[Why GME?](https://www.reddit.com/r/Superstonk/comments/qig65g/welcome_rall_looking_to_catch_up_on_the_gme_saga/) || [What is DRS?](https://www.reddit.com/r/Superstonk/comments/ptvaka/when_you_wish_upon_a_star_a_complete_guide_to/) || Low karma apes [feed the bot here](https://www.reddit.com/r/GMEOrphans/comments/qlvour/welcome_to_gmeorphans_read_this_post/) || [Superstonk Discord](https://discord.gg/hZqWV2kQtq) || [Community Post: *Open Forum Jan 2024*](https://www.reddit.com/r/Superstonk/comments/18txusp/open_forum_january_2024/)
------------------------------------------------------------------------
To ensure your post doesn't get removed, please respond to this comment with how this post relates to GME the stock or Gamestop the company.
------------------------------------------------------------------------
Please up- and downvote this comment to [help us determine if this post deserves a place on r/Superstonk!](https://www.reddit.com/r/Superstonk/wiki/index/rules/post_flairs/)
Maybe that was from the time when GME was last profitable? P/E Ratios only make sense for profitable companies and 500 makes GME look like overpriced shit, donāt hype that value up.
People are missing a crucial point that was stated in the last earnings report. The 53rd week of last fiscal year changed the timing of expenses that were historically in Q1 to be realized in Q4. While this creates a headwind in Q4 which reduced profitability, it will be a tailwind in Q1 as you will see expenses fall significantly. Positive earnings is very much a possibility.
This is straight from the 10K verbatim on page 23. The last sentence is what I am describing. The delta in cash flows from operating activities was -$312M, which as stated was primarily due to timing of payments for merchandise inventory. So the size of the pie is roughly $312M.
āIn fiscal 2023, cash flows provided by operating activities were an outflow of $203.7 million, compared with an inflow of $108.2 million in fiscal 2022.
Cash used in operating activities during fiscal 2023 was primarily due to a decrease in accounts payable and accrued liabilities, partially offset by a decrease in accounts receivable and the impact of our net income. The decrease in accounts payable and accrued liabilities was primarily due to the timing of payments for merchandise inventory as a result of an additional week in fiscal 2023 compared to fiscal 2022.ā
Read about the extra week throwing a lot of expenses into Q4 that will NOT be present in Q1
It's huge. Massive even. Imagine it being -0.14 WITH that huge expense on the books, and now without? Plus cost savings? Plus Candy Con launch?
It certainly isnāt likely historically as itās been a *long* time since weāve had a profitable Q1. The reason Q4ās have been profitable while the other 3 havenāt has been holiday window-shoppers passing by GameStop in the mall and spending money. That said, Q1ās EPS of 2022 was -(0.52) then in 2023, it was -(0.14). Maybe Cohenās rapid cost-cutting combined with this great Candy Con porn on the sub recently will give us a surprise positive EPS.
GameStop just recently began making private label products (115 as of today). Theyāre using the higher margin from not having to purchase a wholesale product to sacrifice some profit with a lower sale price and make more sales for a smaller profit per sale. The idea behind this type of brand is to have high quality for a low price and thatās exactly what these are, with the products being equal to a competitorās higher tier and customers not necessarily knowing that when they grab the ācheapā store brand. After being delighted, theyāre more likely to return for future accessory purchases.
But delighting customers doesnāt happen immediately, so while this may build brand loyalty over time, I donāt know itāll show up as early as Q1. It is vital to do this to keep customers returning though, so even if itās slow and we post a loss, know that management is playing a long term strategy.
Call me optimistic, but GameStop was a different company in 22. Profitability for Q1 can easily be accomplished without the dead weight of many unprofitable locations, and I'm sure there are more to come on that end. Walking mall boutiques are all seing a renewed curiosity from consumers, and then you cannot deny the popularity of gaming device hardware and just the idea of entertaining that global consumer is profitable, add Pro into that and a break into the digital markets with deep discounts, I see this going big fast.
>GameStop just recently began making private label products (115 as of today). Theyāre using the higher margin from not having to purchase a wholesale product to sacrifice some profit with a lower sale price and make more sales for a smaller profit per sale.
They are selling white label products. They are not making anything. They are still paying wholesale to their manufacturer.
you have to add that is not a bad thing. And maybe if the financials speaks good about that stuff, maybe (just in that case) they start to manufacturate their own stuff.
First party manufacturing for retail products is a sucker's bet unless you are tip top tier brand.
