobile segment.

Foreign Tuffett

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Re: GME - Game Stop Corp
« Reply #52 on: January 29, 2019, 06:45:04 AM »
No sale. Looks like no one wanted to finance a buyout.

"GameStopís Board has now terminated efforts to pursue a sale of the company due to the lack of available financing on terms that would be commercially acceptable to a prospective acquiror."


https://gamestop.gcs-web.com/news-releases/news-release-details/gamestop-concludes-process-pursue-sale-company

5xEBITDA

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Re: GME - Game Stop Corp
« Reply #53 on: January 29, 2019, 11:15:22 AM »
Geez, says something if Apollo/Sycamore can't figure out how to make this work. The '19 bonds look really good for safe ~9 month paper at 5.5%.

Foreign Tuffett

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Re: GME - Game Stop Corp
« Reply #54 on: March 04, 2019, 03:08:20 PM »
To paraphrase "The American Dream" Dusty Rhodes: If you're bad, and you know you're bad, don't repurchase your own shares. I think they should just dividend out their excess cash instead of doubling down on a business that is largely in secular decline.

https://gamestop.gcs-web.com/news-releases/news-release-details/gamestop-declares-quarterly-cash-dividend-announces-intent

Foreign Tuffett

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Re: GME - Game Stop Corp
« Reply #55 on: April 02, 2019, 06:47:18 PM »
Another poor earnings report. Declines in the pre-owned games business continue to accelerate. Yes, they have lots of cash on the balance sheet, but due to working capital seasonality much of that cash will be gone when they release Q1 2019 results.

http://news.gamestop.com/news-releases/news-release-details/gamestop-reports-fourth-quarter-and-fiscal-2018-results-and

I agree with the activists that they may be able to cut some corporate-level SG&A costs, but the stores are already run on minimal hours + GME already pays low wages, even by retail standards.

Finally, based on their "2019 Outlook" we can expect more disappointment. The problem, as I've mentioned previously in this thread, is that the core of their business is in structural decline. Yes, they can sell collectibles and other things in their stores, but many (most?) of their stores are so small that they quickly become "unshoppable" when you fill them with physical merchandise.

What they need to do is be more aggressive with store closings. There is a group of customers who still do the buy-trade-buy thing. GME needs to try migrate these customers to a significantly smaller store base. 


valuedontlie

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Re: GME - Game Stop Corp
« Reply #56 on: April 03, 2019, 05:02:48 AM »
A local investor near me had great success owning a nationwide movie distributor during the height of Blockbuster's struggles. The business pooped out cash and he sucked it dry by taking distributions and keeping overhead to the bone. Wound up being a phenomenal IRR by the time the business had to permanently close.

GME sort of interesting given the B/S isn't bad. These guys have wasted a ton of money in buying back stock and that should stop immediately. This business will eventually be game over.

That said, keeping costs low and adopting a slow-playing liquidation might entice me. Take a variable payout policy and distribute all cash back to shareholders every year until the whole thing goes kaput. Recognize it for what it is and stop trying to chase "growth"

Wishful thinking...