What do you make of the rapid uptick that we've
seen when it comes to Gamestop stock price in recent
weeks. I look at these charts and I start
to think, Hey, we're back in January of
2021 again, good morning Tim Katie, Thanks for
having me back. Um, I don't know if
I'm gonna go that far to call it Jan 21
. There's no stem ease hanging out like you said
, demand destruction with, you know, gas and
grocery prices pinching consumers pocketbooks is uh, I think
probably taking some of that ammunition out of retails hands
. But you're right. It's been an incredible pivot
from reaching the low points since in mid March.
Right? So speaking about games stop specifically, I
think the catalyst was you had earnings which came in
top line results were a bit better than expected.
Everything else was rather worse, which in the context
of what Cohen laid out in the November 2020 letter
before he even took things over. He always said
it's going to be a very long oriented transformation like
he did with chewy, you know, you were
talking about chewy in the short term just now,
but, but he was always a very long term
oriented approach. We're going to forsake short term profits
. Just like the Jeff Bezos mantra and the anticipation
that will grow a long term rabid consumer base and
no Gamestop took it on the chin and gross margins
, they were down to like 17% in the fourth
quarter. But I think that, that's in line
with their transformation, they're looking to regain consumer confidence
, rebuild their consumer base. They're seeing some results
of that, their power awards, pro paid members
are up 30% over the years. So we're seeing
some early results, I think from, from that
reoriented focus on drawing back in gamers. But really
it's a sentiment story, right? Uh, Cohen
bought 100,000 shares, pushing his ownership stake up to
11.9% On 22 March. And if, if you
look at the chart that day, it seems like
other people might have had a sense something was happening
to Because the stock closed up at 123 up from
, I think 95 or so. And it continued
on, There were some incremental insider buys from other
board members and me mania seemed to be back on
the menu. Right? And there's so much to
dig into their, but like you laid out,
there's a lot of fundamental news about Gamestop, about
this revitalization effort. But like you also said,
it's a very sentiment driven stock. And given the
gains that we've seen in the past couple of weeks
, I'm looking at 125% gains since March 14th or
so. Who do you think is driving this?
I mean, do you think this is mostly retail
investors or do you think more institutional Wall Street types
are getting involved as well. It's, it's clearly
a combination. And and if somebody could tell me
precisely the answer to that question, I think we'd
all have a better sense of what's going on.
You know, if you look at the board like
Wall Street bets and and just the different Reddit chatter
all over the place, um you know, I'm
in several discords and I follow the chatter and yeah
, you can tell there's retail sentiments back up.
People are excited about the the price movements, right
? A lot of these people are more speculators than
investors, but there's obviously some institutional moves, they
move like a basket, retail doesn't really trade.
Um, I don't think retail is doing high frequency
trading on multiple names at once. Uh, it
does seem like there's some algorithmic traders, whether those
are high frequency traders that are just noting that these
stocks move in tandem, right? There's obviously etfs
, you noted the Round Hill E. T.
F. That that has all these stocks in the
basket. So, uh, they kind of move
at the hip even though, you know, for
all intents and purposes, AMC entertainment has nothing to
do with Gamestop from a, from a fundamental perspective
, but you're totally right. They they very much
move in tandem. One other thing I would note
is, I was looking at some of the short
interest and short dollars outstanding. I know Bloomberg um
sources data from S three partners and I was looking
at S three's data and for example game stops short
interest dollars outstanding had gotten down to a low since
january of 21 just shy of a billion per S
three. And that has inflated rather rapidly as you
noted with the price increase and it's back over For
for Gamestop. It was as of this morning almost
three billion and AMC. It was a similar story
, not quite the same. Um That combination of
both short interest rising as this price has increased somewhat
as well as of course the price rising the dollars
out. So so you've got, I would say
for the whole basket, I didn't look at the
entirety of the basket, but you're talking upwards of
high single digit billions of dollars incrementally short, just
as a byproduct of the price increases. And I
saw yahoo reporting um Bill Gross talking about Gamestop and
AMC again and talking about them like lottery tickets and
I understand where Bill is coming from and I think
Bill actually has it right where he, his firm
is writing, you know, deep out of the
money Call options to generate income on these lottery tickets
happily selling them to the speculators. In the long
run. I think Bill comes out ahead in almost
all cases, but obviously he's getting burnt this past
week or two. We'll rob before we let you
go oftentimes we do talk about Gamestop and AMC sort
of looped in together in a basket of meme stocks
. And I'm wondering AMC since about March 14 is
also up triple digits, 100%,, Why is it
a mistake to to look at these two companies together
in your opinion? Look, I don't want to
poo poo AMC too much, but but I will
that they're not a gold miner. Um There's no
transformation, there's a whole lot of hubbub blue that
Adam Aaron is successfully uh engaging in to continue to
raise sentiment and interest and excitement in his eighth bass
. But there's not actually a fundamental business transformation going
on at AMC. And while AMC may successfully stave
off insolvency as a byproduct of the capital raises and
their ability to maintain this high share price and likely
dilute shareholders further in 22. While Gamestop did have
two successful at the market offerings in 2021 to raise
capital and and really successfully enable them to endeavor on
this transformation. I would argue that Gamestop does have
a real strategy as I was laying out. Yes
, they're they're taking short term pain which with this
balance sheet revitalization, they are able to in the
margin area to attract customers to grow revenues. They've
been clear now for several quarters that that's the measures
shareholders should take a look at while they have obviously
been very coy and quiet um and rather opposite of
Mr Aaron, I do think that a year or
two from now, it will will for example,
see their N. F. T. Platform will
be launched by the end of the fiscal second quarter
they announced in their earnings earlier this month. So
look, I could be wrong. Game stops transformation
could be a failure, but I would argue that
there is in fact a real transformation going on at
Gamestop, whereas with a m. C, it's
just a whole lot of fool's gold.