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MVIS: Shiny Laser Go Pew ⚡ No But Seriously They Are Gonna Take Over The LiDAR Industry
So, the day has come, and MicroVision's market cap is finally big enough so that you won't get banned for mentioning it on WSB. But what is it? Why have they seen an 800%+ increase in three months? Where are they headed? Allow me to explain. About Them MicroVision, Inc. (MVIS) makes futuristic-as-fuck laser technology that's used in self driving cars and augmented reality headsets. This already sets them apart from a major competitors like Velodyne (VLDR), which focuses solely on LiDAR for self driving cars. Sumit Sharma, the CEO, was head of operations at Google's Project GLASS and has worked to map hardware development at Motorola, also worked at Jawbone. Source Why have they been increasing 800% in three months while similar companies in the same sector see a fraction of that gain? Because their tech is much more advanced than the competition, and they were (are) criminally undervalued. The reason they're so undervalued is because the first thing hedge funds see when they research a potential investment is the balance sheet, and on paper MVIS looks like shit. (Low assets, high liabilities) Even I saw the movement back in December, did some research, and was like "Wtf is this? I need to get puts" But once you do research into their product, who their customers are, and the future of the industry that they are involved in, you see that MicroVision is a turnaround story similar to that of Plug Power; both are 90's futuristic companies that people got way too excited about in 2000, have struggled to make it to 2020, but now are about to finally have their heyday. And they got a $13 million equity facility (loan) in December that greatly improved their balance sheet, making them appeal to institutions, and bringing Vanguard and Blackrock to invest in MVIS days later. I actually had a hedge fund manager tell me that MVIS was doomed to run out of cash in Q1 2020, but if they secured funds then they would have a lot of potential. I go over that in the comments. MVIS (left) vs PLUG (right) 1990's until present Anyways, what is this "much more advanced" technology? I'll just let this chart do the talking: The MicroVision Consumer LIDAR being compared here isn't even their model designed for self-driving cars, that will be coming in April. The resolution it can take as input/second, the points per second, is key when it comes to how clearly the LiDAR sensor can see, how accurately it can identify what it is seeing, and how quickly it can react. That chart is from 2 years ago and still the best resolution Velodyne can provide today is only 4,800,000 pps in their most advanced model, the "Alpha Prime"
3D Lidar Data Points Generated 2- Single Return Mode: ~ 2,400,000 points per second- Dual Return Mode: ~ 4,800,000 points per second.
VLDR has not publicly announced a price for their Alpha Prime yet, but historically their top of the line devices cost $75,000. I have seen unsourced numbers of the Alpha Prime costing $100,000. That was last year, will probably be brought down to be more reasonable for automakers to purchase. They did announce a $500 model called the Velarray H800 in November, but the only thing they said about its pps resolution is that its "outstanding"... lol. As for Luminar (LAZR), they will launch the new model "Iris" in 2022, which will cost about $1,000: (the same price as MicroVision's device to be revealed in April). It will also only operate at 10Hz. This is similar to playing a racing game at 10FPS. If you know anything about video games, you know that this is unplayable.
Iris will cost less than $1,000 per unit for production vehicles seeking serious autonomy, and for $500 you can get a more limited version for more limited purposes like driver assistance, or ADAS. Luminar says Iris is 'slated to launch commercially on production vehicles beginning in 2022,' but that doesn't mean necessarily that it's shipping to customers right now. The company is negotiating more than a billion dollars in contracts at present, a representative told me, and 2022 would be the earliest that vehicles with Iris could be made available.
A lengthy post has been make comparing Luminar's resolutions with MicroVision's, which was not easy to calculate because Luminar said their resolution was "300dpi/spdeg", a statistic that is incomprehensible for shareholders because its not the common specification of millions (3D) points per second. Here's the math, I sum it all up at the bottom:
Luminar's Hydra claims resolution of "up to 200 points per square degree" and a FOV of 120° x 30° (degrees). (and 300 points for Iris, the one coming in 2022.) However, the vertical FOV can be configured from 1° to 30° , which likely explains the use of "up to" in the resolution numbers. Generally, as FOV expands, resolution shrinks, assuming a constant pixel stream. This is why Alex Kipman made such a big deal about MSFT maintaining resolution in Hololens 2(YT links aren't allowed apparently) while expanding FOV because it required more pixels to do so. Specifically, regarding Luminar, is 200 points per square degree available when FOV is at the maximum 120° x 30°? Or is it available only at a lesser FOV such as, for example, 120° x 5°? The use of "up to" suggests the latter. Even assuming 200 points per square degree at 120° x 30° is available, which is not conceded given the stated "up to", that would yield a total resolution of 720,000 points. MVIS claims capacity in excess of 20M points per second. At a resolution of 720,000 points, Luminar would require a frame rate of 27.7 Hz to equal 20M points per second. Luminar's specs do not suggest that its technology is capable of such a high frame rate at this resolution. This is not surprising given it does not use MEMS micromirrors but something more "mechanical" including, as per a recent patent, spindles and a drive belt (1) At video time 19:56, Luminar compares the specs of its Iris product to industry requirements. The graphic reveals that Luminar's 2022 production lidar, Iris, will support resolution of 300 points per square degree at 10 Hz. Assuming that resolution applies to the entire FOV of 120 x 30 degrees and not just a portion of the FOV, that would imply a points per second value of 120 x 30 x 300 x 10 Hz = 10.8M points per second. If the 300 points/ sq. deg applies only to a smaller FOV, the points per second figure would be proportionally smaller. Microvision claims 20M points per second for its current MEMS lidar. The company also advises that its technology is capable of more than 20M points/sec.
TLDR: The best case scenario for Luminar is that their 2022 model will have 10.8 million pps, but in reality its probably much lower than that because of FOV configurations, careful wording by press releases, and Hz limitations. Additional Interesting insight on Luminar and their tech lagging behind is in the comments, this post is long enough already. Again the MicroVision Consumer LIDAR (specifications) being used for comparison here isn't even their model designed for self-driving cars. Their device specialized for cars, the "1st gen Long Range LiDAR (LRL) Sensor", will be coming in April.
We expect our 1st generation LRL Sensor to have range of at least 250 meters and the highest resolution at range of any lidar with 340 vertical lines up to 250 meters, 568 vertical lines up to 120 meters and 944 vertical lines up to 60 meters. This equatesto 520 points per square degree.
(For those who read the math on LAZR, notice he doesn't say up to) It testing is successful, the 1st Generation LRL Sensor will be able to calculate velocity of objects relative to itself, and be able to be used in Level 3 and Level 4 self-driving applications
Our LRL Sensor will also output velocity of moving objects relative to an ego vehicle across our dynamic field of view in real-time 30 Hz sensor output. This sensor would accelerate development of Level 3 (L3) autonomous safety and Level 4 (L4) autonomous driving features that are important to potential customers and interested parties.
What is Level 3 and Level 4 autonomous driving? https://preview.redd.it/n4c8831l9dh61.png?width=848&format=png&auto=webp&s=0652984c72da3159b53a4fc4058c9d9e33cc6b05 Level 1 is feet off, level 2 is hands off, level 3 is eyes off, level 4 is mind off, and level 5 is full passenger (you can sit in the back). So basically, they have that 2045 technology today, while everyone else is trying to play catch-up. How is it so advanced? It all lies in the high resolution of the laser sensors.
I've seen MVIS's LiDAR in action at a shareholder meeting. It can recognize people. This has been described on MicroVision's conference calls, and has been described with significant additional safety and convenience features. This could identify individual people Can distinguish between pets and people (or YOUR pet and the neighbors pet) Can distinguish between normal behaviors and strange things that could be of concern Could save face-scans of intruders and allow intruders to be identified later Source
LiDAR is the only sensor that gives you resolution at range: the ability to get very fine and very accurate detection of objects in space.
that's why Teslas use radar systems in addition to their cameras, still not good enough to prevent fatalities on the road using Tesla's "full self-driving" software. Also, cameras struggle with light glare, weather, and 3D imaging, while LiDAR fixes all those issues. The main advantage of cameras are their resolution, and MicroVision is bridging the gap. So, will testing be successful?