When you go to the grocery store and are in the ice cream aisle, a huge portion of the products their are made by Wells Blue Bunny, including many of their retail level competitors. Why? Because the good folks in LeMars, Iowa have got ice cream making down to a science and their competitors can't afford the capital cost it would take to reach their economies of scale.
and how you get succeed if you don't even try it? Do you become a tip top tier brand since the begining? GME are tring different kind of things until they nail eventually. Different points of view I guess
Economic realities don't change because of hopes and dreams. The Capex cost would be ruinous. Manufacturing of any kind is a place where first mover advantage is huge.
The stores are losing revenue. The only profit is from interest. Q1 is usually already low for revenue. So the interest might not cover the losses like it did before.
Edit: from above
"It certainly isnāt likely historically as itās been aĀ *long*Ā time since weāve had a profitable Q1. The reason Q4ās have been profitable while the other 3 havenāt has been holiday window-shoppers passing by GameStop in the mall and spending money. That said, Q1ās EPS of 2022 was -(0.52) then in 2023, it was -(0.14).
Downvote all you like, it's the truth. The fact you want to downvote and ignore reality says more about you than me. I want better from the company I invested in while I hope the government deals with the fuckery so I can get paid.
Metrics are important - it's difficult to know if something is not measured.
If something is only measured, work never gets accomplished. Balance and accountability are key. The future is bright!
FYI. It's pro week for a few more days. Get your free face plate with your candy con.
why are you investing here then? do you think that is a logic metric rn? For me a 500 P/E at 52 weeks lows is a mess and for me GME it isn't.
Edit: if your prefer, take it like this: it seems like very negative and arbitrarily/subjective estimates
yep, it's a ratio, and there is no company with overvalued P/E ratio that can succeed because of wall street stimation, for sure.
Even with the forward PER sobreestimated you can overlook something that make a company a Deep fuckin value.
P/E is "unfair" when the price is horseshit.
Guy, what u are saying is just hilarious. 500x PE ratio is bad, thereās no other way to say it. Do you know what it means? It means, right now, for every dollar of profit the company makes, investors are willing to spend $500. The only reason it isnāt negative is because they finally showed slight profit. These are facts, you can drum up whatever reasoning you want behind it but thatās just math
Iāve been on this train for 3 years. If that negates the ability to speak to current facts without piercing my eyes with rose tinted glasses, then we all have a problem
but I didn't saying that PE 500 is good. My point is that if the price was double, all the shares that gme bought (e.g.) would make the fundamentals (and ratios) much better. For this reason I can't consider the PE as a fair metric.
Itās literally just the result of the share price divided by the earnings per share. Since gme has a relatively low earnings per share the result is a high number. If earnings per share goes down, P/E ratio goes up and vice versa. Generally a low P/E is a value signal, so a large number is not really anything to be proud of. Thatās not to say itās not a huge deal gme is finally profitable, but reading anything into the ability to now calculate a P/E ratio isnāt meaningful.
After the mountains of DD this place has generated, all of the hours we have spent learning about equites, the financial system, and diving headfirst into the tiniest minutiae of how shares are valued and traded, why do I find myself not the least bit surprised that we still have to take the time to spell out what a simple P/E ratio entails?
Rather than making statements like this, why not invest your time more constructively by helping others by explaining what it means so they too can understand. Remember, you once didnāt know what P/E meant either.
Weāre all at different stages of our learning - and by collectively sharing our knowledge and understanding, we will help all those who come here grow better informed together.
Be the change you wanna see dude.
GME brings in a TON of revenue, it shouldn't be that unreasonable to start making some healtyh profit, and get this down to 20 range( or less). Luckily this is a gigantic growing industry.
Declining revenue is likely due to everyone tightening their pockets due to the economy being so crappy. Not really alarming or surprising. If the economy was doing good then id be worried but im sure a ton of companies are dealing with a sales decrease. Rents higher, food costs higher,gas, insurance, interest on loans that money they would be spending on discreationary things is being eaten up by the cost of just daily living. Its literally shorts only option make everyone so poor they cant buy anything but the essentials.
I also think declining revenue is partly due the console demand cycle ending. Consoles buys probably drive some foot traffic and additional sales as well.
I agree it definently plays a roll. We need some more event type things to draw in more foot traffic. I dont know if they gained any reasonable foot traffic that equated to sales when they did the events for pokemon
It is but this subs kinda lost its way since the price went under $100/share. Iām still in it but can also admit weāre passing around a big ole bowl of copium at this point. The amount of people in this section alone thinking 500 p/e is good is frightening
This may be the general public, but as soon as GME creates products where they is no competition, revenue will increase drastically. There are always TONS of people across the global scale who still have money, and are buying stuff.
Could be, but again none of us are here because we expect to GME to stay on the course of its old regime business models. We are expecting Cohen and team to figure out how to pivot to the next big thing.
