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GameStop ((GME - Free Report) ) delivered weak sales and profits in late March for their Q4 fiscal 2024 (ended January) and shares subsequently declined by over one-third from above $15 to $10.
Of course that's nothing compared to the moon launch the stock saw this week to $60, but we'll cover that mania after we look at the fundamentals.
The Q4 numbers propelled analysts to further lower growth estimates, with the Zacks Consensus for both top and bottom lines turning negative on an annual basis for fiscal 2025 (began February).
At last read, revenues are expected to drop 12.75% to $4.6 billion, while EPS is projected to fall 83% to just a penny.
For a review of the deteriorating business dynamics for GameStop, see this article from March 27...
The great thing about free markets like we've built and maintained in the United States is that just about anyone can raise money to start a company and just about anyone can invest their hard-earned dollars in those companies.
The downside is that hype, hucksters, and hysteria are everywhere and never sleep. And our regulatory bodies like the SEC can no more protect us than they can catch all the crooks.
This past week has been a classic drama of a stock getting renewed hype from believers, fraudsters, and short-squeeze armies. While it may be entertaining to watch as short-sellers cover for big losses and "apes" (or kitties) have their day on the field of victory, in the end, very few are getting rich on the mania.
I tried to explain how this all works three years ago with another infamous meme stock, AMC Entertainment ((AMC - Free Report) ), in this article and video from 2021 when the Ape Army was trying to teach the "evil" hedge funds a lesson...
Years ago on a site called StockTwits, I realized that immature traders often blamed others for "bashing" their favorite equities. As if they thought that retail traders saying something good or bad about a stock could impact the flow of money toward or away from it -- in a gigantic forest of institutional capital that dwarfed them.
One day I described the scene thus...
"StockTwits is a crazy lil kindergarten where all the kids believe their voices move the trees."
The real lessons about how capital markets work are still valuable. Hopefully, some folks who either bought GME shares above $40 this week (or even thought about it), were reminded that if you bring your dollars to a silly kitten fight on Wall Street, you better not be after justice (or profits) without super-strict risk control.
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Bear of the Day: GameStop (GME)
GameStop ((GME - Free Report) ) delivered weak sales and profits in late March for their Q4 fiscal 2024 (ended January) and shares subsequently declined by over one-third from above $15 to $10.
Of course that's nothing compared to the moon launch the stock saw this week to $60, but we'll cover that mania after we look at the fundamentals.
The Q4 numbers propelled analysts to further lower growth estimates, with the Zacks Consensus for both top and bottom lines turning negative on an annual basis for fiscal 2025 (began February).
At last read, revenues are expected to drop 12.75% to $4.6 billion, while EPS is projected to fall 83% to just a penny.
For a review of the deteriorating business dynamics for GameStop, see this article from March 27...
GameStop (GME - Free Report) Q4 Earnings Miss Estimates, Sales Decline Y/Y
Meme Stock Cage Match
The great thing about free markets like we've built and maintained in the United States is that just about anyone can raise money to start a company and just about anyone can invest their hard-earned dollars in those companies.
The downside is that hype, hucksters, and hysteria are everywhere and never sleep. And our regulatory bodies like the SEC can no more protect us than they can catch all the crooks.
This past week has been a classic drama of a stock getting renewed hype from believers, fraudsters, and short-squeeze armies. While it may be entertaining to watch as short-sellers cover for big losses and "apes" (or kitties) have their day on the field of victory, in the end, very few are getting rich on the mania.
I tried to explain how this all works three years ago with another infamous meme stock, AMC Entertainment ((AMC - Free Report) ), in this article and video from 2021 when the Ape Army was trying to teach the "evil" hedge funds a lesson...
AMC FUD Runneth Over: Panic at the Casino!
Years ago on a site called StockTwits, I realized that immature traders often blamed others for "bashing" their favorite equities. As if they thought that retail traders saying something good or bad about a stock could impact the flow of money toward or away from it -- in a gigantic forest of institutional capital that dwarfed them.
One day I described the scene thus...
"StockTwits is a crazy lil kindergarten where all the kids believe their voices move the trees."
The real lessons about how capital markets work are still valuable. Hopefully, some folks who either bought GME shares above $40 this week (or even thought about it), were reminded that if you bring your dollars to a silly kitten fight on Wall Street, you better not be after justice (or profits) without super-strict risk control.