We expect the capability of our LRL Sensor to meet or exceed OEM requirements, based on technology we have scaled multiple times over the last decade, as being a very strong strategic advantage. (Same source)
This product has been getting fine tuned for years and I am personally confident that they will be able to outperform in their testing. Demonstration(YT links aren't allowed apparently) of their consumer LiDAR product from 2018 (make sure your quality is all the way up). Growing Industry The self-driving cars market is expected to reach 220.44 billion dollars by 2025. This includes taxi, civil, public transport, heavy duty trucks, ride shares, and ride hail (UBER - 72 B mkt cap) applications. Traffic Accidents in the US aloneCost 871 Billion A Year, even just yesterday there was an insane pileup on the I-35W highway in Texas that killed 6, injured 36, and damaged 133 vehicles. Not only self-driven cars need LiDAR. In a few years, as soon as MicroVision's 1st Gen LRL is available, LiDAR systems will certainly become mandatory for (still) human-controlled cars to avoid collisions. This tech could become as revolutionary and successful as airbags. Airbags are a 37.3 billion dollar industry. If only 10% of the cars produced annually contain four Microvision LRL systems, this will result in a volume of 364 million units in ten years. (9.1 million cars * 4 modules * 10 years) And this is a conservative calculation, both a higher market share, more cars produced, and more modules per car are conceivable. At least 4 LRL devices will be necessary to establish a \"circle of safety.\" Augmented Reality The Hololens 2 is an example of a Virtual Reality Device (VRD) manufactured by Microsoft that uses MicroVision MEMS Laser Scanning display modules inside. NASA & Lockeed Martin using Hololens (Video)(YT links aren't allowed apparently)
'When a technician puts on the Hololens, they instantly see the work instruction, instead of having to go through stacks of rectangular data, whether its paper or another form of a screen'... 'We see a reduction in cost, increases in quality'... 'What we've found is we can take an 8 hour activity and reduce it down to 45 minutes'... 'We haven't had a single error that's been documented'...
This new GPS system comes equipped with an augmented reality heads-up-display (HUD) that attaches directly to your sun visor. This laser-projected GPS micro-display, developed in collaboration with MicroVision, makes it appear that your route directions show directly on top of the road, letting you keep your eyes on the road at the same time.
Cook was asked about what he expects to be the biggest tech developments in the next five to 10 years. Cook’s response made it clear that he sees augmented reality as the future, calling it the “next big thing.”
While attending a trauma call in the early stages of the pandemic, Mr Kinross noticed that 29 people were working in close proximity. He realized the established way of working would have to change dramatically.
The technician is then linked with a Mercedes-Benz specialist working remotely who can see what the tech sees and communicate in real-time -- manipulating the holographic information with annotations, highlighting areas of focus, pointing at things in the real world and presenting documents and service manuals.
In the next few years, business verticals will be possible in the markets for smart glasses (Video)(YT links aren't allowed apparently) and projections with touchless input(YT links aren't allowed apparently) and gesture control. For example, an eyewear company could develop the smallest and lightest smart glasses device on the market using the chip in that smart glasses video.
In the MicroVision Augmented Reality video, for example, we share a potential module design using our existing MEMS technology platform that could offer the lightest, smallest in volume, low power module with up to 40 degrees field of view packaged into eye wear that resembles frames currently accepted in the market. I believe one could see how our module in the design example would be compelling for a mass-market product.Source
Patents MicroVision has 484 patents granted and pending. This was enough to get them on the Ocean Tomo 300 Patent Value Index. What is that you ask?
The Ocean Tomo 300® Patent Value Index includes the top value companies of the broad- market Ocean Tomo 300® Patent Index, as determined by the price-to-book ratio, and is diversified across market capitalization. It is the industry’s first value index based on the value of intellectual property and represents a portfolio of 60 companies with the highest innovation ratio (i.e., patent maintenance value relative to book value). Source
This index also outperforms the Russel 1000 and the S&P 500. Their intellectual property includes in-house developed custom MEMS, custom optics, proprietary digital and analog silicon chips, embedded real-time firmware and software, manufacturing processes, custom automation and strategic partnerships that allow them to operate in a sleek model. MicroVision patents and products therefore serve many future markets:
Whoever has the MicroVision technology may be able to eliminate the competition or demand license fees from them. Or the other way around: Whoever does not buy the technology can be excluded from markets. Therefore, bidding competition may arise to gain access to the market. Whoever has the best LiDAR system for cars will also be able to supply other components and software to car manufacturers. The car manufacturer who has the best LiDAR system has a big advantage over the competition. All Notable Competition: Velodyne LiDAR, Luminar, Sense Photonics, Robosense, Valeo, SureStar MicroVision: founded in 1993 Velodyne Lidar VLDR: founded in 1983, but as a subwoofer company 😂 and only got into LiDAR in 2005 LAZR: founded in 2012 Non-Public: Valeo: Founded in 1998 Robosense: Founded in 2014 SureStar: Founded in 2005 Basically, MVIS is all these other companies' daddy. They have been working on LiDAR for almost 30 years and it shows, just imagine what they will be able to develop in a few years with more funding. https://preview.redd.it/eh5csdcz9dh61.png?width=1600&format=png&auto=webp&s=068fe6f5508e693ace5c6c56d4d2a5d9294836fb Insider Activity MicroVision is very transparent with its inner workings of the company, you can easily reach out to them on their website under "Investors." One of many conferences held with Vice President David Westgor, investor relations manager Dave Allen, and investors of MVIS revealed:
As to the employee incentive plan, Steve Holt made the point that in his 7 years of experience (I think it was) with MVIS, NO EMPLOYEE had actually ever cashed out in the money options.
Case in point, on December 1s, 2020, the day after she joined the team, Judith Curran was paid with 3 million dollars worth of $3 calls expiring in 2022, and she has not cashed out. On Yahoo it reports that the last insider sale was in 2014. Institutional Investments For reasons stated earlier, institutions have been late to the game on this one, but now are starting to get on the rocket ship before it takes off. MVIS is now the largest holding in the S&P Kensho Moonshots Index, (KMOONP), which is literally an ETF of stocks that are going go the moon 🌙 . Blackrock purchased 2.44 million shares on December 31, 2020. Vanguard purchased 6.61 million shares on the same day. Recent Events MVIS's stagnation really started to break on December 1st 2020, with MVIS when former Ford Executive Judith Curran was added to MVIS's board of directors.
Curran is an accomplished senior automotive executive with over 30 years of experience in vehicle program, engineering and technology leadership. Curran has a strong record of leading innovation at Ford Motor Company where she served in a number of executive positions including Director of Technology Strategy, where she developed the cross-vehicle global strategy for key new technologies including assisted driving, infotainment, new electrical architectures, and connectivity.
Doesn't take a genius to figure out they were about to ride the EV wave, and were appointing the right people to be poised to do so. Eight days later on December 8th 2020, the US Congress approved approximately $700M for the roll-out of IVAS in 2021. 7 days after that on December 15th, MVIS broke $4 for the first time in nine years. December 29, 2020: MicroVision Announces $13 Million At-the-Market Equity Facility (this is huge for improving balance sheet and attracting hedge funds/institutional ownership)
So far, our team remains on track to complete our Long Range Lidar sensor sample in April 2021. We believe this financing will further solidify our balance sheet as we remain committed to pursuing strategic alternatives and establishing value for our shareholders,” said Sumit Sharma, MicroVision Chief Executive Officer. “We expect a stronger balance sheet will provide the Company with runway through 2021 and into the first quarter of 2022 to enable us to continue development of our lidar sensor while pursuing strategic alternatives,” said Steve Holt, MicroVision Chief Financial Officer.
