What is the perceived value of GameStop?
Businesses are traded based off the assets they have or perceived value they provide. In this case GME’s stock was leveraged from just a tug of war.
Before you jump to conclusions on this piece, don’t think I hate GameStop, or that gaming is stupid or I’m just an anti-fun guy.
I’ve shopped at a GameStop, considering it was over ten years ago, and I would say it was somewhat nostalgic. I’ve purchased from a GameStop more than twice, and funny enough traded-in and sold items too, while reluctantly thinking, “now, how is it they charge me $1.50 and they sell it for $12, again?”
“…now, how is it they charge me $1.50 and they sell it for $12, again?”
I’ve waited in line, outside, for a game premiere, just once, and it was quite the experience none the less.
But before we look at the video game industry itself and why or how $GME could improve their influence on it, we must first look at why their stock was where it was at and where it is now, (minus the WSB long pump).
Companies on the stock market should inherently bring value to not just its shareholders, who’ve rightfully so, invested their own interests in an effort to bolster that company’s agendas and bring a monetary value to the public space as a whole, but as well to the people and problems they are solving. Albeit a company with the might to have reached such an astounding accomplishment such as going public, or as with today’s new trends, such as opening a SPAC, they’ve certainly earned that prize from the committed efforts of becoming a solution, and serving its community through fervent business models and diligent inner circle practices and standards.
What are the strong parts of any high value business?
A solid brand that, “gets you.” One that makes you feel like they’ve been there in your ups and downs or insert pain point here perception. Maybe its the embodiment through a commercial, that elicits the joy you had taking your daughter for her first ice cream cone at the local ice cream shop, or your son to his first soccer game. However, brands are forged out of either two ways, habit or experience. You do something all the time, yet there could be an easier or better way. You did something that became a part of your deeper understanding or affinity to something else that born out this conception of value, hence your experience.
So what is it about their business approach in the gaming market that makes them so fierce?
Are they selling at a price that is too competitive for other businesses in the same sector to compete. Maybe. Then it must be that they have engineered the perfect business model or products that not just break the bounds of all the other traditional products out there, but broke the mold on what it is to transcend new innovation and achieve the, creme de la creme, in product market fit. It’s possible.
Why the price is skewed off the rails
They’ve basically taken, a library, a concert, and sci-fi culture and collaged it into a mom and pop shop. Again, I’m not anti-fun here, I’m just trying to wrap my head around how they could get to be valued as the same price as, let’s say half the price of $TSLA.
At this writing $GME is priced at $460 a share. $MSFT is half that and they run complex computing algorithms. At $DIS, people jump through hoops ablaze with hot fire, and play dress up twelve hours a day to fill your kids hearts with dreams and joy and they trade a mere $168. I’m not saying I don’t need someone to bring more value out of my $9.95 purchase, but it’s way out in left field to say the least.
I mean, I could go to McDonalds download a game from literally thousands of games on an android or iPhone and play and eat. You can’t even eat in a GameStop.
Look we all need side hobbies and we should approach our aspirations holistically and look to our inner entrepreneur to create more jobs, build awesome things, and make better with the world. I’m just trying to figure out how GameStop is becoming such an outlier and becoming this pivot of all pivots that has grossly skewed it’s overall perceived value. It’s mainly because a group of people said this other group of people is using the system way too much to their advantage.
What could they improve and grow on from this history lesson
Now they could consider renovating their stores to outfit them with some sort of snack bar or eatery area. Although, the spaces I’ve seen that they lease, are small and may require a lot of rethinking the wheel to make that happen. A coffee shop may be a good fit for the name.
They could float the notion of taking on Valve’s Steam platform, which is a digital shop for gamers to buy games in almost every category and every platform from VR to 2D, PC to Mac and is the preferred choice of many streamers and gamers today.
Whatever avenue they decide to pursue they will need to come out with a thoughtful and strategic plan and do it quickly while the hype train is still gaining digital ground.