Latest news with #Pachter
CNBC
a day ago
- Business
- CNBC
GameStop share valuation is still just relying on 'greater fools' theory, says Wedbush
GameStop 's share valuation is dependent on speculation in overvalued assets because the company's turnaround strategy for its underlying video game business remains murky, according to Wedbush analyst Michael Pachter. "Despite a complete lack of a clear strategy, GameStop has consistently capitalized on the existence of 'greater fools' willing to pay more than twice its asset value for its shares — and so far, they've been correct," Pachter said in a note out Wednesday to clients. The brick-and-mortar retailer reported a decline in first-quarter revenue on Tuesday as demand for online gaming rose. GameStop recently bought 4,710 bitcoins , worth more than half a billion dollars, as the firm began a crypto purchasing plan similar to one made famous by MicroStrategy . GME YTD mountain GameStop shares in 2025. However, the Wedbush analyst believes the bitcoin buying strategy makes little sense from a fundamental business standpoint. "It is difficult to understand why any investor would be willing to pay more than 2x cash value for the possibility of GameStop converting more of its cash into Bitcoin, especially since these investors could invest in Bitcoin or a Bitcoin ETF themselves," Pachter said. "The company already trades at 2.4x cash, making it unlikely that converting more cash to crypto will drive an even greater premium." Gamestop CEO Ryan Cohen recently said GameStop's decision to buy bitcoin is driven by macroeconomic concerns, saying the digital coin, with its fixed supply and decentralized nature, could serve as protection against risks. The analyst reiterated Wedbush's underperform rating on GameStop and a 12-month price target of $13.50, or 55% below Tuesday's close at $30.15. Pachter said his target comprises about $12.50 a share in cash and a going-concern value of $1 a share. "GME shares trade at a level that overlooks the many challenges ahead," he said.
Business Insider
2 days ago
- Business
- Business Insider
‘No Turnaround in Sight,' Says Wedbush About GameStop Stock
GameStop (NYSE:GME) is known for its fanbase of rabid retail investors, but the love is not one the company seems to reciprocate. For the past three years, the struggling video game retailer has failed to hold a conference call or provide guidance when releasing quarterly reports. Confident Investing Starts Here: Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions Receive undervalued, market resilient stocks right to your inbox with TipRanks' Smart Value Newsletter With the company poised to report F1Q25 results tomorrow (June 10), Wedbush analyst Michael Pachter expects 'no improvement in their attitude toward investors.' But what about the actual results? For the quarter, Pachter expects net sales of $750 million, representing a 14.9% year-over-year drop, and EPS of $0.08. That compares to consensus expectations of $754 million and $0.04, respectively. Industry-wide, both hardware and software sales declined y/y, though software held up better thanks to a strong release lineup during the quarter. Hardware sales saw a sharp y/y downturn, largely because the PS5 and Xbox Series X/S have been on the market for several years now. However, Pachter expects hardware demand to rebound next quarter with the launch of the Switch 2. In Q1, profits should get a boost from a stronger software mix, while higher interest income – driven by recent share offerings – will help offset ongoing operating losses. Taking a leaf out of the MicroStrategy playbook, GameStop has also begun accumulating Bitcoin and now owns 4,710 BTC. That said, MicroStrategy trades at roughly 1.75 times the value of its Bitcoin holdings, indicating that investors assign it a premium beyond just its crypto assets. In comparison, GameStop trades at about 2.4 times the value of its cash, which now includes Bitcoin. This suggests investors are giving GameStop a similar kind of Bitcoin-related premium, even though its core retail business is being implicitly valued at just $8 per share. What Pachter finds 'baffling' is that GameStop's Bitcoin holdings are tiny compared to MicroStrategy's – just about 1% as much. Yet both stocks are receiving similar levels of crypto-related investor enthusiasm. While GameStop has seen some 'modest success' with its move into trading cards, Pachter thinks there's 'no potential for a rebound in GameStop's core business,' but that hasn't really mattered here. 'Despite a complete lack of an articulated strategy, GameStop has consistently been able to capitalize on the existence of 'greater fool' willing to pay more than twice its asset value for its shares—and so far, they've been right,' Pachter said. But in his view, GME shares are trading 'at a level that ignores the company's many challenges ahead.' As such, ahead of the print, Pachter rates GME shares an Underperform (i.e., Sell), along with a $13.5 price target, suggesting the shares will shed 54% of their value over the next year. (To watch Pachter's track record, click here) To find good ideas for stocks trading at attractive valuations, visit TipRanks' Best Stocks to Buy, a tool that unites all of TipRanks' equity insights.