December 31: Vanguard adds 6.6 million shares, Blackrock adds adds 2.4. January 20, 2021: Apple CEO Tim Cook says Augmented Reality is the "Next Big Thing." Feb 2, 2021 YooToob stock analyst Deadnsyde covers(YT links aren't allowed apparently) MVIS, causing the beginning of a large breakout past $8. Feb 4: MicroVision granted patent (WSB bot is blocking source from being posted- thinks it contains a ticker), essentially lidar on a chip, this patent in particular is huge. (solid state lidar) Feb 10: Cramer mentions MVIS, says LIDAR is one of three battlegrounds for EV competition. Feb 10 after hours: MVIS announces Progress on Automotive Long Range LiDAR, saying “We expect MicroVision’s Long Range Lidar Sensor, (LRL Sensor) which has been in development for over two years, to meet or exceed requirements established by OEMs for autonomous safety and autonomous driving features,” said Sumit Sharma, Chief Executive Officer of MicroVision. Feb 11: Volkswagen and Microsoft team up on automated driving (potential for MVIS to get involved). Talent at MicroVision Sumit Sharma became the CEO in February of 2020, he is a mechanical engineer that has been with MVIS for five years after having been the head of operations at Google Project Glass, and working for Motorola and Jawbone. Dr. Mark Spitzer is on the board of directors having previously worked at Google X, Darpa, Kopin and having founded Myvu and Photonic Glass. Judy Curran joined the board this year after spending 30 years at Ford, where she was the Director of Technical Strategy. She is also the Head of Global Automotive Strategy for Ansys, a simulation software company that works with ADAS systems. Technical analysis Resistance at 46.75, 123. 39, and 204. 23, could turn to supports. Moving Average Analysis: On February 28, 2020, Market Cap of PLUG was 1.32B, on this date the 120 day MA touches the 8y moving average. 11 months later, PLUG has a market cap of 33.79B, an increase of 2459%. On September 3, 2020, Market Cap of MVIS was 0.21B, on this date 120 day MA touches the 8y moving average. 5 months later, MVIS has a market cap of 2.77B an increase of 1219%. 6 months forward price target: $34.348B Conclusion/Valuation/TLDR LAZR is currently valued at 12.22B VLDR at 3.92B MVIS at 2.77B MicroVision offers a quantitatively much higher performance product than both of its competitor companies. Because of their lack of focus on augmented reality technologies, competitors are not likely to have a future in the markets of smart glasses, healthcare, engineering, military equipment, GPS safety, entertainment, and interactive projectors. They are involved in an industry that is currently at an inflection point, due to grow massively in the near future. Their high number of extremely advanced patents will bring in significant revenue for the company in the coming years. I have never seen a company with such low insider selling, that the last case of a sale was in 2014. Institutional investors are piling in as MicroVision's balance sheet improves and they near the April LRL sensor test date, which has a high likelihood of being a success. I think this stock should currently be valued at 20 Billion dollars, taking all of this into account, and expect it to rise drastically over the next few years. This is not financial advice, I am not a financial advisor, do your own research before believing some retard on the internet. Positions: 300 shares, $19 call 5/21, $20 call 3/19, $31 call 2/19(FD), $28 call 2/19, $24 call 2/19.
Preface: Please believe me when I say I really wanted to take this month off and enjoy the snow in Tahoe. But as I was driving, something caught my eye... Make no mistake. This stock is not going to be nearly as volatile or profitable as GME. In fact, this might be so boring that most of you will ignore me yet again. And that’s exactly why I like it. I’ll do my best to make this engaging, but the fact is, this is going to be a slow grind. Both this DD and the stock. Also, as a bonus, Reddit is currently public enemy #1 in the eyes of the media. Why don’t we do a quick heel-turn and join their side? Are they gonna hate us for buying boring value stocks? They won’t know what hit them. That will be a fun show to watch. Anyway… let’s take a look under the hood. As always, not financial advice. Just education. NOTHING IS A RECOMMENDATION. We are just sharing knowledge here. Ok SEC? Intro: Ford (NYSE: $F -- NOT NASDAQ:$FORD), is another depressed deep value multiple expansion arbitrage play. No short squeeze this time. The GME asymmetry may not be seen again for 10 years. It might seem boring and unsexy on the surface, but Ford is a fantastic company in the midst of one of the best turnarounds in American history. And with a little help from our friend Mr. Options (or as Buffett called, Financial Weapons of Mass Destruction) we can turn a boring old Ford into a lightning fast Ferrari using the quadruple income option wheel strategy. Don’t try this at home. If you don’t know what CSPs, CCs, or vega are, stick to shares. Those should work just fine. Let’s break this down into 5 parts: electrification story and leadership, multiples expansion, technical analysis, options, and the trade. By the way, in 2019, the Ford F-Series was second only to the Apple iPhone, which raked in $55 billion, in terms of total revenue generated. The F-Series generated more revenue than the NFL, MLB, NBA, and the NHL combined, which added up to $40 billion. Just something to think about.
The wheels on the bus go round and round, round and round...
Electrification story and leadership: Let’s jump into history for a second. Ford had a meteoric rise from 1997 - 1999 from $15 to around $32 at the peak. This was due to $F reporting massive earnings increases each quarter:
They were just feasting and feasting. Jim Farley looks like the best person alive to revitalize Ford, capable of tripling the stock in 2-3 years. Look at the last two quarters:
Q3-2020 - Adjusted EPS: 65 cents vs 19 cents expected, Automotive revenue: $34.71 billion vs $33.51 billion expected (due to pent up demand)
Q2-2020 - Adjusted EPS: A loss of 35 cents per share versus a loss of $1.17 per share expected, Automotive revenue: $16.6 billion versus $15.95 billion expected.
Here are excerpts from the Q3 earnings and some other notable highlights:
Farley: Now that plan, which was introduced to the Ford team and many stakeholders on October 1, is very straightforward. Among other things, No. 1, we will compete like a challenger, earning each customer with great products but as well services with rewarding ownership experiences. Number two, we're moving with urgency to turn around our automotive operations, improve our quality, reduce our cost and accelerate the restructuring of underperforming businesses. And third, we're going to grow again but in the right areas, allocating more capital, more resources, more talent to our very strongest businesses and vehicle franchises; incubating, scaling and integrating new businesses, some of them enabled by new technology like Argo's world-class self-driving system; and expanding our leading commercial vehicle business with great margins but now with the suite of software services that drive loyalty and generate reoccurring annuity-like revenue streams; and being a leader in electric vehicle revolution around the world where we have strength and scale. So now speaking about EVs. To start with, we're developing all-new electric versions of the F-150 and the Transit, the two most important, highest-volume commercial vehicles in our industry. These leading vehicles really drive the commercial vehicle business at Ford, and we're electrifying them.
Quick sidebar here from my buddy M: "Whereas traditional manufact / consumer / industrials are valued on an EBITDA multiple, SAAS has historically been valued on a revenue multiple, which translates to flat out higher valuations. EVs themselves are not necessarily a higher margin product that justifies a higher multiple (at least not that I've seen), but tech services / subscriptions are the real money makers in this game. Hint Hint companies like Apple throwing everything they have at trying to integrate services and subscriptions over the last 5 years" This further justifies the expansion multiples we expect will catch up to leading EV automakers (see below).
We own work at Ford. And these electric vehicles will be true work vehicles, extremely capable and with unique digital services and over-the-air capabilities to improve the productivity and uptime of our important commercial customers. The electric Transit, by the way, will be revealed next month, and you heard about it here first, for all of our global markets. We believe the addressable market for a fully electric commercial van and pickup, the two largest addressable profit pools in commercial, are going to be massive. Now you're going to see our strategy of electrifying our leading commercial vehicles and our iconic high-volume products expand very quickly at Ford. When you look at our results, they reflect the benefit of our decision two years ago to allocate capital to our strongest franchise, namely: pickups, a whole range of utilities across the world, commercial vehicles and iconic passenger vehicles. Additionally, we saw higher-than-expected demand for our new vehicles in the quarter. Together, these factors, plus the strongest performance from Ford Credit in 15 years, led to a total company adjusted EBIT margin of 9.7%. That's 490 basis points higher than last year. As an outcome of all this, we generated $6.3 billion in adjusted free cash flow. The strong cash flow in the quarter gave us the confidence and the ability to make a second payment on our corporate revolver, which we did on September 24. So now we have fully repaid the entire $15 billion facility, and we ended the third quarter with a strong balance sheet, including nearly $30 billion in cash and more than $45 billion of liquidity, which provides us with the vital financial flexibility we need.
