quick value cliff notes on $GME
1) dust has settled following 2021 meme stock era
2) need to separate this idea into: (1) fundamentals of core retail business; and (2) what will they do with their pile of cash
3) core retail biz was unprofitable from 2019-2024, but had $286m EBIT in FY25... how? mix shift (collectibles = higher margin), lower overhead, leases / store closures
3a) favorable lease situation: 53% of stores up for lease renewal in FY26... potential for further improvement at retail biz as they cut underperforming locations?
4) balance sheet has $9bn cash & securities and $4.2bn convertible debt at 0% interest = ~$10.70/sh net cash & securities (ignoring bitcoin holdings)
5) company is led by CEO Ryan Cohen (google him for TL;DR) who is pushing for mega acquisition of an undervalued consumer business (rumors are $BBY)
6) up for shareholder vote is a LT stock incentive plan giving Cohen 171.5m shares in tranches at increasing levels of market cap + cumulative EBITDA hurdles
7) Cohen also takes zero cash comp, bonus, or ST incentive comp + owns ~9% of GME
8) at $22/sh, stock is trading at $11.30 net of cash & securities... core biz doing $0.64/sh pre-tax earnings so 17-18x earnings
Hmm...
Lots of value embedded in future capital allocation, but fundamental improvement is impressive... interesting to watch/speculate on what this could become
P.S. BBY deal makes a ton of sense, but then you'd own a levered BBY/GME retail chain spending next few years repaying debt, no?
