𝗚𝗮𝗺𝗲𝗦𝘁𝗼𝗽 𝗩𝗮𝗹𝘂𝗮𝘁𝗶𝗼𝗻 𝗔𝗻𝗮𝗹𝘆𝘀𝗶𝘀

💸 𝙏𝙚𝙣𝙗𝙖𝙜𝙜𝙚𝙧 💸

I've been buying GameStop $GME (GameStop Corp New) since September 2019 (it was down 95% from all time high) because of these catalysts:

• New Console cycle --> Cigar Butt Stock
• Deep Value Stock trading under cash value
• Possible Short Squeeze

It is now a tenbagger (over 1000% returns vs just 40% for the S&P 500 $SPX500 ) but the catalysts have changed with no change in fundamentals:

• Activism from Ryan Cohen (founder of Chewy $CHWY (Chewy))
• Speculation from Wallstreetbets subreddit
• Short squeeze happening 💰𝙑𝙖𝙡𝙪𝙖𝙩𝙞𝙤𝙣 💰 Ryan Cohen did not give us any concrete plan yet but he wants the company to be move from physical retailing to ecommerce and compete with Amazon $AMZN (Amazon)

Assumptions:

• Estimated FCF of $300 million in 2021
• $200 million per year in 2022-2026 with business model changing
• Number of stores go from 5000 to 2000
• SG&A costs lowered to $1 billion by 2026
• Lower revenues but better margins

Intrinsic Value:

• Bear Case: $23/share • Base Case: $32/share
• Bull Case: $50/share (currently over $90)

In best case scenario, GameStop stock can go to $200/share by 2026. The problem, however, is that at current price, the downside risk is bigger than the upside reward (at least in the long-term). The stock will keep going higher as long as the speculators think it can and choose not to move to the next hot stock.

🍋𝙎𝙝𝙤𝙧𝙩-𝙎𝙦𝙪𝙚𝙚𝙯𝙚 🍋

Short squeeze is happening. It is impossible to borrow shares (rate are at 32%). It is more likely going to be a fast short squeeze (eg. Volkswagen in 2008) rather than a long one (eg. RH $RH (RH) ongoing since 2016).

⚠️𝘾𝙤𝙣𝙘𝙡𝙪𝙨𝙞𝙤𝙣 ⚠️

Stock likely still going to go up with the short squeeze but major correction to follow after speculation frenzy ends. As for the business long-term, I believe Ryan Cohen will bring the necessary changes