Check out this credit downgrade weeks before Ford paid off their revolving credit facility. Smells like GME? Alright. What about Q4-2020 and beyond? Ford is expected to post a loss. TA is signaling a beat (see the TA section). Ford is spending this money in order further restructure and deliver on the following items in their pipeline: Bronco:
Within the first month of open reservations, the Bronco had received an estimated 230,000 reservations. 230,000 reservations is an incredibly impressive figure, especially when put into the context of Ford’s total vehicle sales. 230,000 sales would represent 4% of Ford’s total sales.
Some other nice features: Fold down the shifter, lay seats down completely flat, speakers in headrest, tailgate worksurface (pen/pencil holders, rulers) C clamp, 120V outlet, bottle opener, light), sensing running board, tailgate step and railing, and more. Watch the video.
Ford Raptor launch (just happened today, customers are excited. Look at the comments on YouTube and IG) Further potential tailwinds:
The Postal Service told Trucks.com that it expects to reach a contract with one or more of the teams bidding for the business in the federal government’s second fiscal quarter of 2021. That works out to the first quarter of next year.
There is a historical inverse relationship between gas prices and car sizing. Tell me if I'm reaching here. But as America continues to head towards electrification and energy independence under Biden, larger gas cars will be more in demand. Furthermore, the aftershock of COVID will continue to propagate the dedensification of cities. Less commuter vehicles, and more travel vehicles. And look who is conveniently positioned to take advantage of all of this?
Dr. Anning Chen is also a killer CEO of Ford China. This is largely intangibles (which Wall Street cannot model), but watch his interviews here and here.
Dr. Chen used the COVID shutdown to improve the operational efficiency of the company. It has not shown on the bottom line thus far, but it will later.
Regarding the above leadership and BOD members, experienced executives are a better fit for running the day-to-day than any other. Add a sprinkle of savvy techfin folk and you have a recipe for a elite transition.
English please? Ford is a strong company. Farley is delivering on his promises and can lead the company towards an operationally efficient turnaround towards electrification. Combine this with a loyal customer base rivaled only by AAPL, and you get another special opportunity. This is the turning point. Multiples Expansion: Now here lies the crux of the thesis. Amidst all the EV hype, Ford is being unfairly ignored at an extremely depressed multiple compared to the other companies in the EV space. Here are some comparisons (numbers may be slightly outdated, pulled earlier this week, more relative comparison than absolute): $Ticker - Market Cap - TTM Revenue MM - TTM EBITDA MM - Revenue Multiple - Ebitda Multiple TSLA - $810B - $28B - $4B - 29X - 202X NIO - $92B - $12B - ($7B) - 7.6X - (NaN) GM - $78B - $116B - $18B - 0.7X - 4.3X F - $44B - $131B - $10B - 0.3X - 4.4X That’s an eyesore. Let’s focus on just TSLA and Ford, because why not. Assuming Ford can quickly turn towards electrification (from the evidence above), these two companies are fair comparisons. No Tesla is not a software/energy company, look at their automotive % of revenue. Stop it. It has only recently dropped to 80% due to the expansion of their leasing division. Energy is still a tiny part of TSLA. Revenue Multiple: TSLA = 29X F = 0.3X EBITDA Multiple: TSLA = 202X F = 4.4X Yes those numbers are correct. Look at them for 60 seconds and tell me what you see. Quick quote from my buddy M:
Just zoom out and think. TSLA is for sure ahead of the rest on their tech and charging infra right now. But in terms of just overall bottom line infrastructure and manufacturing capability; once the GMs, Fs, and VWs of the world can get the ball rolling, they are way ahead in that aspect. Much more experience in production and retail / distribution channels, as well as logistics sourcing. Plenty of battery makers, and self driving tech makers out there too right now. Small to mid scale M&A will probably be the name of the game if I had to guess.
This is why Burry is short $TSLA, but two scenarios can unfold: either the high-flying stocks drop, or Ford rises. I believe we will land somewhere in the middle, with Ford rising as we begin to enter the optimism phase in the final third of our bull market. Shorting is a dangerous game anyway... So I’ve been hearing on the news... TA, Options: Exhibit A from our resident chart whisperer J (who will remain unnamed because you monkeys keep bothering him). Larger view. As you can see, the trendline has broken out. Exhibit B from our resident quant T (also to rename unnamed):
Starting on 1/4 you'll find right tail distributions into any liquidation which represent large buying. Which has led up to a recent run-up and eventually left tail distributions which represent short coverings which lead into the gaps and thinner distributions where there aren't any major bids. Even with the pullback on 1/22 we see more right tail distribution after the profit taking from the recent run-up, which means someone is buying up the inventory. This is unusual for F, where F trades within tight ranges. On 2/1 you can see a bimodal distribution which means a new player has stepped in, which we assume has additional knowledge apart from the larger players that were already in the market. The recent range between 10.70 and 11.20 indicates that the market has accepted this price range as fair value. Without additional research at first glance we can see that a large player (or players) is buying up a significant amount of inventory. On 1/4 we find that the volume increased to 77,559,128 from the previous trading of 34,462,454 (125% increase) and 33,127,776 the day before that. Volume has been higher since. On our first major left tail distribution (which represents short covering) since the buying on 1/4 the volume was at 113,707,973.
Exhibit C 250k shares of F 10.92; 100k F 11.04; 3.53m F 9.78; 708k F 9.78; 500k F 9.64; 377k F 9.50; 338k F 9.50; 201k F 9.75; 192k F 9.80; 150k F 9.77 These are blocks of shares bought in the past 7 days Top OI changes: +19610 F 02/05/21 11 C 43821 38% 13% 48% +12904 F 02/05/21 12 C 31929 38% 11% 52% Top OI positions: 170902 F 02/19/21 10 C +807 26% 49% 25% 112480 F 02/19/21 12 C +3207 29% 29% 41% The percentages are bid mid ask. Someone is bullish on Ford. For an earnings play, daily RSI is oversold looking towards an uptick. Options gamma is interesting to note as well. Open interest on 2/5 $13 and $15Cs are also notable. Could be covered calls? Could be someone knows something? Could be Jeff reading too much into the tea leaves. Not financial advice. Just showing you what I see. The Trade: The simplest way is just to purchase shares and collect dividends as Ford may reinstate them sometime in 2021. Possibly leaps if you feel adventurous. For the option junkies like myself, and as a tribute to the greatest company in American history, I will use the wheel(s). The GME trade was a very special and momentous occasion. Now that we have a bankroll, we’ll just quietly play theta gang as we enjoy our lives and spend time with our families and loved ones. Here’s a good summary. This is not for amateurs. I mean, none of this is financial advice anyway, just educational. But in a nutshell, I will: 1) Buy shares, 2) Sell CSPs 30-45 days out with 0.3 delta, 3) sell CCs with 0.3 delta (will reconsider this if Ford goes vertical) 4) Collect dividends. The Wheel doesn’t work on everything. Here are the qualifications from the above post, let me know if this sounds familiar:
Profitable company that has solid cash flow
Bullish, or Very Bullish, analyst ratings
Priced around $10 to $50 so that I can afford to take the assignment if needed and I stay away from sub-$10 stocks as a rule
A stable chart without wild gyrations (especially those caused by CEO tweets!)
A nice dividend is always a good thing, both that you may collect it if assigned the stock but also that dividend stocks tend to more stable and predictable.
