GME - GameStop Is Becoming A Poorly Run Bank
2024-06-26 11:30:00 ET
Summary
- GameStop's shares rocketed up 20-fold in early 2021 to touch over $80 apiece. Though sinking since to $23 per share, the company's market capitalization now stands at around $8 billion.
- Management took advantage of the euphoria and issued equity periodically. Shareholders bought up a $2 billion offering earlier this month and $1 billion in late May. Add that to the $1 billion the company had on its balance sheet, and its cash pile has grown eight-fold from end-2019.
- While GameStop has tried to get its finances in order, the cash hasn't been used to change its business meaningfully.
By Breakingviews
GameStop’s ( GME ) actual business - selling video games and associated paraphernalia - isn’t doing so hot. Its other business - earning interest on cash that was handed over irrationally - is helping. But that makes GameStop more akin to a bank than a retailer. Shareholders would be better off sticking with an actual savings account....
GameStop Is Becoming A Poorly Run Bank