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Varchild2008 (84.50)

Go Against the Grain: Buy Gamestop

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January 07, 2010 – Comments (7) | RELATED TICKERS: GME

Disclosure:  Varchild = Moron.....  now moving on...

To not buy Gamestop off this 15+% dip is the wrong move.

Why?

Final Fantasy 13 in March + Singularity + a number of great titles are coming this quarter.

I plan to make my purchase of FF13 at Gamestop... pre-ordering this weekend in fact...

Look at it this way...  The numbers that came out showed that year over year sales were flat.
That's a complete polar opposite of the supposed "declines" analysts were expecting in December for Video Games.  Granted, same store sales droped over 8%.....  So the flat performance was a result of their being more Gamestops.

I think Gamestop got badly hurt in part NOT because video games are not selling....

But because Walmart slashed $10 off the most popular titles for sale this past Christmas Season.

So people went to Walmart... I did...  But, Gamestop can counter this by lowering prices themselves.

I strongly believe Video Games need to drop $10 in price anyhow...across the board.. in 2010.

Hopefully, Video Game Publishers will be willing to drop prices this year as analysts some analysts have wrote about....  Cut the prices.... and games will sell better...

But more importantly... the news that TONS of Wiis and Playstation 3s were sold in Christmas....That's plenty reason enough to buy GME and be bullish on GME....

The period of sales struggle will reverse itself at some point...the MACRO is improving as more and more people buy a CONSOLE.

7 Comments – Post Your Own

#1) On January 07, 2010 at 10:15 AM, Elwavinator (59.84) wrote:

Same store is what counts man. Otherwise the company could just double the number of stores every year, while same store sales would be cut in half each time. Would you still say that it wasn't so bad in that case?

 Also, the stock is down today because the analysts were expecting numbers to be much higher-- current expectations are what counts in the stock market.

 Also, you say " But, Gamestop can counter this by lowering prices themselves."

 Well, Walmart can then counter by lowering prices again. Want to guess who wins in the situation? Who has lower costs? Gamestop wants to compete on customer experience, selection, pre-order availability, used-game trading, etc... not price!

 Bill Gates once said something like "If Microsoft gives away all its internet software for free, and Netscape gives away all its internet software for free, I like Microsoft's chances better". Walmart can subsidize a break-even video game business to gain marketshare and hurt their biggest competitor. Gamestop can't do that.

 You may in fact be right that GME is a good short term long trade now (I think it probably is, but I am bearish longer term). But it's not for the reasons you suggest.

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#2) On January 07, 2010 at 10:30 AM, Sozurmama (23.36) wrote:

I like your style, good time to jump on HOTT too :)

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#3) On January 07, 2010 at 10:38 AM, BMFPitt (71.94) wrote:

5 years from now, Gamestop will have probably gone the way of Blockbuster.  They can't compete against big box stores than can afford to use games as loss-leaders.  They can't compete against the internet (especially now that Amazon and others are starting to dabble in used games.)

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#4) On January 07, 2010 at 10:48 AM, BMFPitt (71.94) wrote:

Oh yeah, and once games are primarily downloadable, if Gamestop lasts that long, they have nothing to fall back on.

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#5) On January 07, 2010 at 10:49 AM, Momentum21 (44.33) wrote:

I thought they would surprise to the upside but it could be that the future has come early for these guys...I was tempted to jump on in the wake of the exodus but after futher reflection it doesn't seem prudent when you just can't figure out how they might re-invent themselves. Better off with ATVI I think...

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#6) On January 07, 2010 at 5:02 PM, Varchild2008 (84.50) wrote:

I agree about being better off with ATVI....  Which is why if you check my profile I am in ATVI and not GME.

But......  Unless Gamestop has the absolute worst C.E.O. ever..... They should be able to find a way to compete with Amazon and they should be able to get going on a plan soon..or risk long term implications that are already piling up.

However....  The MACRO of Video Games in 2009 was miserable..... If employment improves in 2010 and beyond then the MACRO will lift a stock like GAMESTOP....

I don't think the direct download fears and Walmart Fears and Amazon Fears have anything to do with 2010.   Maybe 2012?

Short - Long positon is exactly what I am after by making these
calls... and of course do your homework..
I can often be wrong:-)

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#7) On January 07, 2010 at 5:03 PM, Varchild2008 (84.50) wrote:

P.S.  if GME trades up tomorrow due to surprisingly good employment numbers in December.....  Then you have the entire rest of January before more employment numbers surface to enjoy an UP trending GME.

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