Lately i can’t go a single day without getting an alert from my investment brokers. Gamestop is up 10 it’s down 10 it’s sideways 5 and it’s doing my bloody head in and then a lot of people go on youtube and say: look. Can you give gamestop an sti? Well, i am a man of the people and i am happy to announce that i am lubed up and ready to go i’m gon na gently bend gamestop over and give it the best sti it’s ever gotten. So if you are new here, firstly welcome sti series or the stock ticker investigation series is where we gather information and give my personal opinion on some stocks. That are of note and for sure gamestop is of note, and i actually think i found the real reason why gamestop is up so much. But before we get into the video, could you do me the kindest of favors and go down there and make sure that, like button is turned blue? If you’re new here again subscribe and turn on the bell? And if you want to support the channel there’s, some exclusive perks down the patreon in the description, if you’re not from the us of canada, etoro pinned comments, sign up deposit make one simple trade and you get free lifetime access to the investing chat, room. Saving you a hell of a lot of money, so a bit of background about gamestop gamestop. If you don’t know what it is, basically it’s a shop where you go inside a little bit like what blockbuster used to be and you buy and sell games now that business model has slowly been dying out.
It’S been no secret, as people tend to download more and more games and, more importantly, even further than that stream them online gamestop has struggled to adapt and we’ve seen over the past few years. This stock slowly slowly die a slow and painful death, but recently last year a lot of people have been sizing in short and it’s caused a mega squeeze which i’ll come on to in just a little while, but firstly, let’s look into the fundamentals currently at this Crazy extended valuation gamestop is worth around about 4.5 billion, but by the time this video comes out, it could have changed massively. We don’t really know this stock. Is that volatile that could be half tomorrow? It could be double tomorrow. We don’t quite frankly know but currently at the recording of this video 4.5 billion market cap crazy for a company that is not turning over profits and because they’re not turning over profits. They have no p e or peg ratio. So we can’t really see on the traditional method, if it’s, fair value and going on to their short term assets and liabilities, we can see that they have 1.65 billion in assets with a liabilities of 1.58 billion, so they’re covered short term going on to long term. They’Re also covered as well. They have 949 million in assets and 692 in liabilities, so they covered as far as assets and liabilities go. Unless we look at their debt to equity, which has been steadily on the decline with the current stock price.
Their debts x3 is currently at 146 i’ve seen a lot worse during this pandemic, i’m. Not gon na lie, but it’s. Definitely not a good sign that it’s been downtrending in the wrong direction over the past few years. And if we look at the inside of buying and selling it’s an absolute mess institutions are getting out and getting in people are buying and selling there’s people buying. But no one really of note of the company and there’s no one really selling inside the company as well, so it’s a bit of a mix back down in the inside of buying and selling flip a coin. I don’t really see that as much of an indicator. Now to me, gamestop is a very familiar company. If you don’t know i actually day trade as well as invest and gamestork has been a previous gapper that many people have had luck with shorting, because the company is fundamentally flawed. It’S been an easy short in recent years, so i am no stranger to gamestop gapping up and then selling off with some. You know, offerings and things of the sort, but more importantly, that downward selling pressure into any pop. That said, since the middle of last year, game stock has absolutely ripped short open again, i’ll come on to that in a little bit more time now from their 2020 lords to their high in january. The stock is up over 3 000, which is a crazy gain and for sure not sustainable on a company that was facing bankruptcy a only a short time ago, so with people not buying games physically in a store anymore and buying them more and more online.
Every single day and moving more to the free applications, is there a future for game stock and, more importantly, why is the price up? After all, i don’t think there’s that many people investing long term into game stock it’s a very, very similar business model to blockbuster, and we all know how that went. But the reason gamestop actually went up is quite simply a short squeeze in very layman’s terms. If you don’t know what a short squeeze is when shorts get too greedy and there’s too many shorts in it stops the float being liquid. It takes up a lot of shares from the marketplace and then it is easily manipulated by a smaller share count and that’s. Exactly what we’ve seen a simple short squeeze, that’s gone out of hand and gone absolutely ape if you don’t know who citroen research are they’re, a very, very popular short seller on twitter and they’ve, been calling out gamestop non stop they’re one of the best short sellers In the game and all of their information, they publicly list on their twitter. So even if you’re, not short, biased and you don’t agree with them, i strongly suggest you go and check them out, but also on a very berry side as well. Cfra research came out with this statement and i quote: we have concerns over game stocks, ability to maintain a competitive positioning, namely due to the high dependence on brick and mortar and the shift away from physical gaming to digital and mobile gaming devices.
