GameStop fans have made it clear that they ‘like the stock’, and not even the company’s first results since the Reddit – powered rally will change that.
The videogame retailer, the OG stock, is expected to report its fourth-quarter earnings on Tuesday. But while Wall Street is taking a cautious approach to valuing the brick-and-mortar business, rocket emojis are apparently not subject to the usual laws of physics and finance. WallStreetBets users on Reddit ‘diamond hands’ board say they’m ready to buy more GameStop GME,
regardless of what Tuesday’s quarterly results say about fundamentals.
“Damn this volume is so low,” a Reddit user moaned Monday morning, analyzing the market’s quiet precedent and concluding that “people are waiting for earnings to buy.”
This sentiment was reflected by another user when GameStop tumbled more than 5% in early trading, writing that ‘200 is the new $ 40. Buy before we move to $ 500. ”
GameStop is the first official statement on its financial picture since the manic march in January increased the share by more than 1,641% in a matter of days. send GameStop shares “to the moon.”
This rally took place despite the results of GameStop for the third quarter of 2020. In December, the company announced that sales fell by more than $ 1 billion on a year-on-year basis, a decrease of 30 , 2%, which creates a huge short interest in the stock and gives more power to activist investor Ryan Cohen, who publicly shared his opinion that GameStop’s sales model is outdated and needs to be updated, with the move to digital sales .
For mainstream viewers of GameStop shares, expectations remain low, but Tuesday offers Cohen the first opportunity to articulate his vision. Cohen, the co-founder of Chewy Inc., became a member of the board of directors of GameStop in early 2021, and so far his communication has been limited to social media memes, including this one where he shares the image of ‘ tweeted a McDonald’s ice cream. cream cone:
And this one, which sketches the buddy-comedy movie ‘Dumb and Dumber’:
“Whether it’s estimate or not is a big point,” said Thomas H. Kee Jr., founder of Stock Traders Daily. “If they do not make an announcement, it will be terrible for the stock.”
GameStop is expected to report earnings per share of $ 1.35, or $ 88 million, on $ 2.211 billion in revenue for the fourth quarter, according to the consensus estimates of six analysts surveyed by FactSet. These estimates have been steadily declining since October, when consensus estimates in the fourth quarter predicted revenue of $ 1.80 on revenue of $ 2.52 billion.
Wedbush Securities analyst Michael Pachter quoted the Wall Street Journal as saying that it was impossible for GameStop’s results to reflect the valuation of about $ 14 billion.
‘There is not an institutional investor in life who is considering going long [on the stock at] at $ 200, ”Pachter said. “It’s not a dot-com just starting out.” In fact, GameStop was founded in 1984 in Dallas under the name Babbage’s Etc.
In any case, GameStop’s Reddit army is not subtle about the contempt of Wall Street analysts.
“Must love all these guys who say it’s over and to sell,” a user wrote Monday afternoon, adding sarcastically: “I’m sure you were the same guys who predicted the first two nails?”
“It’s good if we dive a little bit today,” thought another user. “Just make things juicy for the merit / conference.”
For Kee, a former years-long MarketWatch contributing columnist, there is one way for GameStop to surprise the market: “Unless they turn to a digital model, they will collapse and fail,” he said.
“There’s no way to justify the share price, but they may come close when they announce a major event, such as a hub to digital.”
Regardless of what GameStop reported Tuesday, the company set a new benchmark to watch its stock value move with parabolic volatility between earnings calls, a market phenomenon best summed up by another WallStreetBets user on Monday.
“I learned 99% of the stock market knowledge based on GME,” the user wrote. “Which means I have to learn everything again after GME, because it doesn’t seem like a normal situation to me.”