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GameStop, the American video game retailer, has surprisingly good business fundamentals.

entremet

entremet

You wouldn't toast a NES cartridge
Member
Oct 26, 2017
60,613
I know they were (are?) more known for their meme stock shenanigans of late, but I was doing some research and noticed the following things:

  • New CEO cofounded Chewy, which is an e-commerce juggernaut. This guy know his stuff. Chewy is an amazing company and took on Amazon incredibly well. Check out this article on how they did it
  • This CEO also takes no salary, so he's incentives are more directly tied to company performance. (Yes, I know many CEOs do this, Elon for example.)
  • They virtually have no debt.
  • They have nearly 60M PowerUp members, with around 10 percent paying for the Pro, which is decent ARR.
  • Digital. Yeah, I don't buy physical games myself, but GS still sells more gaming stuff than Best Buy. Best Buy was supposed to eat their lunch when BB entered the used gaming market--this has not happened.
Their growth is a concern, especially as digital takes over. I'm not giving stock buying advice here. I don't buy invididual stocks either (VOO all day, baby). Just as a business, I'm pretty surprised at their decent fundamentals. It's very hard for a company with basically zero debt to die--unless a PE firm buys them up and ruins them.
 
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Deleted member 61531

Banned
Nov 19, 2019
10,231
I think the fact that they still exist at all is a sort of weird testament to something going right.

I used to love it there but now I dread going in, and my experiences have degraded in a basically linear way over the years. Except that time they gave me Dualsense Edge trade in credit for a broken standard Dualsense...that was a good day.

But it's obvious that all of the things many of us don't like about them (i.e. becoming The Funko Store etc.) must be paying the bills.
 
hydro94530

hydro94530

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Oct 27, 2017
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This thread outta go well lol.

The way they treat their customers and they're store employees is pretty bad; shit pay, strenuous requirements in order to get hours, lying to customers, selling used games as new and the list goes on.
 
OP
OP
entremet

entremet

You wouldn't toast a NES cartridge
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Oct 26, 2017
60,613
nihilence said:
Aren't they debt-free because of the meme status they had
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I believe so. They also have a nice warchest now too. Not Apple level. But they have 1.3B, with a B lol. In the bank.

That's way better than most specialty retail.

Remember Bed, Bath & Beyond? They were hobbled with debt for many years until they succumbed.
 
pink

pink

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Oct 27, 2017
6,121
User warned: drive-by posting
/r/superstonk thread

is this financial advice?
 
Bear

Bear

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Oct 25, 2017
10,937
Physical media is a thing of the past, and the majority of what they sell now is gaming adjacent figures and Funko Pops and stuff. They won't be in business in 5 years.
 
stopmrdomino

stopmrdomino

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Jun 25, 2023
4,630
yeah no sorry i'm not about to suck off a corporation over their business sense when they pay minimum wage across the continent
 
OP
OP
entremet

entremet

You wouldn't toast a NES cartridge
Member
Oct 26, 2017
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pink said:
/r/superstonk thread

is this financial advice?
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I literally said it is not lol.

I'm just impressed at their business health. Kinda nuts as a long time gamer. I thought they were dead in the water.

Bear said:
Physical media is a thing of the past, and the majority of what they sell now is gaming adjacent figures and Funko Pops and stuff. They won't be in business in 5 years.
Click to expand...
Click to shrink...

They have 1.3B in the bank. They will be around for a decade at least, unless some PE firm buys them and saddles with tons of debt.
 
Joe

Joe

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Oct 25, 2017
8,675
entremet said:
I believe so. They also have a nice warchest now too. Not Apple level. But they have 1.3B, with a B lol. In the bank.

That's way better than most specialty retail.

Remember Bed, Bath & Beyond? They were hobbled with debt for many years until they succumbed.
Click to expand...
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If their big debt-free advantage is simply something that they sorta lucked into as part of a random Reddit meme, I don't think that speaks very well to the strength of their fundamentals.
 
OP
OP
entremet

entremet

You wouldn't toast a NES cartridge
Member
Oct 26, 2017
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Joe said:
If their big debt-free advantage is simply something that they sorta lucked into as part of a random Reddit meme, I don't think that speaks very well to the strength of their fundamentals.
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I'm also looking at their executive hires too.
 
pink

pink

The Fallen
Oct 27, 2017
6,121
entremet said:
I literally said it is not lol.

I'm just impressed at their business health. Kinda nuts as a long time gamer. I thought they were dead in the water.



They have 1.3B in the bank. They will be around for a decade at least, unless some PE firm buys them and saddles with tons of debt.
Click to expand...
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up only
 
jwhit28

jwhit28

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Oct 25, 2017
5,089
Last time I went to Gamestop, the one poor soul who worked there was assembling an oscillating fan because they told him the A/C would not be fixed.
 
bulbasort

bulbasort

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Oct 25, 2017
383
It's all thanks to this man.

ryqrchonnze21~2.jpg
 

Deleted member 61531

Banned
Nov 19, 2019
10,231
hydro94530 said:
This thread outta go well lol.

