Gamestop 3 Years Later: Smart Money?

This article provides a comprehensive analysis of the investment potential of GameStop Corp GME based on various factors, including their ventures into web3, NFTs, digital video game skins, Gamestop Playr, strategic partnerships, financial stability, e-commerce growth, omnichannel integration, insider ownership, increased brand recognition, and exceptional stock performance. By examining these aspects, this analysis aims to demonstrate why Gamestop presents a compelling investment opportunity for the future.

Introduction

Gamestop has garnered significant attention in recent years due to its transformational efforts and strategic partnerships that have positioned the company as a player in the emerging digital economy. This paper analyzes the key factors contributing to Gamestop's investment potential.

Ventures Into Web3, NFTs, And Digital Video Game Skins

Gamestop's foray into web3, non-fungible tokens (NFTs), and digital video game skins represents a forward-thinking approach to embracing the digital revolution. By leveraging blockchain technology and enabling users to buy and sell digital assets on their platform, Gamestop taps into a rapidly growing market that provides unique monetization opportunities and enhances customer engagement.  

Strategic Partnerships

Loopring

The partnership with Loopring, a layer-2 scaling solution built on Ethereum, enables GameStop to enhance the efficiency and scalability of its blockchain-based initiatives. This collaboration ensures seamless and cost-effective transactions for GameStop's NFT marketplace, increasing user adoption and overall market competitiveness.

Immutable X

The partnership with Immutable X, a layer-2 scaling solution for Ethereum, further strengthens GameStop's position in the NFT market. Immutable X's technology provides fast and gas-free transactions, solving the scalability challenges associated with blockchain-based marketplaces. This partnership improves the user experience and expands the potential customer base.

Microsoft

GameStop's collaboration with Microsoft is a significant strategic move that leverages the tech giant's Azure cloud platform. This partnership allows GameStop to optimize its operations, enhance digital offerings, and leverage advanced analytics for better customer insights. The integration of Microsoft technologies provides GameStop with a competitive edge in the digital gaming market.

Gamestop Playr

The introduction of Gamestop Playr, a subscription-based gaming service, showcases the company's commitment to diversifying revenue streams and creating a loyal customer base. This platform provides gamers with exclusive content, discounts, and perks, which strengthens customer loyalty and generates recurring revenue.

Strong Financial Position

Gamestop's $1,300,000,000 in cash reserves with almost no debt establishes a strong financial foundation for future growth and investment opportunities. This financial stability allows the company to pursue strategic initiatives and weather market fluctuations more effectively.

E-commerce Growth And Omnichannel Integration

Gamestop's commitment to e-commerce growth and omnichannel integration is evident in their efforts to enhance the online shopping experience, improve fulfillment capabilities, and integrate physical stores with digital platforms. This approach positions Gamestop to capture the growing trend of online retail and adapt to changing consumer preferences effectively.

Insider Ownership And Confidence

The high insider ownership of Gamestop stock at 15.54% signifies strong confidence among company insiders regarding its future growth potential. This level of insider ownership surpasses 491 out off 500  S&P 500 companies, highlighting a strong belief in Gamestop's ability to deliver value and generate positive returns.

Brand Recognition And Marketing Opportunities

Gamestop's increased brand recognition resulting from the 2021 short squeeze has provided the company with invaluable marketing opportunities. The extensive media coverage and global awareness surrounding Gamestop have amplified the company's reach and set the stage for strategic partnerships and collaborations with other industry players.

Outstanding Stock Performance

Gamestop's stock performance has been exceptional over the last three years, with a staggering increase of 2,024%, compared to the S&P 500's return of 42% during the same period. This impressive growth underscores the market's recognition of Gamestop's transformative initiatives and its potential for future success.

Game Informer Magazine

Today, one in every forty people in the United States subscribes to Game Informer. With over 8 million paid monthly subscribers, the popularity of the magazine has grown to become the 3rd largest consumer print publication in the United States. The company also distributes Game Informer Digital, a publication for tablets, mobile, and browsers that is the #1 digital publication in the world, and delivers daily content on gameinformer.com.

GameStops DRS Movement

GameStop's direct registered shares with Computershare, currently standing at 76.6 million and steadily growing, present a compelling case for a potential drying up of liquidity in the stock. The direct registration process allows shareholders to hold their shares directly with the transfer agent, bypassing the need for a traditional brokerage account. This means that these shares are not held in street name by brokers, which can make them more difficult to locate and borrow for short sellers.
With fewer shares available for lending out to short sellers, the scarcity of available shares can lead to an increase in demand and create a situation ripe for a massive short squeeze. Short sellers, who bet on a stock's decline, rely on being able to borrow shares to sell them in the hopes of buying them back at a lower price later. However, if the supply of shares available for borrowing decreases significantly, it becomes increasingly challenging for short sellers to locate shares to borrow, forcing them to cover their positions by buying back shares in the market.
GameStop's direct registered shares have gained attention due to the company's unique position in the market. According to the best available information, GameStop has the highest percentage of directly registered shares, accounting for approximately 25% of its shares outstanding. This is a notable figure when compared to other publicly traded companies, as it suggests a significant portion of GameStop's shares are held directly by individual investors rather than being held in brokerage accounts.
The combination of a growing number of direct registered shares, the potential drying up of liquidity, and the decreased availability of shares for lending to short sellers creates an environment where a short squeeze becomes a distinct possibility. A short squeeze occurs when short sellers rush to cover their positions by buying shares, driving the stock price even higher. This can create a feedback loop, further exacerbating the demand for shares and potentially leading to a significant increase in GameStop's stock price.

Conclusion

Based on the analysis presented, Gamestop represents a compelling investment opportunity. The company's ventures into web3, NFTs, and digital video game skins, along with strategic partnerships, financial stability, e-commerce growth, and strong insider ownership, indicate a promising future. Additionally, Gamestop's increased brand recognition and exceptional stock performance further reinforce its position as an attractive investment choice in the evolving digital economy.

Disclaimers: This analysis should be regarded as an opinion and does not constitute financial advice. Investors should conduct thorough research and analysis before making any investment decisions. This is not investment advice. The author may be long one or more stocks mentioned in this report. The article may contain affiliate links, but these partnerships do not influence editorial content. Malone Wealth Ventures LLC is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Malone Wealth Ventures LLC and its representatives are properly licensed or exempt from licensure. This marketing  is solely for informational purposes. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Malone Wealth Ventures LLC unless a client service agreement is in place.