GameStop enthusiasts have made it clear they “like the stock,” and even the company’s first earnings results since the Reddit-fueled rally won’t change that view.
The video game retailer, the OG meme stock, will report its fourth-quarter earnings after Tuesday’s closing bell. But while Wall Street takes a cautious approach to valuing the physical business, rocket emojis are apparently not subject to the usual laws of physics and finance. Users on Reddit board WallStreetBets equipped with “diamond hands” say they are ready to buy more GameStop GME,
regardless of what Tuesday’s quarterly results say about fundamentals.
“Damn, this volume is so low,” one Reddit user moaned Monday morning, analyzing the perceived silent premarket action and concluding that “people are waiting for revenue to buy in.”
That sentiment was echoed by another user when GameStop plummeted more than 5% early in the trade, writing that “200 is the new $ 40. Buy before we get to $ 500. “
Tuesday will be GameStop’s first official statement on its financial picture since January’s manic rally pushed stock up more than 1,641% in a matter of days, as a horde of traders used social media platforms like Discord and Reddit and free apps like Robinhood to send GameStop- shares “to the moon”.
That rally came despite GameStop’s results for the third quarter of 2020. In December, the company announced that its revenue was down more than $ 1 billion year-over-year, down 30.2%, driving huge short-term interest in shares emerged and more power for activist investor Ryan Cohen, who publicly shared his view that GameStop’s sales model is outdated and in need of updating, with a shift to digital selling.
Expectations remain low for mainstream viewers of GameStop shares, but on Tuesday offers Cohen the first opportunity to voice his views. Cohen, the co-founder of Chewy Inc., joined GameStop’s board of directors in early 2021 and so far his communications have been limited to social media memes, including this one tweeting the image of a McDonald’s ice cream. cream cone:
And this one, which turns down the buddy comedy movie “Dumb and Dumber”:
“Whether or not they beat the estimates is a moot point,” said Thomas H. Kee Jr., founder of Stock Traders Daily. “If they don’t make any announcement, it will be terrible for the stock.”
GameStop is expected to report earnings per share of $ 1.35, or $ 88 million, on $ 2.211 billion in revenue for the fourth quarter, according to the consensus estimates of six analysts polled by FactSet. Those estimates have fallen steadily since October, when consensus estimates predicted earnings per share of $ 1.80 on revenue of $ 2.52 billion in the fourth quarter.
Wedbush Securities analyst Michael Pachter was quoted by the Wall Street Journal as saying it is impossible for GameStop’s results to reflect its valuation of approximately $ 14 billion.
“There is not a single institutional investor alive who is considering going long [on the stock at] for $ 200, ”said Pachter. “This isn’t a dot-com just getting started.” Indeed, GameStop was founded in Dallas in 1984 under the name Babbage’s Etc.
Regardless, GameStop’s Reddit army isn’t subtle about its disdain for insane Wall Street analysts.
“Got to love all these guys saying it’s over and to sell,” one user wrote on Monday afternoon, adding sarcastically, “I’m sure you were the same guys who predicted the first two peaks?”
“It’s okay if we dip a little bit today,” mused another user. “Just juices it for the income / conference call.”
For Kee, a former columnist who has been contributing to MarketWatch for years, there is one way for GameStop to surprise the market: “Unless they run to a digital model, they will collapse and fail,” he said.
“They don’t justify the stock price in any way, but they might get close to announcing a massive event like a pivot point to digital.”
Regardless of what GameStop reports Tuesday, the company has set a new bar for seeing the stock value price movement with parabolic volatility between earnings calls, a market phenomenon best summed up by another WallStreetBets user on Monday.
“I’ve learned 99% of what I know about the stock market based on GME,” wrote the user. “Which means I have to relearn everything after GME, because this doesn’t seem like a normal situation to me.”