It's disturbing and dishonest how the media is painting an image where the day traders on WallStreetBets are the villains and the hedge funds shorting this stock to over 100% of float for over the past year and also purchasing large numbers of puts so market makers naked short to hedge are the victims.
The float has been over 100% shorted for over a year. The shorts could have easily covered or trimmed their position when the stock was trading in the $3-$4 range this spring and summer for a profit but they chose not to. Book value was estimated to be $10 at that time. News came out that improved GameStop's situation and its future appeared less bleak. There should have been short covering on each of those pieces of news: GameStop paying off debt early, Ryan Cohen first buying 5% of the company, then 13%, then joining the board with 2 other CHEWY executives, the new PlayStation and XBox consoles releasing and always being immediately sold out, the microsoft profit sharing deal, huge ecommerce growth yoy, etc. But the shorts chose not to cover at all! Short float remained the same at over 100% as more new people bought into the company on the good news.
Many people may not know this but a new CEO was hired 2 years ago: George Sherman, and he's been doing a good job of turning around the company by doing unsexy things like shutting down unprofitable stores like where there's 2 GameStops in a single mall and improving their supply chain logistics and ecommerce business. 95% of all GameStop stores are 4 wall ebitda profitiable was what they said on a conference call 2 years ago.
I would also like to point out GameStop is a highly cyclical business. It depends a lot on the 7 year playstation and xbox console cycle. Look back on the historic stock chart. People think it's failing because revenue declines year over year then the stock goes parabolic in the new console release year. It's like the console cycle isn't priced in until it hits people in the face.
yes this is 100% accurate. All these dummies laughing at ARK/Cathie Wood while she talked about Tesla/AMD/Biotech innovation years ago. WSB is far more educated compared to MSNBC/Jim Cramer crowd.
The float has been over 100% shorted for over a year. The shorts could have easily covered or trimmed their position when the stock was trading in the $3-$4 range this spring and summer for a profit but they chose not to. Book value was estimated to be $10 at that time. News came out that improved GameStop's situation and its future appeared less bleak. There should have been short covering on each of those pieces of news: GameStop paying off debt early, Ryan Cohen first buying 5% of the company, then 13%, then joining the board with 2 other CHEWY executives, the new PlayStation and XBox consoles releasing and always being immediately sold out, the microsoft profit sharing deal, huge ecommerce growth yoy, etc. But the shorts chose not to cover at all! Short float remained the same at over 100% as more new people bought into the company on the good news.
Many people may not know this but a new CEO was hired 2 years ago: George Sherman, and he's been doing a good job of turning around the company by doing unsexy things like shutting down unprofitable stores like where there's 2 GameStops in a single mall and improving their supply chain logistics and ecommerce business. 95% of all GameStop stores are 4 wall ebitda profitiable was what they said on a conference call 2 years ago.
I would also like to point out GameStop is a highly cyclical business. It depends a lot on the 7 year playstation and xbox console cycle. Look back on the historic stock chart. People think it's failing because revenue declines year over year then the stock goes parabolic in the new console release year. It's like the console cycle isn't priced in until it hits people in the face.