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Intro
https://i.redd.it/y0dwen9h9lbd1.gif
$GME's price is still discounted enough to be considered a historic discount.
Here we look into GameStop's fair value, performance, and technicals. In addition, we look at the macro market backdrop and vet it for the necessary indicators.
The $GME story is nowhere near over
Price Estimate
The textbook valuation for GameStop has improved over the past few weeks, primarily due to GameStop raising $3 Billion additional dollars over just a three-week period.
A commonly used multiple for determining the relative value of firms is the enterprise value-to-sales ratio (EV/sales). This is regarded as a more accurate measure than the P/S ratio because it considers the debt that a company has. First we need to calculate the enterprise value:
GameStop's Enterprise Value is, therefore, $10.306 Billion (market cap) 28.5 Million (french covid loan) - $4.19 Billion (cash and equivalents) = $6.15 Billion. EV/sales, therefore, is $6.15 Billion / $5.273 Billion = 1.16. This is low! The lower the EV/sales multiple, the more attractive—or undervalued—a company is.
By comparison, Coca-Cola's EV/Sales is 6.5. Tesla's is 8.34. Apple's is 9.33. MSFT's is 14.71. Nvidia's is 38.14. If we average these common companies, we get an EV/Sales of 15.4. Therefore, by EV/sales comparisons, $GME should be valued 1,327.59% times what it currently is. This means GameStop should currently be worth at least $136 Billion.
And interestingly, a Warren-Buffett-style evaluation using mid-June data reveals that, if compared with Apple and Nvidia on the 'Buffett measures', then $GME should fairly be worth $3,000.00 per share.
GameStop's positive derivative of net cash flow, and negative derivative of expenditures, adds further merit to the above results.
When compared with the real negative return due to inflation, since its IPO on the NYSE, GameStop has outperformed cash dollars (i.e. equal value stored under a mattress) by 14.3x.
Cyclical patterns show that GameStop's bull runs last 3.6 years on average, and its bear runs last for 2.75 years on average. Also shown is that a bear run just concluded in 2023. Provided that 2024 is showing the start of a new bull run, then this cyclical pattern holding suggests that $GME should runup for a few years straight.
https://i.redd.it/jegohwxs8lbd1.gif
Technical backdrop
$GME's technicals show an upcoming wedge breakout:
$GME's technicals also show a low RSI, impending MACD crossover, and strong rising supports.
https://i.redd.it/llf7eica8lbd1.gif
Nope, we're not done:
Macroeconomics
Bad actors had no alternative but to run equities up quickly in order to offset quickly-rising liabilities (i.e. GameStop short bags and via swaps and derivatives). Cryptoassets were pumped using derivatives and futures, in some cases with 100-1000x leverage. Many of the hedge-fund-created-shitcoin promotions were to specifically attempt to divert GameStop investor capital away from GameStop stock and into those scams, for example in scams like 'roaring kitty coins', continued 'GameStop tokens', etc. Yet, none of them had any merit. Yet, the most insidious and meritless pumps of them all. by market cap was Nvidia. Nvidia's value became detached from even the most fantastical imaginations of value.
Nvidia has since capped out;Â nvidia is already down about 11%Â over just ten business days. With Nvidia shown in green and GameStop shown in red, the inverse since 2022 is verifiable:
Cryptoassets too have recently fallen. Cryptoassets by market cap are already down 25%, (the largest one to $55k), since its recent high.
As has been repeatedly shown, Cryptoasset prices are specifically used to run hedge funds equities columns up in order to proactively maintain collateral in accordance with the NSCC's daily capital requirements. $GME's price shown in red, and the predominant crypto's price shown in yellow, this scheme began in 2019 and continues today:
Thus - since evidence shows that cryptoassets' price action is both an inverse and leading indicator regarding $GME's price action - the recent flop of cryptoassets is bullish for $GME's price. Both nvidia and cryptoassets' market cap flopping so readily and so substantially does help GameStop investors call the shots (by timing and magnitude) of when to anticipate a price runup. The data suggests that $GME should subsequently run up in price.
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https://i.redd.it/cqwyy4669lbd1.gif
https://i.redd.it/j929ajld8lbd1.gif
TLDR
Financials are ironclad for $GME: $4B cash, Negligible debt, and already profitable. A standard value estimate shows that the company should be worth 1,327.59% times it's current price. GameStop is now upgraded across the board (strongest buy) on proven intrinsic value. Technicals show that $GME's price is ready to breakout of a months-long wedge that terminates on July 11th. Regarding macro indicators, the anti-$GME hedges (i.e the nvidia and cryptoasset collateral scams) are now failing. This means it's a good time to own a long position in GameStop.
Subreddit
Post Details
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- 6 months ago
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- reddit.com/r/GME/comment...