Hmm... Conclusion: Ford is a massive, complex, multinational corporation so I’ve likely missed very many things, but I wanted to get this out before ER so I can flex again. (No market manipulation here lol. My buddy's multi-million dollar block buys didn't move the needle one iota.) There are many things I haven’t covered, and simply don’t know yet. As more facts begin to unfold, and as I spend more time with the stock, I’ll share the information here. Also, every time I post about an equity, it seems to go down. Lol... (GME). With all this in mind, this is still a very risky bet. Nevertheless, I like what I’ve seen thus far. Ford looks like a fantastically healthy company in the midst of a turnaround towards electrification with a phenomenally depressed multiple according to the market’s appetite. It deserves a multiple trending towards TSLA’s, not a dying auto manufacturer. Jim Farley has shown early to be a great CEO and I think he can continue the transformation. We’ve begun to enter a phase of exuberance, so I’ll choose to long Ford instead of short TSLA. As a bonus, we have the opportunity to join forces with the boomers and talking heads and bet on one of their favorite companies. Time for America to be on the same side again. We’ve been divided for too long. I know my GME posts were lucky. I’ll stake my reputation on another bet. One call sure is lucky. What about two? In any case, investing is a marathon, not a sprint. Glad to be a part of this journey with you all. Note: I will not discuss GME in the comments, which all depends on Ryan Cohen. There is nothing further to add until Q4 earnings. And finally, we’ve officially entered the last phase of our very long bull market. This is not necessarily a sell signal yet, as some of the greatest returns can come in this period and can last for a long time. I will do my best to look for the signal and sound the alarm. The world will be celebrating, and I will be bearish. Burry’s passive indexing bubble call in combination with Thiel’s government debt bubble call will lead us into a dark time of unprecedented proportions. Tail risk hedging won’t work as the declines will be slow at first, and then fast and violent and unrecoverable. Be careful. Listen to Ken Fisher. Thank you very much for your time. Positions: Bullish shares, LEAPS, on-going quadruple income wheel strategy as Ford reinstates the dividend. Timeframe 12-18 months. Watch out VIGILANTLY for macro risks. Bear market is on the horizon. Drop some Fs in the chat to pay respects. PT: $32 with a chance of $98 if we start to see exuberance in the broader market. -JA
CORSAIR EARNINGS PLAY, The DD you've been waiting for
Corsair Gaming ($CRSR) Redefining gaming, eSports, and streaming Company Overview Corsair Gaming is an American computer hardware and peripherals company founded in 1994 and headquartered in California. They acquired Elgato Gaming in 2018 to expand to the streaming gear market, Origin PC and SCUF gaming in 2019 to expand into the custom-built PC systems and console controllers markets, respectively, and during 2020 they acquired Gamer Sensei and EpocCam, and partnered with Pipeline to grow into the gaming and streaming coaching market. Corsair went public on September 23, 2020, with its IPO priced at $17, valuing the company at about $1.3B. Understanding the Business Value Proposition Corsair provides specialized, high-performance gear for gamers and streamers. Their products are designed to provide speed and reliability for competitive gaming, high quality content for streamers, and powerful PC components that allows gamers to run modern games smoothly. Revenue Streams Currently, Corsair groups its product offering into two segments: gamer and creator peripherals and gaming components and systems. Gamer and Creator Peripherals: which represents around 25% of net revenue, includes gaming mice, keyboards, and headsets, streaming gear, and high performance console controllers. Gaming Components Systems: which represents around 75% of net revenue includes computer cases, power supply units (PSU), high performance memory products (40% of net revenue), and custom-built gaming systems. Acquisitions and Partnerships: During 3Q 2020 Corsair acquired Gamer Sensei, a gaming coaching platform, EpocCam, an app that allows iPhones to serve as a webcam, and partnered with Pipeline, a course-based education platform for streamers. Industry Market Size According to Jon Peddie Research, the global gaming and streaming gear markets is expected to reach $40B by the end of 2020. Before the pandemic JPR estimated the market to grow at a modest 1.05% CAGR until 2022. However, during 2020 the market has grown an estimated 10% year-over-year. Additionally, DFC Intelligence research estimated that the video-game coaching market surpasses $1B. Industry Fundamentals Growth in the gaming and streaming gear industries are driven by strong and robust fundamentals. Popularity of gaming is increasing: According to Newzoo, there are an estimated 2.7B gamers worldwide, which are expected to spend $159B on games in 2020 and is expected to grow at an 8.3% CAGR to exceed $200B by 2023. PC and console gaming represents 51% of the total market, and mobile gaming 49%. Corsair has stated that currently there is no interest in expanding to the mobile gaming market. Tech-driven improvements in game quality: Advances in computer power have enabled gaming platforms to provide increasingly immersive experiences. This in turn, places increased demand on high-performance computing hardware. Increasing gaming and streaming engagement: Some interesting facts reported in the Limelight Networks’ State of Online Gaming 2019 research report include:
On average, video gamers spend six hours and 20 minutes each week playing video games
More than 38% of gamers would like to become professionals if it could support themselves
Gamers from novice to aspiring professionals report missing daily activities due to gaming, missed sleep is the most pervasive
Watching gamers play video games online is more popular than watching traditional sports for 18-25 year olds.
The eSports and streaming flywheel The rise in popularity and viewership of eSports brings more investment from publishers, sponsors, advertisers, team owners, and leagues to the eSports industry. Increased investment brings more players and increased performance focus of gamers who advance from less engaged gaming to high-performance gameplay, which in turn brings more viewers. Competitive Landscape & Risks Competition The gaming and streaming market is characterized by intense competition, constant price pressure and rapid change. Competition across Corsair’s product offering includes: Gaming keyboards and mice - Logitech and Razer Headsets and related audio products -Logitech, Razer, and HyperX Streaming gear - Logitech and AVerMedia Performance controllers - Microsoft and Logitech PSUs, cooling solutions, and computer cases - Cooler Master, NZXT, EVGA, Seasonic, and Thermaltake High performance memory - G.Skill, HyperX, and Micron Pre-built and custom-built gaming PCs - Alienware (Dell), Omen (HP), Asus, Razer, iBuypower and Cyberpower Competitive Strategy The company follows a differentiation leadership strategy by prioritizing high-performance and professional quality and charging a price premium on their products in exchange for superior quality, high value added features, and superior brand recognition. Market Share According to NPD Group, by 2020 Corsair had #1 market share position in the US in its gaming components and systems products with 42% of the market share from 26% in 2015. Their gamer and creator peripheral products are not yet market leaders, however, the company increased its market share in that segment from 5% in 2013 to 18% by 2020 in the US. Growth Strategy Move into the Asia Pacific region: The Asia Pacific Region represents a long-term growth opportunity. According to Newzoo, they represent 54% of the global gaming community. Complimentary acquisitions: Corsair has carried out this strategy aggressively since 2018 with the acquisitions of Elgato Gaming, Origin PC, SCUF and Gamer Sensei. They plan to continue evaluating and pursuing new acquisitions that may strengthen their competitive position. New Markets: Uses of streaming gear has spread into areas including, podcasting, video blogging, interactive fitness, remote learning, and work-from-home, which represent a promising avenue for continued expansion in this product segment. Threat of New Entrants Because of the continued convergence between the computing devices and consumer electronics markets, increased competition from well-established consumer electronics companies is expected in the gaming and streaming peripherals segment (e.g. use of Audio-technica microphones by streamers). Threat of Substitution A significant medium- to long-term risk for Corsair’s business model is the evolution of cloud computing and augmented/virtual reality entertainment. Cloud computing refers to a computing environment in which software is run on third-party servers and accessed by end users over the internet, requiring minimal processing power from the end-user’s system. Through cloud computing, gamers will be able to access and play sophisticated games without the need of expensive high-performance PC systems and components. According to Grand View Research, the global cloud gaming market is expected to grow at a CAGR of 48% from 2020 to reach $7.2B by 2027. Additionally, Corsair must be able to adapt its product offering to meet the needs of the evolving augmented/virtual reality industry. Moats There does not seem to be any relevant, structural moats, that may prohibit competitors from capturing Corsair’s market share across their product offering. Other Relevant Risks Due to the concentration of their production facilities in Taiwan and China, Corsair may be adversely by geopolitical tensions and trade disputes. Financial Summary Proforma Balance Sheet https://postimg.cc/QHgY1ZxL Income Statement https://postimg.cc/qNkbGDzN For the 9 months ended September 2020 compared to the same period last year: The 49% increase in net revenue is mostly attributed to a large number of consumers gaming and working from home during the COVID-19 pandemic. The company’s gross margin is influenced by its product mix for the period, gamer and creator peripherals have a higher gross margin (25-35%) than gaming components and systems (15-25%). Proforma Cashflow Statement https://postimg.cc/XXCzNyRY Cash used in investing activities consists primarily on the acquisitions of Elgato in 2018, and SCUF and Origin PC in 2019. Peer Comparison https://postimg.cc/Whcfd1V6 Logitech International (LOGI) and Micron Technologies (MU) Why am I posting this now? I believe they are going to have very strong 4th quarter 2020 earning results. 2020 had record pc sales,and pc video games has reported record numbers of players. They are in my opinion the leading pc peripherals brand for gamers. Q4 Earnings Include both Black Friday and Christmas Sales Record pc sales: https://www.businesstoday.in/technology/news/record-pc-sales-in-2020-as-covid-limits-work-education-to-homes/story/427858.html#:~:text=According%20to%20the%20latest%20data,units%20in%20Q4%20of%202020&text=COVID%2D19%20pandemic%20has%20turned,personal%20computer%20(PC)%20industry%20industry). Google trends: https://imgur.com/oKPn6R5 My price target for this earnings: $65 EDIT: (EOM) TLDR: $CRSR will crush Q4 earnings🚀 🚀 🚀🚀 🚀 🚀🚀 🚀 🚀 Position: 60 Contracts 40c exp 2/19 disclaimer: I am not a financial advisor. DO YOUR OWN RESEARCH credit: u/italiansomali and u/erythaean