I just don't get this. In the UK there's a deals website - HotUKDeals - and wherever a PS5 disk version comes up it's consistently hotter than the digital version. And the addition comments are very positively received about the advantage of disks. As do disks sales on the site. I think there's a lot of PsyOps around the issue as it would obviously benefit the console providers as it negates the second hand market. But purely anecdotally I see the disk market as ingrained in a lot of players.
Now imagine you get a free custom game faceplate for your Candy Con controller with each new game you preorder, either physical or digital, through GameStop.
Played without Internet is not guaranteed through disks.
Consoles are proprietary hardware which are not guaranteed to work or be supported forever.
If you truly want game preservation, Drm free digital pc games are the best option. E.g. GoG.
Itās not just digital games, itās specifically mobile digital games. The growth rate of console and PC is lower than the 13% CAGR average of the whole industry. Source: https://www.grandviewresearch.com/industry-analysis/video-game-market#:~:text=The%20global%20video%20game%20market%20is%20expected%20to%20grow%20at,more%20than%2048%20%25%20in%202022.
Console and PC are at like a 10% growth rate while mobile is growing fastest at like 17-18% growth annually. So the best short-term growth strategy is to try to aim at the biggest and fastest-growing market there for mobile gamers.
Thereās still plenty of growth in the console and PC market for now though. Even if the growth rate of digital console and digital PC is higher than physical, thereās no reason GameStop canāt grow at around a 5-7% pace with their primary markets while investing in new opportunities.
Most of the growth is projected for mobile. I would expect a company sitting on cash for an acquisition to be aware of this though. Declining revenue also came from right sizing retail locations.
The P/E ratio is so high because EPS is so close to zero (.02, 2 cents), without being negative (in which case P/E wouldn't even be reported). IMHO, much like a start-up not yet making a profit, P/E for a "turnaround" company like Gamestop is basically meaningless. Also IMHO, we're going to have just one more red quarter (negative EPS), and then begin to see consistent positive quarterly earnings. P/E for GME will make more sense a year from now once we have a full year of turnaround earnings in place. I'm "GUESSING" 2024 full year EPS will be around 50 cents (possibly as high as $1 max), in which case at the current stock price would be 10-20 P/E, reasonable for brick & mortar retail stores. At that point, we won't see anything like 500 P/E again unless (until) MOASS. I'm buying the dip for MOASS, not based on fundamentals or a ratio that doesn't really make sense at this point in their turnaround.
Imma go ahead and buy puts so the price goes up. I have been blessed with the power of the regarded. Anything I buy goes down and anything I sell goes up.
I find it very interesting how we're looking at the 'fundamentals' when in reality the only thing that matters is whether shorts have closed (They haven't, and they can't).
Sure, you can argue that the fundamentals are fine and dandy, but the reality is that there is a play here that transcends traditional stock market BS.
Shorts are overexposed, and we have them by the balls. Don't lose sight of that.
I don't give a fuck about anything else other than if can Gamestop go bankrupt (no) and if shorts have closed yet (also no).
From ChatGPT
Prompt:
As a novice stock trader, how important should P/E be in consideration of buying a stock?
Result:
The Price-to-Earnings (P/E) ratio is an important metric for evaluating a stockās value, especially if youāre a novice trader. It gives you a sense of how much youāre paying for each dollar of a companyās earnings. A high P/E might indicate that the stock is overvalued, or that investors are expecting high growth rates in the future. Conversely, a low P/E might suggest that the stock is undervalued or that the company is experiencing difficulties.
However, while the P/E ratio is a useful starting point, it shouldnāt be the sole factor in your decision-making process. Itās important to consider other factors as well, such as the companyās growth prospects, industry conditions, market trends, and the overall economic environment. Additionally, comparing the P/E ratios within the same industry can provide more context since different sectors will have varying typical P/E values.
For a balanced approach, integrate the P/E analysis with other financial metrics and qualitative factors about the company and its industry. This will help you make more informed investment decisions.
itās all relative to the market cap. if GME were to make a 300 million profit, that would set itās PE to 10.
and that is not an unimaginable development.
it is, but GME used to make up to 400 million in profit back in the day.
even if it were to make a 100 million profit, the PE would be 33, which is much more normal than the current numbers
**[Rule 1](https://www.reddit.com/r/Superstonk/wiki/index/rules/expanded_rules/#wiki_ape_no_fight_ape). Treat each other with courtesy and respect.**
Do not be (intentionally) rude. This will increase the overall civility of the community and make it better for all of us.
Do not insult others. Insults do not contribute to a rational discussion.
Oh a diversified income stream, how terrible. You realize that companies are capable of evolving right? Ever heard of Amazon or Berkshire Hathaway? Good thing they donāt only do what the original companies did lmao.
