GameStop: Dying Thieves or Evolving Thieves?

How can you support someone who stole from children? GameStop stole from me as a child. I ordered NFL QB Club online for $10, then when it showed up it had a sticker on it for $2.99. I had my mom call GameStop to complain, but nothing happened. I’m still not fully over it.

GameStop is becoming a divisive company among investors. Many view it as a relic of the retail days. Not only is business trending towards e-commerce, but gaming is going digital. The age of the cartridge is gone and so will be all physical forms of gaming. On top of all of this, GameStop had declining sales and a poor overall financial situation. The management team doesn’t exactly give me a ton of confidence either. A team filled with retail executives. Why would anyone invest in a dying brick and mortar retail with an uninspiring management team?

The argument is GameStop is evolving to become an omni-channel gaming brand company. Gaming is still a booming industry, even if the age of physical cartridges and disks are dying. GameStop is trying new things like a gaming café. GameStop also announced a partnership with Microsoft in which Microsoft will share a portion of digital revenue from systems sold by GameStop. Another portion of GameStop’s plan is to de-densify their locations, which should lead to a stronger financial picture. Institutional investors are also adding shares. Driving the changes are new board members (Co-Founder of $CHWY and two other former $CHWY executives). GameStop does have an impressive board to offset it’s lack luster management team. Initial sales results are promising. GameStop has an increasing amount of smart people embracing it. Oh, and it’s still dirt cheap.

The lesson here is to be open. Interact with other investors who think differently. I initially laughed at the idea of GameStop, but enough smart people kept bringing it up, so I dived in with an open mind. When you see a difference in the way someone else thinks, lean in. I’m by no means a GameStop bull, but I have started to understand why the bulls are as bullish as they are. GameStop violates my investing rules so I will never buy and hold, but I do think the risk/return is interesting. Hence the crazy call options I bought (please note this is gambling, not investing). I don’t know what will happen to GameStop, but I think it’s a great opportunity to review your thought processes and an opportunity to be open towards new ideas.

One thing I do know to be true… GameStop still owes me $7.