The way they treat their customers and they're store employees is pretty bad; shit pay, strenuous requirements in order to get hours, lying to customers, selling used games as new and the list goes on.
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Every time I think about the customer service situation, I'm genuinely gobsmacked.

"Sure you can go to those other retailers for these products, but will they...

...Ask you 20 unwarranted questions?
...Randomly tack on additional charges such as "insurance" and play it off as a mistake when you notice?
...Tell you they have no plans to carry the game you want unless you preorder?
...Give you the saddest, most pitiful puppy dog eyes in the world if you don't renew your Pro subscription, as if they are going to fired that very day and it will be your fault?
...Sell you an open box product for the price of a new one?"

It's just like...so many self-defeating strategies. Yet they persist, and I still find myself inside one from time to time.
 

Dis

Member
Oct 27, 2017
6,019
Not American but been inside their stores when visiting in laws. My favourite experience is when I took my brothers series s with me to the USA so I had some games to play in my free time when I was there for the month. After a few days I decided it would be easier to just go and buy a power cable for it that had a USA plug. Went into GameStop and asked if they had any expecting some third party power cable. They went and grabbed a power cable they had from somewhere and started to ring it up, I noticed it was an OG Xbox one power cable with the external power brick they wanted to sell me for $99 and went nah thanks and left haha.
 
Davilmar

Davilmar

Member
Oct 27, 2017
4,277
I never understood why people are so impressed with CEOs not taking salaries, especially when they are exorbitantly rich to begin with. Elon is the least risky since he's a multi-billionaire several times over. People like him and other CEOs rarely do things for money at that point. I'd actually be impressed if a young or "up and coming" leader with little money or resources refused a salary.
 
OP
OP
entremet

entremet

You wouldn't toast a NES cartridge
Member
Oct 26, 2017
60,613
Davilmar said:
I never understood why people are so impressed with CEOs not taking salaries, especially when they are exorbitantly rich to begin with. Elon is the least risky since he's a multi-billionaire several times over. People like him and other CEOs rarely do things for money at that point. I'd actually be impressed if a young or "up and coming" leader with little money or resources refused a salary.
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It's not so much about it being a charity thing.

It's more that the CEO has an incentive to improve the value of the company. He's not just some "career CEO" looking for fat checks.

Compare that to some other prominent CEO hires of troubled retailers.
 
hydro94530

hydro94530

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Oct 27, 2017
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EntelechyFuff said:
Every time I think about the customer service situation, I'm genuinely gobsmacked.

"Sure you can go to those other retailers for these products, but will they...

...Ask you 20 unwarranted questions?
...Randomly tack on additional charges such as "insurance" and play it off as a mistake when you notice?
...Tell you they have no plans to carry the game you want unless you preorder?
...Give you the saddest, most pitiful puppy dog eyes in the world if you don't renew your Pro subscription, as if they are going to fired that very day and it will be your fault?
...Sell you an open box product for the price of a new one?"

It's just like...so many self-defeating strategies. Yet they persist, and I still find myself inside one from time to time.
Click to expand...
Click to shrink...

I feel I've heard all of this at some point too over the years lol. I feel bad for some the workers I've met over the years and I also still wander in on occasion just to check it out.

So many toys and non-game things in Gamestops these days lol.
 
Dyle

Dyle

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I would strongly suggest you look at the history of Chewey's stock price again
 
MJForum Poster

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I always want to pop in a Gamestop and just browse but there's nothing for me to browse anymore. The game prices are always the same - full price new, maybe $5 off used. They have no older games to peruse in a bargain bin sort of way. 70% of the store is Funko Pops, t-shirts, and video game themed plush toys or stuffed animals
 
Diarrhea Day-Lewis

Diarrhea Day-Lewis

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Oct 27, 2017
20,783
They suck as a corp but if they vanished we would lose used games market. Publishers and other corporations are salivating at this idea, as an excuse to move 100% digital and hope consumers don't care

But yes they are surprisingly resilient as a business
 
oreomunsta

oreomunsta

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OP should check out Folding Ideas. Dan Olson just launched a massive video about the Gamestop frenzy, and covers the Chewey guy

He's not very impressive at all
 

Deleted member 6263

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I just watched the Folding Ideas video on gamestop and...I don't think Ryan Cohen is the genius business guy that superstonk makes him out to be.
 