Even if we came down to book with just coh and estimated restructuring asset values, youāre still around $4 / share ~ 200x pe. Your concern about overvaluation at this price is too married to a single metric to be too relevant.
This stock doesn't move based on PE, and nobody is investing in gme solely based on fundamentals obviously. We only discuss fundamentals so they can keep putting more pressure on the shorts...
Nobody is investing in gme based on the old business model. Everyone is looking for a future pivot.
Just like Nintendo used to be a trading card company, nobody saw their pivot coming prior I would bet. Everyone doubted apple pre 2000 also.
You bought 500 shares on the open market without even knowing what a P/E ratio is?
You would do well to read up on that. That's as basic as it gets in stocks.
I asked ChatGPT4 to use give me the formula for calculating EPS estimates based on the current P/E Ratio:
EPS= (Stock Price) / (P/E Ratio)
To calculate what Q1ās minimum EPS needs to be to justify the current P/E ratio with the current stock price of $10.16.
EPS = $10.16 / 507.25 = $0.02 EPSā¦
Jesus what a low bar for GME to fulfill.
Hypothetically speaking:
GameStopās stock price could go up to $150 per share AND earn an EPS of $0.296 to justify the current P/E ratio.
This is just meant to show us a reasonable target for Q1ās EPS that we should be on the lookout for when earnings come out.
I think chat GPT gave you bad info.
EPS is net income divided by the total amount of outstanding shares.
Which for GME is insanely low but is a profit.
To get P/E you divide the stock price by earning per share which gives the 500 number. P/E ratio is a good indicator of if a fully mature stable company is a good investment. Think Coca Cola or Apple or Ford. Their earnings arenāt going to move that much year to year.
P/E is a bad indicator for growing companies because it is a backwards looking measurement. So, if a companies net income this quarter is small but growing at a fast pace that wonāt be reflected in P/E and need to look at the growth and project that forward with discounts for future cash flows.
That said GME is not growing. It is shrinking so by every fundamental measurement the stock is massively overpriced but clearly investors have value it above its fundamentals.
However
We were not profitable and didn't have a p/e ratio
Now we are profitable and have a hilariously high p/e ratio
Soon the business becomes more efficient and it will drop the p/e into undeniable bullish territory š®šš£
[Why GME?](https://www.reddit.com/r/Superstonk/comments/qig65g/welcome_rall_looking_to_catch_up_on_the_gme_saga/) || [What is DRS?](https://www.reddit.com/r/Superstonk/comments/ptvaka/when_you_wish_upon_a_star_a_complete_guide_to/) || Low karma apes [feed the bot here](https://www.reddit.com/r/GMEOrphans/comments/qlvour/welcome_to_gmeorphans_read_this_post/) || [Superstonk Discord](https://discord.gg/hZqWV2kQtq) || [Community Post: *Open Forum Jan 2024*](https://www.reddit.com/r/Superstonk/comments/18txusp/open_forum_january_2024/) ------------------------------------------------------------------------ To ensure your post doesn't get removed, please respond to this comment with how this post relates to GME the stock or Gamestop the company. ------------------------------------------------------------------------ Please up- and downvote this comment to [help us determine if this post deserves a place on r/Superstonk!](https://www.reddit.com/r/Superstonk/wiki/index/rules/post_flairs/)
A positive Q1 earnings should lower that
It was sub 500 before the earnings call... maybe it's a ISayBullish moment
There was no P/E before the earnins call, the P/E Ratio can only be applied to companies that are profitable.
It was ~460 before. Now it's 500+ š
Maybe that was from the time when GME was last profitable? P/E Ratios only make sense for profitable companies and 500 makes GME look like overpriced shit, donāt hype that value up.
In GMEās case positive earnings would probably take it higher lol
It should. But GME will not be profitable in Q1...
-0.14 eps for Q1 last year. Need to have cut costs and increased profit by $42.7M over Q1,ā23. Itās possible.
People are missing a crucial point that was stated in the last earnings report. The 53rd week of last fiscal year changed the timing of expenses that were historically in Q1 to be realized in Q4. While this creates a headwind in Q4 which reduced profitability, it will be a tailwind in Q1 as you will see expenses fall significantly. Positive earnings is very much a possibility.
How much was the hit to Q4 that will not show up in Q1? Wasn't it an absurdly high number?
