Name the stock that has a forward PE of 5, a dividend of about 10%, a market-cap of only 1.5B... and yet has sales of over 9B. (for a price/sales ratio of .16) And its not an obscure biotech, gold, or energy play. Very familiar name.
What was their 392 mln "unusual expense" in Q4-2017? And... call me a skeptic, but 1.3 bln in inventory... what's that about? It's a games company right? What's the inventory? CDs?
Asset and good will impairment write downs. They do sell games and I'm sure that's the majority of their inventory, but they also own Simply Mac, ThinkGeek, authorized AT&T wireless reseller (Spring Mobile), and some other misc branded stores. Their physical game sales have been dwindling with the rise of electronic distribution (ie Nintendo has the e-shop, Microsoft the xbox store, Playstation the playstation store) where people can buy and download games from their home. However, GME's revenues in gaming related merchandise (think t-shirts, mugs, action figures, etc) has been increasing. AT&T changed their payout structure, which hurt them in their AT&T wireless stores. I generally don't hold stocks (because I'm awful at picking them, so take this for what it's worth), but I actually decided to buy them, sell call options, and collect the dividend starting back in Feb. I'm currently slightly positive, but the underlying moves so much it can be +- $2 (on a roughly $14.50 stock) within a week. My reasons for buying them aside from what I already listed: 1) Trading in used games is something people tended to do. While electronic distribution is more convenient, it's usually the same price for the consumer and you can't ever sell/trade/let a friend borrow a game. I actually thought there would sort of be a come back in physical game purchases after people start to realize the downsides of electronic purchases, but that has yet to happen. 2) With Gamestop's massive inventory of games, I expected them to create a Gamefly like service (game rental). They already have thousands of distribution points by way of their stores, they already have the used inventory, it would cost them little to start up such a service and if they allowed people to swap their rented game in stores, it would also increase foot traffic which could also result in selling more gaming merchandise (ie t-shirts, keychains, etc). It would also help to keep their brand in gamer's minds, which may lead to increased sales of games and merchandise. I'm still shocked they've not done this yet. 3) I actually thought they'd get acquired. I wasn't sure by whom. I was actually thinking Valve Software (private company). Valve basically owns electronic distribution on the PC and has a very good reputation among PC gamers. A few years ago Microsoft tried to screw them (by way of making the new version of DirectX optimizations only work on games purchased through the Microsoft store, which would have significantly hurt Steam -- Valve's distribution platform). One way for them to kind of take revenue from Microsoft would be to take physical game sales from Microsoft's xbox store (ie get in to physical game sales for console gaming). Gamestop already has the stores. Valve's reputation would be a great boost to Gamestop. On top of that, as I stated, Gamestop's physical game sales are going down, but merchandise sales are going up. Valve has also been increasingly involved in merchandise sales. Valve is a private company with billions of dollars available. I think it'd be a good fit, but I don't really have a good reason that Valve specifically would buy them. I think they'd be a good purchase for any of the game publishers who are trying to compete with Valve's Steam platform on the PC side of things and wants a bigger piece of a sale than they get by having their games sold via the console manufacturers online stores. Furthermore these games publishers would also benefit from the merchandise distribution.
@Lee- it seems to me that they might be the "Blockbuster" type that has too many physical stores and inventory etc. I heard that some are already thinking about a Netflix for games... that will hurt. If something like that will be linked up with Xbox/Playstation etc, will make physical games obsolete. That said, I don't know their business really. I guess any hardware related items will be on inventory... but 1.3 bln inventory on a 1.5 bln market cap seems excessive.
They don't own the land underneath.... or I would be all over this pig as REIT play. Like Macys at $17. https://elitetrader.com/et/threads/macys.314406/