Sky News
29-03-2025
- Automotive
- Sky News
Expert predicts GTA VI will cost $100 and believes gamers will snap it up without complaint
Grand Theft Auto VI is the most anticipated game of the year. The long-awaited sequel by developer Rockstar Games is expected in the autumn - 12 years on from the record-breaking GTA V. While gamers excitedly await its release, the industry itself is buzzing with anticipation over rumblings the base game could command a premium $100 (about £80) price point and still achieve colossal sales. Setting this precedent could lead to other game publishers wanting a slice of the action by increasing their own starting prices. However, the GTA series boasts two winning ingredients that some other games do not have - brand power and fan loyalty. Expert research analyst Michael Pachter told Sky News he believes Rockstar and parent company Take-Two Interactive Software will be able to charge $100 with little complaint. Mr Pachter, a managing director at US-based Wedbush Securities, highlighted the rising cost of entertainment since GTA V was released in September 2013. He said: "Realistically, video games are the only form of entertainment that hasn't kept up pricing with inflation. "Look at movie tickets, concerts, Disneyland, video on demand (VOD) - all have doubled." Mr Pachter said the key to "charging" more is to justify the value to the consumer. He explained: "I expect GTA VI to be fully integrated with GTA Online, and Rockstar can offer premium edition purchasers $100-worth of in-game items - currency, skins, vehicles, weapons, etc - as a trade-off for the higher price point. "The level of integration will make the in-game items more valuable, and I don't expect a lot of pushback. "I think $100 or so makes sense, and don't expect that we will ever see a $500 game." If history repeats itself, GTA Online will be the moneymaker. The persistent online world offers endless monetisation opportunities - with gamers enticed to splash out on new vehicles, weapons, properties, businesses and cosmetic upgrades. Mr Pachter said GTA VI's integration with its online offering provides an "excuse" for engaged players to spend more money. He added: "Some players will spend an additional $500 and most won't, but those who spend more than $100 will do so if they perceive there is value derived from the purchase." The GTA series - which was created in Dundee, Scotland - is one of the biggest franchises in the industry. GTA V became the fastest entertainment product in history to make $1bn (in its first three days) and has since sold more than 210 million copies worldwide. Developer Rockstar North (formerly DMA Design), based in Edinburgh, has achieved additional success by collaborating with fellow studio Rockstar San Diego on the Red Dead Redemption games. When GTA V made its debut, it launched on PlayStation 3 and Xbox 360. That was two consoles ago, with the new game set to arrive via PlayStation 5 and Xbox Series X/S. AAA (Triple-A) games - big budget, high-profile productions - are now taking longer to make as gamers demand seamless multiplayer experiences, cross-device gaming capabilities, visually impressive graphics, and fully immersive storylines. From the GTA VI trailer footage, players will be returning to the Miami-flavoured metropolis of Vice City in the fictional state of Leonida. The Bonnie and Clyde-style story is set to include the first playable female character in the series' history. GTA has always poked fun at American culture, with the nation's past decade of politics like something out of the game. GTA VI looks certain to continue the series' tradition of satire, but the trailer also shows that no expense has been spared in regards to bringing the sun-soaked streets of Vice City to life. The cost of creating a game can vary widely based on a multitude of factors, including the studio size, staff skill level, and development time. Given the size of Rockstar's workforce and the number of years the game has been in development, Mr Pachter believes the cost of GTA VI "is highly likely to be nearly $1bn". Mr Pachter said: "They spent this much time because they can, and the scope of the game is typically immense." Rockstar has so far remained tight-lipped over its budget and whether GTA VI is indeed the most expensive video game ever made. Not easy to share games in a digital download age Jenness Mitchell Scotland reporter @Jenster13 The gateway toy that sparked my love for gaming was the Tomytronic Shark Attack 3D device. It was the early 1980s and I'd received the binocular-style game for Christmas. I soon upgraded to the ZX Spectrum, and as the years have passed I've been fortunate to enjoy many of the consoles released via Nintendo, PlayStation and Xbox. Let me be clear, I'm a console gamer. If I had the spare money and patience, maybe I would build my own gaming PC – but I don't see that in my future. I love the GTA series and rank Rockstar Games' Red Dead Redemption, L.A. Noire, Bully (Canis Canem Edit) and The Warriors amongst my top favourites. Although the GTA games are meant for adults, I expect many youths across the UK will either want it on day one or will add it to their Christmas list. Rolling back to when I was in primary school, I was able to borrow ZX Spectrum games from the local library. My friends and I would share these around between ourselves, and in later years we would continue to swap our own Nintendo, PlayStation and Xbox games. This meant that