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GameStop's Second Act: A Stroke of Luck & a Hoard of Cash
Key Takeaways
GameStop saw one of the most dramatic short squeezes in 2020.
Management leveraged the mania to raise piles of cash.
Now, GME is cash-rich with a dirt-cheap valuation.
CoreWeave & NVIDIA: Right Place, Right Time
Every so often, a company strikes a strikes gold with a bout of extreme luck. CoreWeave ((CRWV - Free Report) ) is a fantastic example of a company that benefited from an extremely lucky circumstance and pounced on the opportunity. In its infancy, the company was known as Atlantic Crypto, a digital asset company that owned and operated data centers used for crypto mining. However, in 2018, crypto markets crashed and entered a debilitating bear market, forcing Atlantic Crypto to pivot, change its name to CoreWeave, and focus on AI data centers. Although it wasn’t clear at the time, the pivot to AI data centers would turn out to be the best thing that could possibly happen to the company. In fact, annual revenues have soared from $15 million in 2022 to $5 billion in 2025.
Image Source: Zacks Investment Research
In the early 2000s, NVIDIA ((NVDA - Free Report) ) was best-known for its general-purpose computing and gaming chips. However, by 2006, NVIDIA discovered its chips were perfect for training complex AI models, fully embracing the coming AI revolution in 2010.
Image Source: Zacks Investment Research
GameStop: Better Lucky than Good
Before 2020, GameStop ((GME - Free Report) ) was a dying, heavily shorted, brick-and-mortar video game retailer. However, GME shares experienced one of the most breathtaking runs of all time after a group of retail investors on Reddit’s r/wallstreetbets forum orchestrated a short squeeze that forced large hedge funds to drive up the stock price. Amid retail investor liquidity gained fueled by COVID-era stimulus checks, GME shares would explode from $0.64 to $121!
Image Source: Zacks Investment Research
Like most fundamentally-absent short squeezes, GME’s story would end with a major correction, with shares dropping as low as $10 by early 2021.
GameStop is a Cash Cow
Since GME shares came back to Earth, Wall Street has largely forgotten about the once high flyer. However, GameStop’s business has materially changed. Amid the hype, the company’s management has used stock spikes to raise hoards of cash. In fact, since 2021, GME has raised more than $5 billion in cash. Currently, GME’s balance sheet shows ~$9 billion in cash on hand.
Image Source: Zacks Investment Research
GameStop Will Use Its Cash to Diversify
With its pristine balance sheet, GME is afforded flexibility. GameStop CEO Ryan Cohen has signaled that the company will diversify its business and will make a “very big” acquisition soon. An acquisition would allow GME to expand away from its slow-growing retail business into higher-growth businesses.
Michael Burry is Buying GME Shares Again
Famed investor and the inspiration behind Hollywood’s hit movie “The Big Short”, Michael Burry, told his newsletter subscribers that he is buying GME shares. In 2021, Burry was one of the few prominent, non-retail investors to catch the euphoric price move. Back then, Burry bet on the company because it was a short-squeeze. That said, Burry now believes that cost-cutting, Ryan Cohen’s turnaround strategy, and its dirt-cheap valuation will lead to the next big move. With a price-to-book ratio of 2.07, GME is one of the cheapest stocks on Wall Street.
Image Source: Zacks Investment Research
Meanwhile, with a lofty short interest of 16% and 65 million GME shares held short, the stock may be setting the stage for another meteoric short squeeze.
Bottom Line
Although GameStop’s meme era is a thing of the past, the company has a pristine balance sheet and a hoard of cash. The company is no longer a meme play but is instead a value company with several catalysts.
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Image: Bigstock
GameStop's Second Act: A Stroke of Luck & a Hoard of Cash
Key Takeaways
CoreWeave & NVIDIA: Right Place, Right Time
Every so often, a company strikes a strikes gold with a bout of extreme luck. CoreWeave ((CRWV - Free Report) ) is a fantastic example of a company that benefited from an extremely lucky circumstance and pounced on the opportunity. In its infancy, the company was known as Atlantic Crypto, a digital asset company that owned and operated data centers used for crypto mining. However, in 2018, crypto markets crashed and entered a debilitating bear market, forcing Atlantic Crypto to pivot, change its name to CoreWeave, and focus on AI data centers. Although it wasn’t clear at the time, the pivot to AI data centers would turn out to be the best thing that could possibly happen to the company. In fact, annual revenues have soared from $15 million in 2022 to $5 billion in 2025.
Image Source: Zacks Investment Research
In the early 2000s, NVIDIA ((NVDA - Free Report) ) was best-known for its general-purpose computing and gaming chips. However, by 2006, NVIDIA discovered its chips were perfect for training complex AI models, fully embracing the coming AI revolution in 2010.
Image Source: Zacks Investment Research
GameStop: Better Lucky than Good
Before 2020, GameStop ((GME - Free Report) ) was a dying, heavily shorted, brick-and-mortar video game retailer. However, GME shares experienced one of the most breathtaking runs of all time after a group of retail investors on Reddit’s r/wallstreetbets forum orchestrated a short squeeze that forced large hedge funds to drive up the stock price. Amid retail investor liquidity gained fueled by COVID-era stimulus checks, GME shares would explode from $0.64 to $121!
Image Source: Zacks Investment Research
Like most fundamentally-absent short squeezes, GME’s story would end with a major correction, with shares dropping as low as $10 by early 2021.
GameStop is a Cash Cow
Since GME shares came back to Earth, Wall Street has largely forgotten about the once high flyer. However, GameStop’s business has materially changed. Amid the hype, the company’s management has used stock spikes to raise hoards of cash. In fact, since 2021, GME has raised more than $5 billion in cash. Currently, GME’s balance sheet shows ~$9 billion in cash on hand.
Image Source: Zacks Investment Research
GameStop Will Use Its Cash to Diversify
With its pristine balance sheet, GME is afforded flexibility. GameStop CEO Ryan Cohen has signaled that the company will diversify its business and will make a “very big” acquisition soon. An acquisition would allow GME to expand away from its slow-growing retail business into higher-growth businesses.
Michael Burry is Buying GME Shares Again
Famed investor and the inspiration behind Hollywood’s hit movie “The Big Short”, Michael Burry, told his newsletter subscribers that he is buying GME shares. In 2021, Burry was one of the few prominent, non-retail investors to catch the euphoric price move. Back then, Burry bet on the company because it was a short-squeeze. That said, Burry now believes that cost-cutting, Ryan Cohen’s turnaround strategy, and its dirt-cheap valuation will lead to the next big move. With a price-to-book ratio of 2.07, GME is one of the cheapest stocks on Wall Street.
Image Source: Zacks Investment Research
Meanwhile, with a lofty short interest of 16% and 65 million GME shares held short, the stock may be setting the stage for another meteoric short squeeze.
Bottom Line
Although GameStop’s meme era is a thing of the past, the company has a pristine balance sheet and a hoard of cash. The company is no longer a meme play but is instead a value company with several catalysts.