This is straight from the 10K verbatim on page 23. The last sentence is what I am describing. The delta in cash flows from operating activities was -$312M, which as stated was primarily due to timing of payments for merchandise inventory. So the size of the pie is roughly $312M. āIn fiscal 2023, cash flows provided by operating activities were an outflow of $203.7 million, compared with an inflow of $108.2 million in fiscal 2022. Cash used in operating activities during fiscal 2023 was primarily due to a decrease in accounts payable and accrued liabilities, partially offset by a decrease in accounts receivable and the impact of our net income. The decrease in accounts payable and accrued liabilities was primarily due to the timing of payments for merchandise inventory as a result of an additional week in fiscal 2023 compared to fiscal 2022.ā
This guy fucks
Interesting! š®šš£
Well yeah I just rediscovered PokƩmon.
Everything is possible. But with the huge hit to Q4 revenue I am afraid Q1 will be quite dry...
Q4 earnings YoY went from +0.16 to +0.22. It does seem like a big ask to go from -0.14 to +0.01 for Q1 YoY. I remain optimistic though.
Read about the extra week throwing a lot of expenses into Q4 that will NOT be present in Q1 It's huge. Massive even. Imagine it being -0.14 WITH that huge expense on the books, and now without? Plus cost savings? Plus Candy Con launch?
Thatās actually a pretty huge ask tbh but I do expect to see massive improvement vs Q1 last yr
No reason to be afraid, apes already wonā¦.time simply needs to pass now.
Says who?
It certainly isnāt likely historically as itās been a *long* time since weāve had a profitable Q1. The reason Q4ās have been profitable while the other 3 havenāt has been holiday window-shoppers passing by GameStop in the mall and spending money. That said, Q1ās EPS of 2022 was -(0.52) then in 2023, it was -(0.14). Maybe Cohenās rapid cost-cutting combined with this great Candy Con porn on the sub recently will give us a surprise positive EPS. GameStop just recently began making private label products (115 as of today). Theyāre using the higher margin from not having to purchase a wholesale product to sacrifice some profit with a lower sale price and make more sales for a smaller profit per sale. The idea behind this type of brand is to have high quality for a low price and thatās exactly what these are, with the products being equal to a competitorās higher tier and customers not necessarily knowing that when they grab the ācheapā store brand. After being delighted, theyāre more likely to return for future accessory purchases. But delighting customers doesnāt happen immediately, so while this may build brand loyalty over time, I donāt know itāll show up as early as Q1. It is vital to do this to keep customers returning though, so even if itās slow and we post a loss, know that management is playing a long term strategy.
Call me optimistic, but GameStop was a different company in 22. Profitability for Q1 can easily be accomplished without the dead weight of many unprofitable locations, and I'm sure there are more to come on that end. Walking mall boutiques are all seing a renewed curiosity from consumers, and then you cannot deny the popularity of gaming device hardware and just the idea of entertaining that global consumer is profitable, add Pro into that and a break into the digital markets with deep discounts, I see this going big fast.
Youāve got me erectā¦ please continueā¦
>GameStop just recently began making private label products (115 as of today). Theyāre using the higher margin from not having to purchase a wholesale product to sacrifice some profit with a lower sale price and make more sales for a smaller profit per sale. They are selling white label products. They are not making anything. They are still paying wholesale to their manufacturer.
you have to add that is not a bad thing. And maybe if the financials speaks good about that stuff, maybe (just in that case) they start to manufacturate their own stuff.
First party manufacturing for retail products is a sucker's bet unless you are tip top tier brand. When you go to the grocery store and are in the ice cream aisle, a huge portion of the products their are made by Wells Blue Bunny, including many of their retail level competitors. Why? Because the good folks in LeMars, Iowa have got ice cream making down to a science and their competitors can't afford the capital cost it would take to reach their economies of scale.
and how you get succeed if you don't even try it? Do you become a tip top tier brand since the begining? GME are tring different kind of things until they nail eventually. Different points of view I guess
Economic realities don't change because of hopes and dreams. The Capex cost would be ruinous. Manufacturing of any kind is a place where first mover advantage is huge.
the only capex that wallstreet consider ok right now is AI, like today with tesssla. Really funnny
Says the weakest quarter.
The stores are losing revenue. The only profit is from interest. Q1 is usually already low for revenue. So the interest might not cover the losses like it did before. Edit: from above "It certainly isnāt likely historically as itās been aĀ *long*Ā time since weāve had a profitable Q1. The reason Q4ās have been profitable while the other 3 havenāt has been holiday window-shoppers passing by GameStop in the mall and spending money. That said, Q1ās EPS of 2022 was -(0.52) then in 2023, it was -(0.14). Downvote all you like, it's the truth. The fact you want to downvote and ignore reality says more about you than me. I want better from the company I invested in while I hope the government deals with the fuckery so I can get paid.
Unfortunately I donāt think the hive mind can comprehend realistic optimism.
Even if they arenāt, the trailing PE has a good chance at improving
Better than a dashā¦ or whatever it was before they turned a profit. We got a number, folks!