Corsair Gaming ($CRSR) Redefining gaming, eSports, and streaming Company Overview Corsair Gaming is an American computer hardware and peripherals company founded in 1994 and headquartered in California. They acquired Elgato Gaming in 2018 to expand to the streaming gear market, Origin PC and SCUF gaming in 2019 to expand into the custom-built PC systems and console controllers markets, respectively, and during 2020 they acquired Gamer Sensei and EpocCam, and partnered with Pipeline to grow into the gaming and streaming coaching market. Corsair went public on September 23, 2020, with its IPO priced at $17, valuing the company at about $1.3B. Understanding the Business Value Proposition Corsair provides specialized, high-performance gear for gamers and streamers. Their products are designed to provide speed and reliability for competitive gaming, high quality content for streamers, and powerful PC components that allows gamers to run modern games smoothly. Revenue Streams Currently, Corsair groups its product offering into two segments: gamer and creator peripherals and gaming components and systems. Gamer and Creator Peripherals: which represents around 25% of net revenue, includes gaming mice, keyboards, and headsets, streaming gear, and high performance console controllers. Gaming Components Systems: which represents around 75% of net revenue includes computer cases, power supply units (PSU), high performance memory products (40% of net revenue), and custom-built gaming systems. Acquisitions and Partnerships: During 3Q 2020 Corsair acquired Gamer Sensei, a gaming coaching platform, EpocCam, an app that allows iPhones to serve as a webcam, and partnered with Pipeline, a course-based education platform for streamers. Industry Market Size According to Jon Peddie Research, the global gaming and streaming gear markets is expected to reach $40B by the end of 2020. Before the pandemic JPR estimated the market to grow at a modest 1.05% CAGR until 2022. However, during 2020 the market has grown an estimated 10% year-over-year. Additionally, DFC Intelligence research estimated that the video-game coaching market surpasses $1B. Industry Fundamentals Growth in the gaming and streaming gear industries are driven by strong and robust fundamentals. Popularity of gaming is increasing: According to Newzoo, there are an estimated 2.7B gamers worldwide, which are expected to spend $159B on games in 2020 and is expected to grow at an 8.3% CAGR to exceed $200B by 2023. PC and console gaming represents 51% of the total market, and mobile gaming 49%. Corsair has stated that currently there is no interest in expanding to the mobile gaming market. Tech-driven improvements in game quality: Advances in computer power have enabled gaming platforms to provide increasingly immersive experiences. This in turn, places increased demand on high-performance computing hardware. Increasing gaming and streaming engagement: Some interesting facts reported in the Limelight Networks’ State of Online Gaming 2019 research report include:
On average, video gamers spend six hours and 20 minutes each week playing video games
More than 38% of gamers would like to become professionals if it could support themselves
Gamers from novice to aspiring professionals report missing daily activities due to gaming, missed sleep is the most pervasive
Watching gamers play video games online is more popular than watching traditional sports for 18-25 year olds.
The eSports and streaming flywheel The rise in popularity and viewership of eSports brings more investment from publishers, sponsors, advertisers, team owners, and leagues to the eSports industry. Increased investment brings more players and increased performance focus of gamers who advance from less engaged gaming to high-performance gameplay, which in turn brings more viewers. Competitive Landscape & Risks Competition The gaming and streaming market is characterized by intense competition, constant price pressure and rapid change. Competition across Corsair’s product offering includes: Gaming keyboards and mice - Logitech and Razer Headsets and related audio products -Logitech, Razer, and HyperX Streaming gear - Logitech and AVerMedia Performance controllers - Microsoft and Logitech PSUs, cooling solutions, and computer cases - Cooler Master, NZXT, EVGA, Seasonic, and Thermaltake High performance memory - G.Skill, HyperX, and Micron Pre-built and custom-built gaming PCs - Alienware (Dell), Omen (HP), Asus, Razer, iBuypower and Cyberpower Competitive Strategy The company follows a differentiation leadership strategy by prioritizing high-performance and professional quality and charging a price premium on their products in exchange for superior quality, high value added features, and superior brand recognition. Market Share According to NPD Group, by 2020 Corsair had #1 market share position in the US in its gaming components and systems products with 42% of the market share from 26% in 2015. Their gamer and creator peripheral products are not yet market leaders, however, the company increased its market share in that segment from 5% in 2013 to 18% by 2020 in the US. Growth Strategy Move into the Asia Pacific region: The Asia Pacific Region represents a long-term growth opportunity. According to Newzoo, they represent 54% of the global gaming community. Complimentary acquisitions: Corsair has carried out this strategy aggressively since 2018 with the acquisitions of Elgato Gaming, Origin PC, SCUF and Gamer Sensei. They plan to continue evaluating and pursuing new acquisitions that may strengthen their competitive position. New Markets: Uses of streaming gear has spread into areas including, podcasting, video blogging, interactive fitness, remote learning, and work-from-home, which represent a promising avenue for continued expansion in this product segment. Threat of New Entrants Because of the continued convergence between the computing devices and consumer electronics markets, increased competition from well-established consumer electronics companies is expected in the gaming and streaming peripherals segment (e.g. use of Audio-technica microphones by streamers). Threat of Substitution A significant medium- to long-term risk for Corsair’s business model is the evolution of cloud computing and augmented/virtual reality entertainment. Cloud computing refers to a computing environment in which software is run on third-party servers and accessed by end users over the internet, requiring minimal processing power from the end-user’s system. Through cloud computing, gamers will be able to access and play sophisticated games without the need of expensive high-performance PC systems and components. According to Grand View Research, the global cloud gaming market is expected to grow at a CAGR of 48% from 2020 to reach $7.2B by 2027. Additionally, Corsair must be able to adapt its product offering to meet the needs of the evolving augmented/virtual reality industry. Moats There does not seem to be any relevant, structural moats, that may prohibit competitors from capturing Corsair’s market share across their product offering. Other Relevant Risks Due to the concentration of their production facilities in Taiwan and China, Corsair may be adversely by geopolitical tensions and trade disputes. Financial Summary Proforma Balance Sheet https://postimg.cc/QHgY1ZxL Income Statement https://postimg.cc/qNkbGDzN For the 9 months ended September 2020 compared to the same period last year: The 49% increase in net revenue is mostly attributed to a large number of consumers gaming and working from home during the COVID-19 pandemic. The company’s gross margin is influenced by its product mix for the period, gamer and creator peripherals have a higher gross margin (25-35%) than gaming components and systems (15-25%). Proforma Cashflow Statement https://postimg.cc/XXCzNyRY Cash used in investing activities consists primarily on the acquisitions of Elgato in 2018, and SCUF and Origin PC in 2019. Peer Comparison https://postimg.cc/Whcfd1V6 Logitech International (LOGI) and Micron Technologies (MU) Why am I posting this now? I believe they are going to have very strong 4th quarter 2020 earning results. 2020 had record pc sales,and pc video games has reported record numbers of players. They are in my opinion the leading pc peripherals brand for gamers. They also have strong support from wallstreetbets. Record pc sales: https://www.businesstoday.in/technology/news/record-pc-sales-in-2020-as-covid-limits-work-education-to-homes/story/427858.html#:~:text=According%20to%20the%20latest%20data,units%20in%20Q4%20of%202020&text=COVID%2D19%20pandemic%20has%20turned,personal%20computer%20(PC)%20industry%20industry). Google trends: https://imgur.com/oKPn6R5 My price target for this earnings: $55 disclaimer:I am not a financial advisor. Do not trade based on the information I have posted. credit: u/italiansomali and u/erythaean
EDIT 3 : CONGRATS TO ALL GME HOLDERS. TRUELY HONORED TO BE PART OF THE GME FAM. 🚀
Introduction
PDF VERSION HERE (20+ pages) with all the references and better quality illustrations but without updates and typo corrections. This is the FIRST VERSION of the post, but there could be more edits. I wanted to do a more extensive DD but as my exams start tomorrow I don’t have more time. If you want to take my work and extend it, please feel free to do so, just give a little shout out. FIRST AND FOREMOST, SHOUTOUT TO 🚀💎🙌 GME GANG 💎🙌 🚀, YOU’RE IN MY ❤️. This DD is just my own analysis. I put my money where my mouth is but this is definitely not advice. Do your own DD. Last thing: Some stuff might be unsourced in this post but everything is sourced in the pdf version. While it’s not impossible that I might have missed some stuff, most of the time I put the stuff that I quote from other sources in italics. My ego is not big enough to feel like reformulating other people’s ideas and even less to steal other people's ideas. All I do is just gather insightful facts, figures, ideas and analysis.