Jakisthe

Jakisthe

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Oct 25, 2017
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Davilmar said:
I never understood why people are so impressed with CEOs not taking salaries, especially when they are exorbitantly rich to begin with. Elon is the least risky since he's a multi-billionaire several times over. People like him and other CEOs rarely do things for money at that point. I'd actually be impressed if a young or "up and coming" leader with little money or resources refused a salary.
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This. Any worthwhile CEO would recognize that they can make *far more* through stock-based comp than they could in cash. Interpreting "He's not taking a salary!" as some big secret growth move - or some sort of penance, like with Iwata - is like a bingo square for people who don't know how finance works.

Same for startups, for what it's worth. You want to see someone going big on a company? Someone who doesn't take equity. That's impressive. And almost never happens, since for all the good that would do in freeing up a cap table, it would also virtually ensure that the exec comes out with pennies. Either that, or they have a super onerous vesting structure with a predatory "accelerator program".

Anyway, these aren't really what I look for when I assess "business fundamentals", OP. Take debt, for instance. In corporate finance terms, debt follows an inverted curve for its effect on the weighted average cost of capital. That is to say, if you have no debt, and take on *some* debt, then the cost of capital goes down from the tax shield effect. You need to base it against the actual BS impacts and against the rest of the market.
 
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Deleted member 61531

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MJForum Poster said:
I always want to pop in a Gamestop and just browse but there's nothing for me to browse anymore. The game prices are always the same - full price new, maybe $5 off used. They have no older games to peruse in a bargain bin sort of way. 70% of the store is Funko Pops, t-shirts, and video game themed plush toys or stuffed animals
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One of the things that used to get me into gamestop is that they typically had games that Walmart etc. would not stock. I bought Disgaea 1 there on launch day.

Now wal-mart et. al. has expanded what they carry, while Gamestop has reduced their variety, so it's like their stock is identical 9 times out of 10. Hell, sometimes it's worse! I went looking for a physical copy of Breath of the Wild recently and the couple of Gamestops I checked didn't even have that.
 
vixolus

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www.engadget.com

GameStop will get a cut of digital revenue from every Xbox it sells

Microsoft and GameStop have inked a deal that would give the latter a portion of the tech giant’s digital sales revenue for every next-gen Xbox the gaming retail chain sells. The companies published a press release about their collaboration last week, but it mostly focused on GameStop employees...
www.engadget.com www.engadget.com
"We are allowed to state we will receive a portion of the downstream revenue from any device we will bring into the Xbox ecosystem."

Did this ever pan out? This could potentially be a "path forward" for retailers selling digital consoles... to be given a percent for each console sold from that store..
 
1-D_FE

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Oct 27, 2017
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I thought the whole reasoning behind not taking salary is because profits on capital gains are taxed at a way lower rate. It's basically tax evasion for the rich. There's a place for capital gains, salary replacements for suits isn't it.
 
OP
OP
entremet

entremet

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Oct 26, 2017
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NightShift said:
How much money did you lose OP?
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I don't buy individual stocks lol.

1-D_FE said:
I thought the whole reasoning behind not taking salary is because profits on capital gains are taxed at a way lower rate. It's basically tax evasion for the rich. There's a place for capital gains, salary replacements for suits isn't it.
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He's not any getting compensation.

www.cnbc.com

GameStop names Ryan Cohen as CEO effective immediately, won't receive salary

The move comes more than three months after GameStop fired CEO Matthew Furlong.
www.cnbc.com www.cnbc.com

His firm owns a lot of the stock.
 
LJ11

LJ11

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Oct 25, 2017
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Last time I was in there a little kid was trying to buy v bucks with some cash and they wouldn't sell him the card without being a pro member. Is this a new policy? Like are they making you sub so you can purchase a stuff like that?
 
A Grizzly Bear

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Oct 27, 2017
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Jakisthe said:
This. Any worthwhile CEO would recognize that they can make *far more* through stock-based comp than they could in cash. Interpreting "He's not taking a salary!" as some big secret growth move - or some sort of penance, like with Iwata - is like a bingo square for people who don't know how finance works.

Same for startups, for what it's worth. You want to see someone going big on a company? Someone who doesn't take equity. That's impressive. And almost never happens, since for all the good that would do in freeing up a cap table, it would also virtually ensure that the exec comes out with pennies. Either that, or they have a super onerous vesting structure with a predatory "accelerator program".
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I think a lot of people would be surprised at how different the total comp and employment agreements are for senior execs. Which is weird given how much we hear about Golden parachutes and huge bonuses in the midst of layoffs.

Even if Cohen screws this whole thing up, he's still walking away with a payday. His incentive is mostly ego more than anything else. He couldn't stop talking about how much better he would be for the company during 2021 simply because of Chewy.
 
AstronaughtE

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Nov 26, 2017
10,329
That's great for them and their customers.

Maybe they could use these financials to entice me back but, until then, I'll continue to use them as a very last resort when I'm at my most desperate.
 
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