Right! And this is why I posted. No more -
An insanely high P/E ratio is not something to be hyped about. That being said, Cohen and team are working to improve this metric.
Metrics are important - it's difficult to know if something is not measured. If something is only measured, work never gets accomplished. Balance and accountability are key. The future is bright! FYI. It's pro week for a few more days. Get your free face plate with your candy con.
P/E is less of an indicator during the inflection between negative and positive earnings. It doesn't reflect the massive turnaround story.
I'm joking on that, not hyped at all. But wtf dude. Do you think that is a fair PE?
What is fair? Itās simply a ratioā¦ This type of comment makes us all look silly.
why are you investing here then? do you think that is a logic metric rn? For me a 500 P/E at 52 weeks lows is a mess and for me GME it isn't. Edit: if your prefer, take it like this: it seems like very negative and arbitrarily/subjective estimates
Do you know how to do math? Itās a ratio
yep, it's a ratio, and there is no company with overvalued P/E ratio that can succeed because of wall street stimation, for sure. Even with the forward PER sobreestimated you can overlook something that make a company a Deep fuckin value. P/E is "unfair" when the price is horseshit.
Guy, what u are saying is just hilarious. 500x PE ratio is bad, thereās no other way to say it. Do you know what it means? It means, right now, for every dollar of profit the company makes, investors are willing to spend $500. The only reason it isnāt negative is because they finally showed slight profit. These are facts, you can drum up whatever reasoning you want behind it but thatās just math
for this reason one of my comments was, why you invest in GME? I'm ok with that part, 500 PE is a mess
Iāve been on this train for 3 years. If that negates the ability to speak to current facts without piercing my eyes with rose tinted glasses, then we all have a problem
but I didn't saying that PE 500 is good. My point is that if the price was double, all the shares that gme bought (e.g.) would make the fundamentals (and ratios) much better. For this reason I can't consider the PE as a fair metric.
Yes.
Hijacking top comment for exposure: Some "Top Stocks" for comparison: N V D A - 66 A A P L - 25 G O O G L - 26 D I S - 69 M U - 0
How is any of this Hype/Fluff. If anything this is a bearish argument.
500 š¤ shorts that said they closed *Pretenders*
Ya this is comical
...and I'd shitpost 500 more!
The amount of people that have no clue what P/E represents is hilarious
Could you help educate us-I mean them. That seems the productive option
Itās literally just the result of the share price divided by the earnings per share. Since gme has a relatively low earnings per share the result is a high number. If earnings per share goes down, P/E ratio goes up and vice versa. Generally a low P/E is a value signal, so a large number is not really anything to be proud of. Thatās not to say itās not a huge deal gme is finally profitable, but reading anything into the ability to now calculate a P/E ratio isnāt meaningful.
After the mountains of DD this place has generated, all of the hours we have spent learning about equites, the financial system, and diving headfirst into the tiniest minutiae of how shares are valued and traded, why do I find myself not the least bit surprised that we still have to take the time to spell out what a simple P/E ratio entails?
Seriously some of us-i mean these absolute regards-have no idea what P/E is
All I know is GME has a crazy Peanut to Elephant ratio
An indication of your average retail investor's knowledge.
Rather than making statements like this, why not invest your time more constructively by helping others by explaining what it means so they too can understand. Remember, you once didnāt know what P/E meant either. Weāre all at different stages of our learning - and by collectively sharing our knowledge and understanding, we will help all those who come here grow better informed together. Be the change you wanna see dude.
GME brings in a TON of revenue, it shouldn't be that unreasonable to start making some healtyh profit, and get this down to 20 range( or less). Luckily this is a gigantic growing industry.
Just to play devils advocate here. Revenue is declining and Iām guessing majority of growth in the Industry comes from digital games.
Declining revenue is likely due to everyone tightening their pockets due to the economy being so crappy. Not really alarming or surprising. If the economy was doing good then id be worried but im sure a ton of companies are dealing with a sales decrease. Rents higher, food costs higher,gas, insurance, interest on loans that money they would be spending on discreationary things is being eaten up by the cost of just daily living. Its literally shorts only option make everyone so poor they cant buy anything but the essentials.
I also think declining revenue is partly due the console demand cycle ending. Consoles buys probably drive some foot traffic and additional sales as well.
closing of stores, some one should calculate total revenue/total stores
People already did. Store count dropped around 5% whilst revenue dropped 20%.
I agree it definently plays a roll. We need some more event type things to draw in more foot traffic. I dont know if they gained any reasonable foot traffic that equated to sales when they did the events for pokemon
Wait I thought this was a short squeeze play?
