They're not really "saving it". This is more like a hearty f-u to the people doing the hyper-aggressive shorting. It might make some redditors a nice bundle of money at the expense of some hedge funds in the short term.
GameStop, AFAIK, is a dead-end strip-mall based retailer who, much like Blockbuster, has failed to adapt to changes in the last few years. They've lost something like a billion dollars and nothing is looking up for them as far as their actual business goes. Gamestop likely doesn't have a plan for revitalization unless that involves liquidation or getting bought out. I expect they're utterly blindsided by these recent events-- they've been very quiet about it. Gamestop surely knows this won't end well for them.
Is there a place for GameStop-like retail in dying suburban strip-malls? Sure. Are they a growth industry? nope! The Hedge-fund guys are ultimately "correct" that GameStop has no future. I just hope that all the reddit kids who bought this stock are fully aware that the last ones holding the bag are going to lose money, but I feel nothing but elation at the hedge funds losing a ton of money over something so ridiculous.
WallStreetBet's consensus on buying Gamestop was born from an understanding of its share price being undervalued, based on basic profit and loss analysis, as well as a promising board member joining who has the background to grow the company's digital business. Brick and mortar business has also run successful experiments with positioning as local e-sports hubs, which could be an interesting evolution for that side of the business.
The insane stock price we're seeing now is in anticipation of a short squeeze, but folks who took the bet before January seemed to mostly agree that the share price belonged somewhere around $30 regardless of the insane shorts. There was hope of a short squeeze being possible, but the downside was considered minimal with the thesis that GME was fundamentally undervalued regardless.
Is this f-u actually costing them any money? There are paper losses in the short term, but unless they're forced to actually cover those shorts, they don't materialize as real losses.
Are those losses occurring? Or is WSB just being self-congratulatory about how much of their own money they're throwing away, and being ignored by the people they're supposedly hurting?
(I genuinely don't know; it's hard to tell from the reporting. Nor am I an expert. I could imagine that some hedge fund is getting margin calls forcing them to cover shorts that would seem to be shaky. If that's the case, I could imagine those rules getting rewritten.)
GameStop can issue shares at the higher price and use the cash to revitalise their business. Note I'm not familiar with the company so I can't assess whether the company is salvageable.
There is so much going against them it's hard to see how they can make it work. Gamestop is a mall/strip mall operation which already means they are suffering from the massive over buildout of retail that ran wild until the crash of '08. They have a huge shopping mall presence, which means even for retail they are suffering more than most due to the cratering value of mall space in the US.
A large portion of their profit came from buying used game discs and reselling at a healthy markup. Digital distribution was already hurting that in a major way and COVID is only accelerating the decline of physical media.
Their plan has been the same as several other desperate mall-based stores like barnes and noble: keep the core product to draw people in, but pack the shelves with cheap high-margin "lifestyle" items like t-shirts and toys. I predict in 5 years they will be a corpse that's been picked clean by venture capital, existing as nothing more than a brand that can be slapped on some online game store.
Not "saving it" but "saving it from short seller pressure". The stock was previously heavily shorted, to the point GME was reaching bankruptcy. That is no longer the case.
GameStop, AFAIK, is a dead-end strip-mall based retailer who, much like Blockbuster, has failed to adapt to changes in the last few years. They've lost something like a billion dollars and nothing is looking up for them as far as their actual business goes. Gamestop likely doesn't have a plan for revitalization unless that involves liquidation or getting bought out. I expect they're utterly blindsided by these recent events-- they've been very quiet about it. Gamestop surely knows this won't end well for them.
Is there a place for GameStop-like retail in dying suburban strip-malls? Sure. Are they a growth industry? nope! The Hedge-fund guys are ultimately "correct" that GameStop has no future. I just hope that all the reddit kids who bought this stock are fully aware that the last ones holding the bag are going to lose money, but I feel nothing but elation at the hedge funds losing a ton of money over something so ridiculous.