someone like myself – who didn't come from money – was able to play a game I otherwise wouldn't have been able to afford. I highlight this because some of the newer consoles don't have a disc drive, and most games are now bought and downloaded digitally. I certainly don't begrudge the price of video games rising to ensure a good quality product, but by making it more difficult to share them with friends is a hindrance. With the cost of living crisis affecting households right across the UK, there may be parents who do not have the money to buy a new game on release or even while on sale for their children. Speaking from experience, some of my greatest gaming nights have been round at friends' houses watching them play their new game while having a little go myself. You see, that's the beauty of the gaming community – it's a supportive sharing space where we want to see everyone join in on the fun. After COVID all but wiped out trips to see a movie on the silver screen, film studios are now having to contend with the cost of living crisis and audiences preferring to wait for digital releases instead of spending money at the cinema. For those concerned about a $100 starting point for GTA VI, or indeed if it becomes the new standard for video games, Mr Pachter is advising to similarly wait it out. He said: "Like theatrical releases, game prices decline over time. "Rockstar can charge $100 for six months, can drop to $70 for six months, then drop periodically thereafter. "Nobody has to 'afford' $100; they all know they can wait." Even if GTA VI fans do wait it out for a cheaper price or for it to potentially drop via Xbox Games Pass, Mr Pachter is confident that will not affect Rockstar's overall success. He said: "There is no question they will sell 100 million copies - or more - eventually." So, while there is little doubt all eyes will be on GTA VI's launch, the lasting question is whether other studios will attempt to follow suit if we do indeed see a price rise. But a word to the wise, there are few games with a legacy as formidable as GTA and any price increase may turn out to be the exception rather than the rule. As career criminal and former bank robber Trevor Philips (GTA V character) nicely put it: "I said something nice, not expensive."
Yahoo
29-03-2025
- Business
- Yahoo
GameStop Tumbles 25% Following Bitcoin Convertible Bond Plan. What's Happening?
Shares of GameStop (GME), the embattled video game retailer turned memestock darling, plunged 25% on Thursday, more than erasing all the gains since the company earlier this week announced it will add bitcoin (BTC) as a treasury reserve asset. GME fell to just above $21 during the session, trading at its lowest price since October and down over 28% from its Wednesday peak of nearly $30. The price action happened after the company unveiled plans late Wednesday for a $1.3 billion, 0% convertible note offering to raise money for its BTC acquisition plan. After an initial wave of euphoria among the crypto crowd, the hype died down on Thursday after investors took a closer look at the financing. "Many existing shareholders dislike the move, so a switch is happening with large volume," Louis Liu, chief investment officer of Mimesis Capital, said in an X post. The sharp sell-off may also have to do with the convertible bond pricing period, as prospective bond buyers might be selling or shorting the stock. James Van Straten, senior analyst at CoinDesk, noted that MicroStrategy (MSTR) and Semler Scientific (SMLR) shares also declined during pricing periods of their convertible note offerings. "We suspect that GameStop's share price will drift lower prior to the issuance of the convert, particularly given that a convert investor will receive a zero coupon and will be required to have faith that the GameStop meme phenomenon will persist for another five years," said Wedbush analyst Michael Pachter, who has an underperform rating on GME. Pachter argued that the company is following Strategy's playbook, but MSTR trades at less than twice the value of its bitcoin, while GME trades at more than twice its cash holdings. "We expect the offering to fall flat," Pachter continued. 'We find it hard to understand why any investor would pay more than 2x cash value for the potential for GameStop to convert that cash into BTC, particularly since the same investors can invest in BTC or a BTC ETF themselves.' GME is only the latest Wall Street firm to convert some of its cash into bitcoin. The trend started with Strategy, the company led by bitcoin proponent Michael Saylor, which years ago announced it would use its cash reserves to buy the cryptocurrency. MSTR's success following the transition caused many other companies to follow, especially recently as U.S. President Donald Trump has promised to make the U.S. the center for digital asset development. While Saylor has long vouched for more companies, especially those with large cash reserves, and even the U.S. as a country, to adopt bitcoin as a reserve strategy, not everybody agrees. 'Gambling on companies buying Bitcoin is not a good investment strategy,' said well-known bitcoin gadfly Peter Schiff in a post on X. '$GME has lost all of yesterday's Bitcoin-inspired 15% gain. Shares are now down 2% over the two days combined. Now that all the fools have already rushed in, smarter investors are selling as they realize that wasting cash buying Bitcoin is not a viable long-term business model.' Sign in to access your portfolio
