GME - The GameStop Lollapalooza Effect: Why Roaring Kitty's Thesis Of Real Option Value Makes Sense

2024-06-10 06:58:05 ET

Summary

• Keith Gill, also known as Roaring Kitty, expresses belief in GameStop's ability to reinvent its business model and highlights confidence in management.
• GameStop's substantial cash reserves of nearly $4 billion offer real option value for exploring new business opportunities and rejuvenating its market position.
• The article proposes a transformation strategy for GameStop, including the establishment of a digital storefront, a subscription-based gaming service, and the acquisition of exclusive content.
• While I do acknowledge that a GameStop investment is highly risky, I believe that the value of the company's implied real options exceeds the company's market cap of <$10 billion.

The GameStop (GME) hype is back. Following a volatile ride for GameStop shares over the past few weeks, on Friday Keith Gill, also known as Roaring Kitty on X and YouTube and u/DeepF***ingValue on Reddit, returned to YouTube to express his belief that GameStop's business model could be reinvented and to emphasise his confidence in the company's ability to do so. Roaring Kitty said :

I wanted to hop on [the stream] and re-iterate viewpoints that I held previously [...] There was a two part thesis two it. And the second part of the thesis was related to a reinvention of the business model, or a transformation. We are [now] in that second part of that [...] What could they transform into [...] It becomes a bet on management, in particular Ryan Fu***** Cohan and his crew [...] Also, y ou have a company with so many people rooting for it, myself included. And they are sitting on billions and billions of dollars of cash.

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