So again, it’s a little bit like blockbuster there, companies that are relying on brick and water or physical shops. Where people go in and buy a game at a premium. I may add they’re not doing it as much anymore and in fact, the new generation coming through with gaming. As we know, it evolves very, very quickly, starting like an ipad or an iphone and it’s a free, download, it’s, more popular look at fortnite. Look at roblox. Look at all these other games that are coming through. You don’t need to go into a shop and buy that. I remember when the shop started. These gaming shops started selling like cards for like fifa. By the way i played fifa yeah, but you could go in and buy fifa points in a shop and now you don’t even do that. You just do it online, so these shops are going to struggle in the future without a shadow of a doubt. But this type of news has caused short sellers thinking. This company’s going to go bankrupt and it’s an easy short, so they all piled in taking out the shares from the marketplace, making it less liquid and removing them shares, meaning it’s, an even smaller, float and easier to manipulate and that’s exactly what happened. There’S, a few groups on reddit i’m, not going to name them that i’ve actually advertised buying gaming stock to personally short squeeze citrine and, more importantly, these have big power there’s many many people following these subreddits.
So what they’ve done is they’ve bought game stock and it’s gone up a crazy, crazy amount and the big question: will it keep going i’ll answer in just a minute, but because game stock is very easy to manipulate and a lot of people are in with leverage There’S, a lot of people really in a lot of pain right now and if it continues going up – and i think that’s what we’ve seen recently last friday when the stock went up so so much in one day is the fact that a lot of people are Getting margin calls as this goes on, their brokers are calling them in and as they are getting margin called that’s, actually a buy signal on top. So, therefore, the cycle continues and it the short squeeze basically fulfills itself it’s a self fulfilling prophecy in a way, but is this growth long term and should you buy gamestop today or should you sell game stock and, more importantly, should you show it well in reverse Order, if you’re looking to show it? No, no, you shouldn’t! As of all what i’ve just talked about there’s too much short interest right now, and you should wait if you’re in game stock and you’re looking to sell. I strongly suggest you take some profits, because this extension may never happen ever again. You may get more pushes you may not, but definitely 300. 3. 000 in 12. Less than 12 months is crazy gains and you should be locking in some gains.
Should you buy it here? Well, if it’s a day trade, i may be a good setup, maybe for a day trade for investing. No, i don’t think there’s many investors in this. I think there’s a lot of day traders looking to make a quick buck. I think that if gamestop is to survive, it’s going to have to shift its business model and there is rumors that it’s going to shift to an e commerce and they’re closing down a lot of stores which might help keep the company alive. But i don’t think it will thrive. All of this will need investment and i think that they’re going to do that via an offering. They have done offerings in the past and if they do offer shares on a 424b effect or a warrant, then it’s going to drive the price down very very quickly, as they add liquidity into the stock. So, although there is downside, there is still a lot of upside, therefore making it a no trade for me again if you’re in it i’d love to know your thoughts down in the comments so feel free to hit me up down there. But more importantly, what was your last game that you bought at gamestop? I don’t think i’ve ever been to one, because i tend to just get my games from tesco while i’m out doing my usual grocery shopping. I pick up the latest fifa it’s very convenient. So my prediction is very very simple: i’m expecting a 30 to 50 deviation up and down from its current price in the next couple of weeks and months.
Don’T know if that’s up or down but that’s the flexibility and volatility i’m thinking this stock’s gon na do but in five years time. Well, i think you’re going to be looking at another low cap stock with a market cap around about three or four hundred billion. The fact of the matter is it’s just when they fry these warrants and offerings when short sellers finally do win on this one. In my opinion, i don’t think gamestop’s worth five billion, and i think you probably do agree if i’m wrong. Let me know down in the comments. Please make sure you have hit that like button. It massively helps me out. Even if we disagree, we can agree that that, like button should be blue thanks for watching if you’ve got any other stocks.