GameStop: One Final Ride and the Road Ahead

so gamestop's been in the news lately or at least it was whenever i started writing this video headlines adorned all the papers gamestop on the rise question mark less than a year ago stock value was around 250 and almost rose to 500 buckaroos by january 2021 of course many of you know this wasn't an entirely organic event but i really don't want to make a whole video about all this because you know somebody else was probably gonna do it or did it so whatever but as the big book of youtubing states every video needs to fill that necessary prerequisite of exposition and context so here's how the story goes gamestop as a business has been dying for years knowing this hedge funds shorted the stock when you short a stock you effectively are placing a wager that the price will fall and if it doesn't well you gotta pay up son knowing this reddit group wall street vets bought up a lot of these shares to squeeze the stock upwards the hedge loses money and the wall street bets makes money hooray they're making a movies and what had started as an opportunity to make some cash quickly turned into a movement as some shady [ __ ] went [ __ ] side up trading firms began restricting purchases of gamestop and other shorted stocks the media picks up the stories and organizations with close ties to hedge funds and other big money paints a picture of wall street bets and reddit as a villain against the hard-working good-natured hedge fund peoples gamestop if you don't know it's a video game store and like a lot of businesses they've been struggling because of covert but also because most people buy games online now and yet despite a sharp decline in sales over the past six months their stock price has grown by eight thousand percent because a bunch of amateur investors maybe even some russian disruptors who are part of a reddit community called i have aids and while others might focus on the wider ramifications of a system that caters to those in power and actively destroys the potential of everybody else the media's fabricated persona being nothing more than a marketing arm for these agencies what interested me was something else the catalyst company to all of this gamestop the company's stocks were shorted because it was painfully clear the company was going under sooner or later during the ups and downs of the stock some people wondered whether gamestop would actually ever be worth 50 or 100 or 200 again this is interesting because gamestop as a business is kind of antiquated much like blockbuster or the movie theaters it finds itself in a position where its core market is dissolving from under its feet while some people still like the novelty of buying games on disc year over year digital sales have increased to a point where this is the minority gamestop's bread and possibly the butter of its business model is these used game trade-ins it's only recently that gamestop no longer makes a majority of its profits from these sales so my question is can gamestop actually survive the next decade and if so how the company's history gives the best indication of why gamestop is falling so hard right now in the early days it was a small local company that expanded wet public merged went bankrupt and got bought by barnes and nobles they merged it with funko land which gave it the funko land newsletter that would eventually become game informer around this time video games were getting very popular the used game market exploded and gamestops just got bigger eventually barnes and noble sold the shares gamestop went independence and it kept buying up competitors and seeing others fall they kept expanding at a pretty absurd rate until the recession but wait the economy recovered and sales increased but this only incentivized gamestop to open even more locations there was some fears about used games around this time greedy ass rap bastard publishers were angry at the notions of used game sales video games are not supposed to be reused they are for me mr money xbox tried to get rid of used games altogether and the people were not happy in the game stop was not happy of course going against these games only ended up hurting these companies in the end and gamestop seemed to be unstable footing once more but not all was well and good within the once bountiful retailer online game sales were becoming much more relevant in the console space during this time the pc market had already moved almost entirely to this but what had started as super meat boy here in geometry wars there on xbox became a world of digitized and easy to download triple a titles for obvious reasons this was scary to gamestop it was a double whammy not only would these games not be purchased from them they couldn't be repurchased and resold to other people gamestop eventually recognized this as a potential issue and it began expanding into new markets they bought various merch companies and tech companies and apple reseller companies none all too big but all focused on this retail market and yeah this was not not the best idea all these markets are being made obsolete through a much larger enemy to gamestop than even these digital games it's called the [ __ ] internet amazon and ebay and newegg and toysrus.com they all cater to the same market and generally shopping online offers a better experience than going here you don't have to get up get a shirt on drive a car park a car go inside interact with the human buy a car buy a game walk out drive a car park a car take a shirt off you just press the button and it'll be here when it's here gamestop.com is a thing that does exist and it's existed for a long time but it can't really differentiate itself from well everything else they also tested the waters with game publishing around this time and they didn't see that much success one of the biggest news stories to come out about gamestop was the infamous circle of life policy employees were mandated from the higher-ups to focus on forcing used game sales upon customers above all else going