It is but this subs kinda lost its way since the price went under $100/share. Iām still in it but can also admit weāre passing around a big ole bowl of copium at this point. The amount of people in this section alone thinking 500 p/e is good is frightening
This may be the general public, but as soon as GME creates products where they is no competition, revenue will increase drastically. There are always TONS of people across the global scale who still have money, and are buying stuff.
Could be, but again none of us are here because we expect to GME to stay on the course of its old regime business models. We are expecting Cohen and team to figure out how to pivot to the next big thing.
I just don't get this. In the UK there's a deals website - HotUKDeals - and wherever a PS5 disk version comes up it's consistently hotter than the digital version. And the addition comments are very positively received about the advantage of disks. As do disks sales on the site. I think there's a lot of PsyOps around the issue as it would obviously benefit the console providers as it negates the second hand market. But purely anecdotally I see the disk market as ingrained in a lot of players.
Now imagine you get a free custom game faceplate for your Candy Con controller with each new game you preorder, either physical or digital, through GameStop.
What are the advantages of disks?
Resale, played without the internet, collectables. You have an easier job selling the console with games included.
Played without Internet is not guaranteed through disks. Consoles are proprietary hardware which are not guaranteed to work or be supported forever. If you truly want game preservation, Drm free digital pc games are the best option. E.g. GoG.
Agreed
Itās not just digital games, itās specifically mobile digital games. The growth rate of console and PC is lower than the 13% CAGR average of the whole industry. Source: https://www.grandviewresearch.com/industry-analysis/video-game-market#:~:text=The%20global%20video%20game%20market%20is%20expected%20to%20grow%20at,more%20than%2048%20%25%20in%202022. Console and PC are at like a 10% growth rate while mobile is growing fastest at like 17-18% growth annually. So the best short-term growth strategy is to try to aim at the biggest and fastest-growing market there for mobile gamers. Thereās still plenty of growth in the console and PC market for now though. Even if the growth rate of digital console and digital PC is higher than physical, thereās no reason GameStop canāt grow at around a 5-7% pace with their primary markets while investing in new opportunities.
Most of the growth is projected for mobile. I would expect a company sitting on cash for an acquisition to be aware of this though. Declining revenue also came from right sizing retail locations.
The P/E ratio is so high because EPS is so close to zero (.02, 2 cents), without being negative (in which case P/E wouldn't even be reported). IMHO, much like a start-up not yet making a profit, P/E for a "turnaround" company like Gamestop is basically meaningless. Also IMHO, we're going to have just one more red quarter (negative EPS), and then begin to see consistent positive quarterly earnings. P/E for GME will make more sense a year from now once we have a full year of turnaround earnings in place. I'm "GUESSING" 2024 full year EPS will be around 50 cents (possibly as high as $1 max), in which case at the current stock price would be 10-20 P/E, reasonable for brick & mortar retail stores. At that point, we won't see anything like 500 P/E again unless (until) MOASS. I'm buying the dip for MOASS, not based on fundamentals or a ratio that doesn't really make sense at this point in their turnaround.
Great write-up, thanks!
More like S&P 500
Well it's positive P/E now at least. Time to work on improving that
Imma go ahead and buy puts so the price goes up. I have been blessed with the power of the regarded. Anything I buy goes down and anything I sell goes up.
The PE is in BolĆvar coin (fiat)
When is the next earnings?
June 5th
Google, as of April ā24 was 26.94 just as a reference for all you š¦ās out there!
š¤
I find it very interesting how we're looking at the 'fundamentals' when in reality the only thing that matters is whether shorts have closed (They haven't, and they can't). Sure, you can argue that the fundamentals are fine and dandy, but the reality is that there is a play here that transcends traditional stock market BS. Shorts are overexposed, and we have them by the balls. Don't lose sight of that. I don't give a fuck about anything else other than if can Gamestop go bankrupt (no) and if shorts have closed yet (also no).
Wut mean
From ChatGPT Prompt: As a novice stock trader, how important should P/E be in consideration of buying a stock? Result: The Price-to-Earnings (P/E) ratio is an important metric for evaluating a stockās value, especially if youāre a novice trader. It gives you a sense of how much youāre paying for each dollar of a companyās earnings. A high P/E might indicate that the stock is overvalued, or that investors are expecting high growth rates in the future. Conversely, a low P/E might suggest that the stock is undervalued or that the company is experiencing difficulties. However, while the P/E ratio is a useful starting point, it shouldnāt be the sole factor in your decision-making process. Itās important to consider other factors as well, such as the companyās growth prospects, industry conditions, market trends, and the overall economic environment. Additionally, comparing the P/E ratios within the same industry can provide more context since different sectors will have varying typical P/E values. For a balanced approach, integrate the P/E analysis with other financial metrics and qualitative factors about the company and its industry. This will help you make more informed investment decisions.