Big picture
1.1 Macroeconomic View
I will be brief here, I think everyone knows what’s up basically. Figure 1: although the USD is worth a lot less, the S&P 500 is doing alright. Thanks Jerome. Enthusiasm is the key word here as we are in an environment with a very accommodative monetary and fiscal policy (thanks for the stimulus checks). Equities and Bitcoin hit record highs thanks to positive vaccine news and the markets hope for a fiscal package. The Federal Reserve is going heavy on asset purchases, bailouts and loans. And its balance sheet is expanding as well as money supply. Interest rates are extremely low. Check for example, the Shiller PE ratio to see the enthusiasm driving the markets. On a macro-level side from the risks related to the pandemic, the only worrying signs would be the shrinking money velocity or a suddenly-rising inflation (hyperinflation is bullish for stocks but not for the real economy). That being said, we know how the FED and the government reacted to support the economy and the markets. Low interest rates and weak US dollar which is continuing to depreciate is very bullish for stocks overall. I keep the macroeconomic view very short for that GME correlation with the S&P 500 is low - about 28% over the last 6 months. Moreover despite GME’s heavy reliance on brick-and-mortar stores, GME continues to get closer to profitability even with the pandemic. If the pandemic would make the stock market to crash again during the trade, I wouldn't sell at a loss but wait a few days and then buy a LEAPS. This is my plan. Don't follow it, just make sure you have a plan in case it happens, it's important to avoid buying too much the first dip (because you might get a better price later) or worse, avoid a panic-selling and take a loss instead of tendies.
In years 3 and 4 combined, if just 5 million customers extend the subscription for two years, GameStop makes $180 million in incremental profit with zero cost involved. That's nearly a quarter of GameStop's current market cap in recurring income at 100% margin. - Justin Dopierala, “GameStop Revenue Sharing Agreement With Microsoft Shifts Sentiment.” SeekingAlpha.
2.2 Business Model and Management
Gamestop is omnichanneling into online activities according to Ryan Cohen recommendations although it doesn’t mean they will execute it perfectly this is bullish.
“GameStop needs to evolve into a technology company that delights gamers and delivers exceptional digital experiences – not remain a video game retailer that overprioritizes its brick-and-mortar footprint and stumbles around the online ecosystem.” Ryan Cohen.
The company attributes the losses this quarter to the end of the console cycle and the limited hardware and accessory availability that came with that, as well as various game delays, and an 11% reduction in its store base - partially offset by recaptured sales at other locations and online. → The company should be profitable very soondespite being priced for bankruptcy for a long time → Expectations are incrediblly low until recently, more investors are believing in the vision esp. with Ryan Cohen.
GME e-commerce sales were up 257% year-over-year.
GME reduced its selling, general, and administrative expenses by $115 million.
GME repaid $10 million in debt in Q3 2020.
GME isdiversifying sales to include more high margin itemslike PC accessories, PC monitors, etc (If I speculate, there may be partnerships with certain brands).
Focusing on loyalty programslike power ups andrebranding.
As of Feb. 2020, GameStop had 5,509 physical stores.
GME is closing unprofitable locations: they are closing 1,000 stores in Q1 2021 (by the end of March of 2021).
I’d like to quote a fellow GME gang member on this: It's no secret that brick and mortar is falling off, and if GameStop were to fight tooth and nail to remain a largely brick and mortar retailer they would go bankrupt in no time. It is also a fact that underperforming stores drain cash, which lowers net income and thus lowers earnings per share. Any store that is LOSING MONEY or is barely breaking even is keeping the stock price down because it's preventing future growth and killing net incomes. Closing underperforming stores will lead to a higher EPS and more cash that can be allocated to growth. - horny131313.
Gamestop is rebranding, and shifting to becoming the one stop video game and video game related product online retailer. While we haven't seen exactly what this will be, it is bullish to see them pivoting into other products besides just video games. Headsets, TVS, PC parts, you name it. You've seen the omnichannel memes, but we know that If they are bullshitting, Cohen will step in. Expect to see real progress made.
Some words from the last earnings:
"We anticipate, for the first time in many quarters, that the fourth quarter will includepositive year-on-year sales growth and profitability*, reflecting the introduction of* new gaming consoles*, our* elevated omni-channel capabilitiesand continuedbenefits from our cost and efficiency initiatives*, even with the potential further negative impacts on our operations due to the global COVID-19 pandemic.*" George Sherman, CEO.
Possible catalysts (from KYJELLYTIME69):
A possible new Nintendo console release in ~1-2 years
Currently distressed commercial REITs = ability to negotiate lower rent = more $$$
Likely return of inflation (debatable but money supply ballooned and we are seeing velocity pick up a bit) with JPOW promising to keep rates at 0% even when inflation comes back = bullish for all stocks, bears will get slaughtered
OG printer Yellen manning the treasury in a month + possible dem senate = more stimmy checks = more money going into GME
If sales improve and balance sheets continue improve, we might see more credit upgrades
Better sales = possible dividend reinstatement, I couldn't care less about dividends but guess who's going to be paying? The shorts lol. If Sherman had balls, he would pull an OSTK and announce a special dividend , which will actually lead to a short squeeze while wsb laughs collectively as we get meme returns from this boomer move.
2.3 The Short-Squeeze Thesis
Figure 6: Stare statistics from Oct. 2019 to Nov. 2020 In terms of metrics, the DTC (days-to-cover) actually decreases, lowering the probability to get a short-squeeze short-term. Don’t get me wrong, this DOESN’T mean that it can’t happen, the % of shares shorted is still crazy high. Days to cover: It gives investors an idea of potential future buying pressure. In the event of a rally in the stock, short sellers must buy back shares on the open market to close out their positions. Understandably, they will seek to purchase the shares back for the lowest price possible, and this urgency to get out of their positions could translate into sharp moves higher. The longer the buyback process takes, as referenced by the 'days to cover' metric, the longer the price rally may continue based solely on the need of short sellers to close their positions. Additionally, a high 'days to cover' ratio can often signal a potential short squeeze. This information can benefit a trader looking to make a quick profit by buying that company's shares ahead of the anticipated event actually coming to fruition. (Investopedia). In terms of corporate actions, here is a quote from September mentioning the hostile takeover from Ryan which would trigger a massive short-squeeze, here is the explanation: Short Squeeze Potential -If Ryan Cohen successfully negotiates a purchase price with the Board then the shareholders will have to vote on it. Unlike the proxy battle where Hestia and Permit were running a minority slate of directors, an offer to purchase GameStop would force institutions like Vanguard and Blackrock to call in their shares. By doing so, the shorts would be forced to close out their positions and GameStop would finally have the greatest short squeeze of all-time. Ironically, Cohen could use this opportunity to sell all of his shares and use the proceeds to entirely fund the acquisition of GameStop going down as the first person in history to acquire a billion dollar company... for absolutely nothing. In fact, his acquisition price would be less than zero. It will be exciting to see how it all plays out as according to Bloomberg/WSJ there are now 58 million shares short as of 8/31/2020 with only 65 million shares outstanding. If I were short, I'd be sweating bullets right now. This won't end well and will ruin many. Justin Dopierala is President and Founder of DOMO Capital. How to know when the potential short-squeeze could happen?
