GameStop devotees have made it clear that they “like the action,” and not even the company’s first results since the Reddit-driven rally will change that view.
Video game retailer OG meme will have to report its fourth-quarter profits after Tuesday’s closing bell. But while Wall Street takes a cautious approach to valuing the brick-and-mortar business, rocket emojis are apparently not subject to the usual laws of physics and finance. Users of the Reddit WallStreetBets board equipped with “diamond hands” say they are ready to buy more GameStop GME,
regardless of what Tuesday’s quarterly results say about fundamentals.
“Damn, that volume is so low,” one Reddit user lamented Monday morning, analyzing the silent action the market perceived before concluding that “people are waiting for revenue to buy.”
This sentiment was echoed by another user, as GameStop fell more than 5% during the first trades, writing that “200 is the new $ 40. Buy before it goes to $ 500.”
Tuesday will be GameStop’s first official statement on its financial landscape since the January maniac rally sent shares up more than 1,641% in a matter of days, as a horde of traders used social media platforms like Discord and Reddit and sends GameStop shares “to the moon”.
This concentration occurred despite GameStop’s results for the third quarter of 2020. In December, the company revealed that sales fell more than $ 1 billion year-over-year, a 30.2% decline, which led to a short interest in stocks and more power for activist investor Ryan Cohen, who has publicly shared his view that the GameStop sales model is outdated and needs to be updated soon, with a shift to digital sales .
For top observers of GameStop stocks, expectations remain low, but Tuesday presents the first opportunity for Cohen to articulate his vision. Cohen, co-founder of Chewy Inc., became a member of GameStop’s board of directors in early 2021, and so far his communications have been limited to social media memes, including this one where he tweeted the image of a McDonald’s gel. with cream:
And this one, reproducing the comedy film “Dumb and Dumber”:
“Whether or not they exceed estimates is a debatable point,” said Thomas H. Kee Jr., founder of Stock Traders Daily. “If they fail to make any kind of announcement, it will be terrible for action.”
GameStop is expected to report earnings per share of $ 1.35, or $ 88 million, in revenue of $ 2.211 billion for the fourth quarter, according to the consensus estimates of six analysts surveyed by FactSet. These estimates have been steadily falling since October, when consensus predicts $ 1.80 in EPS for revenue of $ 2.52 million in the fourth quarter.
Wedbush Securities analyst Michael Pachter was quoted by the Wall Street Journal as saying that it is impossible for GameStop’s results to reflect its valuation of approximately $ 14 billion.
“There is no living institutional investor who plans to go a long time [on the stock at] at $ 200, ”Pachter said.“ It’s not a point like it’s just getting started. ”In fact, GameStop was founded in 1984 in Dallas under the name Babbage’s Etc.
In any case, GameStop’s Reddit army isn’t subtle about its contempt for flint-eyed Wall Street analysts.
“I had to love all these guys saying it’s over and it’s for sale,” one user wrote at noon Monday, adding sarcastically, “I’m sure you were the same ones who predicted the first two peaks?”
“It’s okay if we dive a little today,” another user reflected. “It just makes things juicy for profit / conference execution.”
For Kee, a former columnist who collaborated on MarketWatch, there is a way for GameStop to surprise the market: “If they don’t pivot toward a digital model, they will collapse and fail,” he said.
“There’s no way to justify the stock price, but maybe they could get closer if they announce a huge event like a digital pivot.”
Regardless of what GameStop reports on Tuesday, the company has set a new bar to see its asset value move with parabolic volatility between earnings calls, a market phenomenon that best sums up another WallStreetBets user on Monday.
“I have learned 99% of what I know about the GME-based stock market,” the user wrote. “Which means after GME I’ll have to re-learn everything because it doesn’t seem like a normal situation to me.”