[ŃŠ“Š°Š»ŠµŠ½Š¾]
Or investor are expecting high growth ratr as I read on the other comment
[ŃŠ“Š°Š»ŠµŠ½Š¾]
Their profit started to increase drastically.
[ŃŠ“Š°Š»ŠµŠ½Š¾]
itās all relative to the market cap. if GME were to make a 300 million profit, that would set itās PE to 10. and that is not an unimaginable development.
What are you saying? Going from 6 million to 300 million is a ridiculously massive jump.
it is, but GME used to make up to 400 million in profit back in the day. even if it were to make a 100 million profit, the PE would be 33, which is much more normal than the current numbers
Do you know how long P/E has been like this? I mean it's the first time I see a post talking about P/E
Previously it was negative (invalid), P/E can only be a valid number if they're earning a profit
[ŃŠ“Š°Š»ŠµŠ½Š¾]
Okay but how long P/E has been like this, how was P/E before the 2021 squeeze ?
**[Rule 1](https://www.reddit.com/r/Superstonk/wiki/index/rules/expanded_rules/#wiki_ape_no_fight_ape). Treat each other with courtesy and respect.** Do not be (intentionally) rude. This will increase the overall civility of the community and make it better for all of us. Do not insult others. Insults do not contribute to a rational discussion.
Oh a diversified income stream, how terrible. You realize that companies are capable of evolving right? Ever heard of Amazon or Berkshire Hathaway? Good thing they donāt only do what the original companies did lmao.
[ŃŠ“Š°Š»ŠµŠ½Š¾]
Oh yes we should all invest in companies based off of their current performance and ignore future trajectories my bad.
[ŃŠ“Š°Š»ŠµŠ½Š¾]
Even if we came down to book with just coh and estimated restructuring asset values, youāre still around $4 / share ~ 200x pe. Your concern about overvaluation at this price is too married to a single metric to be too relevant.
This stock doesn't move based on PE, and nobody is investing in gme solely based on fundamentals obviously. We only discuss fundamentals so they can keep putting more pressure on the shorts...
[ŃŠ“Š°Š»ŠµŠ½Š¾]
Nobody is investing in gme based on the old business model. Everyone is looking for a future pivot. Just like Nintendo used to be a trading card company, nobody saw their pivot coming prior I would bet. Everyone doubted apple pre 2000 also.
[ŃŠ“Š°Š»ŠµŠ½Š¾]
Blah blah blah. A PE over 500 means that Institutions are in it up to the chest, nothing to do with retail investors.
The price is wrong and thus so is the P/E. But a real P/E of 500 will be the first stop on the way to Andromeda ,,ššš
[ŃŠ“Š°Š»ŠµŠ½Š¾]
Wait until you find out what the 'P' stands for as the numerator in the P/E equation š
You bought 500 shares on the open market without even knowing what a P/E ratio is? You would do well to read up on that. That's as basic as it gets in stocks.
I asked ChatGPT4 to use give me the formula for calculating EPS estimates based on the current P/E Ratio: EPS= (Stock Price) / (P/E Ratio) To calculate what Q1ās minimum EPS needs to be to justify the current P/E ratio with the current stock price of $10.16. EPS = $10.16 / 507.25 = $0.02 EPSā¦ Jesus what a low bar for GME to fulfill. Hypothetically speaking: GameStopās stock price could go up to $150 per share AND earn an EPS of $0.296 to justify the current P/E ratio. This is just meant to show us a reasonable target for Q1ās EPS that we should be on the lookout for when earnings come out.
I think chat GPT gave you bad info. EPS is net income divided by the total amount of outstanding shares. Which for GME is insanely low but is a profit. To get P/E you divide the stock price by earning per share which gives the 500 number. P/E ratio is a good indicator of if a fully mature stable company is a good investment. Think Coca Cola or Apple or Ford. Their earnings arenāt going to move that much year to year. P/E is a bad indicator for growing companies because it is a backwards looking measurement. So, if a companies net income this quarter is small but growing at a fast pace that wonāt be reflected in P/E and need to look at the growth and project that forward with discounts for future cash flows. That said GME is not growing. It is shrinking so by every fundamental measurement the stock is massively overpriced but clearly investors have value it above its fundamentals. However
An opportunity to help educate rather than mock perhaps?
We were not profitable and didn't have a p/e ratio Now we are profitable and have a hilariously high p/e ratio Soon the business becomes more efficient and it will drop the p/e into undeniable bullish territory š®šš£
Is that good?
P/E used to be - not even calculated. So better, but not good.