as far as misleading and flat out lying to customers to increase these numbers when the story broke gamestop resentment just became yeah it wasn't just an underdog it was the underdog that everybody wanted to see lose and by 2018 gamestop was more or less dead to be honest like it was still there physically you could go there but the company was actively looking for buyers buyers that just didn't manifest nobody wanted to be a part of this the company itself was a liability stores were being shuttered constantly and this was simply to limit losses not only did the sales from games not make enough to justify keeping these stores open gamestop doesn't own the property that these shops are even located on it's leased so worst case scenario they can't even rent out the land to other businesses and then 2020 or like the march time kyogre attacked yes once the bird democrat everything was up in the air gamestop was flailing to stay afloat by this time and they got into the news once more for declaring themselves an essential retailer this made it exempt from quarantine restrictions but also yeah now the reason they did this was to stay afloat for the final big games the company might have ever seen animal crossing in the dooms two two the stock was nearing a breaking point it really couldn't go too much lower before it was all over and then right before it seemed that gamestop was about to kick the bucket well some good fortunes actually came to the company people were buying video games again but not like like you know before it was like a new tons of people a lot of people were buying video games people were stuck at home and they wanted to you know they wanted to play the ratchet and clank amazon shipping and delivery times were absurdly long during this era packages were delayed for weeks potentially and if you wanted to play animal crossing and get a switch asap there was really only one place to go and gamestop kept itself afloat for at least one last time around this point there was also a complete change in the direction for the company management had been shifting around constantly throughout the last few years and this gave investors confidence that well it wasn't all just over yet and since then new consoles launched even with super low stock but this put gamestop back into the spotlight once again the future seems kind of bright right like but flickering a little bit because all of this is short-term fixes for the much larger problem even with the good fortunes of the last year even with the short squeeze that brought the company's stock like over a thousand percent things could still go very wrong very quickly so what does the company plan to do well that that is the question before the whole kyogre virus sent everything into a tailspin there was a plan to get gamestop back on track not a good plan mind you but a plan nonetheless it was called gamestop 2.0 yeah yeah that's the idea was to transition gamestop into not necessarily a store but a hip rad place for gamers to hang out each current gamestop would be repurposed into one of four different flavors you had the one that just sold the merchandise you had the one that just catered to the retro games wow look at that tv it's so old you had one that was just a normal gamestop but there's a couch and then i guess one that you could have birthday parties in and then all the board members got kicked out or something and the new people came in so this plan yeah you know so what does the new guys want to do well it's better than the birthday party you might have heard of this name or you haven't ryan ko he invested a lot of money into the company he he made a website that made pets or something and then he took that money and he invested it and gained stuff and then the stock went boom but he didn't sell and now he's on the board his overall expertise is in how the internet and this is somewhat contradictory to the whole retail vibe that gamestop puts out now he said that he wants gamestop to be the quote amazon of games now my first response to all this was well that exists it's called amazon and you just type in games but the more i thought about it you know it could work start reading more what he had to say and as convenient as amazon seems to be it does have a few major flaws anything that is retro or discontinued is usually sold by third parties with huge markups the quality of used items isn't necessarily held to any standard beyond he gets what he is pays for eliminating any potential distrust in evaluating each supplier would make the experience of buying gaming things online better this company fascinates me not even so much out of nostalgia sure we all have the gamestop stories but over the past decade it's been a roller coaster of bad decisions retail expanding into more retail that is made irrelevant because retail dies every market it went into rejected it entirely and the fact it still exists is like divine intervention but even more fascinating than the story of how it got there is how it could potentially survive and thrive throughout this maybe not thrive maybe exist business businesses rarely adapt to a changing market well and those that do become worth a lot of money but usually that's by destroying everyone in its path the idea that gamestop could turn around fight back and maybe give consumers a better alternative is pretty neat or i guess microsoft could just buy them oh that would suck [Music] you [Music]

Channel: KnowledgeHub

Views: 89,720

Rating: 4.9546561 out of 5

Keywords: Gamestop, GME, GME stock, GME Congress, KnowledgeHub, KnowledgeHub gaming, gamestop history, gamestop robinhood, robinhood, robinhood congress, gamestop bankruptcy, gamestop closing, retail store game, gamestop short squeeze

Id: m6gJX5so65c

Length: 13min 13sec (793 seconds)

Published: Fri Feb 19 2021

Reddit Comments

[u/AverageRedditor42069]

For those wondering why I post this 2 days late and don't sticky it: It's intentional. I don't want to scare off the alt his hub fans who don't watch knowledge hub.