GameStop fans have made it clear that they “like the stock” and not even the company’s first results from the Reddit-powered rally will change that view.
Video game retailer OG meme is due to report fourth-quarter earnings after Tuesday’s closing bell. But while Wall Street takes a cautious approach in evaluating the company’s bricks and mortar, rocket emojis are apparently not subject to the usual laws of physics and finance. Users on the Reddit WallStreetBets board equipped with “diamond hands” say they are ready to buy more GameStop GME,
no matter what Tuesday’s quarterly results say about fundamentals.
“Damn, this volume is so low,” a Reddit user moaned Monday morning, analyzing the quiet actions perceived by the premarket and concluding that “people waiting for earnings to buy.”
This sentiment was echoed by another user, while GameStop fell by more than 5% in early trading, writing that “200 is the new $ 40. Buy before you go to $ 500. ”
Tuesday will be GameStop’s first official statement on its financial image, as the January maniac rally sent shares up more than 1,641% in a few days, as a horde of traders used social media platforms like Discord and Reddit and toll-free apps like Robinhood to send GameStop shares “per month”.
The rally came despite GameStop results for the third quarter of 2020. In December, the company revealed that sales had fallen by more than $ 1 billion year-over-year, a 30.2% drop, creating a huge short interest in stocks and providing more power for investor investor Ryan Cohen, who has publicly shared the view that GameStop’s sales model is old and needs to be updated immediately with the move to digital sales.
For regular viewers of GameStop actions, expectations remain low, but on Tuesday it presents the first opportunity for Cohen to articulate his vision. Cohen, co-founder of Chewy Inc., became a board member of GameStop in early 2021, and so far his communications have been limited to memes on social media, including this one, where he posted on Twitter the image of a McDonald’s ice. with cream:
And this, riffing the friend comedy film “Dumb and Dumber”:
“Whether it exceeds estimates or not is a debatable point,” said Thomas H. Kee Jr., founder of the Stock Traders Daily. “If they fail to make some kind of announcement, it will be terrible for the stock.”
GameStop is expected to report earnings per share of $ 1.35, or $ 88 million, on 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 declining since October, when consensus estimates projected $ 1.80 EPS for $ 2.52 billion in fourth-quarter revenue.
Wedbush Securities analyst Michael Pachter was quoted by the Wall Street Journal as saying that it was impossible for GameStop’s results to reflect its estimate of about $ 14 billion.
“There is no living institutional investor who intends to go a long way [on the stock at] at $ 200, ”Pachter said. “This is not a dot-com that is just beginning.” Indeed, 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 flinty-eyed Wall Street analysts.
“I have to love all these guys saying it’s over and sell,” one user wrote Monday lunch, sarcastically adding, “I’m sure you were the same guys who predicted the first two peaks?”
“It’s good if we dive a little today,” said another user. “It just makes things juicy for winnings / conference calling.”
For Kee, a former columnist who contributed to MarketWatch, there is a way for GameStop to capture the market: “If they don’t pivot on a digital model, they will collapse and fail,” he said.
“There’s no way to justify the stock price, but it could come close if it announces a huge event, such as a digital pivot.”
Regardless of what GameStop reports on Tuesday, the company set a new bar for viewing the value of its stock moving with parabolic volatility between earnings calls, a market phenomenon best summarized by another WallStreetBets user on Monday.
“I learned 99% of what I know about the GME-based scholarship,” the user wrote. “Which means that after GME I will have to relearn everything again, because this does not seem like a normal situation.”