Massive volume in short dated calls. [...] If you have shares, DO NOT SELL COVERED CALLS FROM THEM. by doing this you make the likelihood of a squeeze decrease. - horny131313
Unwind their short position with some behind closed doors deal. A scenario like this could include: Melvin offering shares of other stocks at discounted prices in exchange for GME shares or to unload a portion of their short shares. The second party to this deal could also offer to buy GME shares for higher than market prices - horny131313
Melvin and BoA both have short positions, and are desperately trying to drive the price down. Unfortunately, it is getting harder and harder to convince people that gamestop is a failing business. They are sweating and will continue to sweat. Given the buy side volume, they could close these short positions gradually without triggering a massive squeeze, however it WILL drive the price up significantly higher than it is now. - horny131313.
2.5 What 2020 Has Taught Us?
I think at this point it is the wrong question to ask (is the stock being manipulated?). To me, the most important thing is what is the upside potential and the risks associated? Then, how to trade GME?
If you're new to gamestop, the volatility will seem scary but the shorts fight hard with this one. -10% days followed by +20% days are not unusual. - horny131313
Whether the stock is manipulated or not, MOST of the 2020 trading days were negative.
The worst daily returns were hard to handle honestly we are talking multiple worst than 14% daily drawdowns.
You could more than triple your money WITHOUT LEVERAGE.
Let’s say you bought late Apr. and sold late Aug. you could have been at -13% returns and +31% the next week if you had diamond hands. For the real diamond hands you had +147% returns the next 2 months.
Psychologically this was a hard trade for sure. But for those who had diamond hands, it was pretty amazing. If you don’t feel comfortable being at -20% or even -30% returns for months before the stock literally BLOWS UP… Reduce your position and diamond hand with a smaller size. Better to win with less than lose with a lot… TLTR: DIAMOND-HAND THIS OR DON’T TRADE THIS AT ALL.
Risks
3.1 Upside Risks
RC Ventures LLC increases its stake.
It could be VERY soon. On the 31 December 2020, someone bought 900K shares, it could be Ryan Cohen given the size of its last purchases:
This is very bullish because after the disclosure of additional buying from Cohen last time, even though it strangely took 1 full trading day for the market to pop up, GME shot up 29%.
Surprise investors with their holiday sales and/or EPS.
GME will more than likely beat earnings next quarter. I won't go into much detail into this because it is not my expertise, howeveru/Uberkikz11has done some amazing DD and has been doing so for a long time. This guy literally goes into GameStop stores to get his information. Read this:https://www.reddit.com/wallstreetbets/comments/kh9na8/gme_4q20_financial_model/ - horny131313
RC Ventures LLC gets more than one seat on the board.
RC Ventures LLC begins a hostile takeover.
On top of its increasing stake, Ryan is supported by both a lot of small and now large investors too.
Moreover “there is a decent amount of evidence that Ryan Cohen spent the summer of 2020 hiring a badass lawyer and crafting a pretty solid plan to wrest control of a struggling Mall-based gaming retailer from its out of touch Boomer Board and CEO so he can turn it into an ecommerce juggernaut like his baby Chewy. the attorney listed on each of the 13Ds filed by RC Ventures. [...] Chris Davis, Activist Attorney Extraordinaire and His Successful Use of the Consent Solicitation to Remove Dipshit Boards/CEOs” - CPTHubbard.
Moody's Upgrades GameStop's credit rating a second time in a row
Hoping for a PR soon confirming the recent redemption of the 2021 notes. Potential credit upgrade from Moodys could come now that GME has officially redeemed 63% of their 2021 notes. If we don't get that now, we should get it in March when the entirety of the 2021 notes are retired. Debt considered investment grade and not junk is a big positive and one most overlook. - Stonksflyingup
Short sellers close a part of their position huge short position.
A major hedge fund takes a significant position on GME.
Dividend reintroduction.
3.2 Downside Risks
New short sellers open a position and current ones scale up theirs.
Momentum towards profitability dies out and the company goes bankrupt.
Honestly if you read this far you know this is extremely unlikely.
It is very unlikely for the shorts to continue to short the company especially when its credit rating is being upgraded - we will see if it keeps getting upgraded or not in March.
If the shorts get to short it more (or new short sellers open a position) it will:
Drive the stock price down (lower market cap), drive the short ratio higher making the unwinding of the short sellers even harder and as a result making the probability to have a short-squeeze VERY BIG if good events happen moving forward.
Push Ryan Cohen to accelerate its plans.
I will personally increase my share-position if it happens.
Conclusion
4.1 Prices Targets
Here is a summary of my post: When the short % of free float went from a high point (~160%) at around February 2020 to a low point (~140%) - which by the way are in absolute terms both huge numbers- the stock went up ~94% BUT most of the gain took place at 2 key moments: at the recovery of the market crash and then in late August which shows that 💎🙌-ing is key to capture most of the gains. Figure 13: GME returns from 3 Feb. 2020 to 1 Sept. 2020 Why do I say this? Because when holding the stock you could “feel” like you bled when you watch the stats:
Positive daily returns
Negative daily returns
49.3 %
50.7 %
But IT WAS IN FACT THE SHORT SELLERS WHO BLED HARD:
Best daily return
Worst daily return
23.0 %
-13.7 %
Imagine you sold GME when the -13.7% happened. You would not have captured the 94% returns. So just 💎🙌 and let those shorts go bankrupt. Table 8: PTs.
4.2 Valuations
“Wallstreetbets - GME 4Q20 Financial Model 🚀 🚀 🚀.” Reddit, www.reddit.com/wallstreetbets/comments/kh9na8/gme_4q20_financial_model/. “GameStop Rips Higher as Hedgeye Pitches the Long Side of the Trade.” SeekingAlpha, 23 Dec. 2020, seekingalpha.com/news/3647009-gamestop-rips-higher-hedgeye-pitches-long-side-of-trade. Thanks for reading.
NTDOY is the most undervalued company, how do you not see this?
Srsly, how has everyone missed this undervalued gem. Let's break this down simple:
This thing has a PE ratio under 18 putting its valuation lower than other boring value stocks like Cisco, Comcast, or Walmart. You even get a 1% dividend yield which is more than your Chase saving account provides you. You'd think having such a low PE under JPow's economy would mean this is a dead company with no prospects, but...
Their latest game console, the Nintendo Switch which has been out since March 2017 keeps selling units by the millions. 80 million Switch devices sold to date, 15 million of them in 2020 alone. They're still selling at a consistent pace at the mid-cycle of the console's lifespan. This would be bad if they sold it at a loss like new game consoles from the competition, but...
The Switch is cheap. You can get the Switch Pro for less than $300, or the lite for $200. When your console is so cheap not only can you sell it at a profit but your customers have more money to buy games. And who makes those games?
Nintendo has basically a monopoly on Switch games taking all the profit. This isn't particilarly hard when you own excellent IPs that raise nostalgia levels so high. All their 15 top selling games are self-published, 9 of them solely developed by then. Their top 6 each sold over 20 million copies, they're in 25+% of Switch owners. This is important when you factor in that 80% of games sold in 2020 were released in prior fiscal years so new Switch Owner will buy these same old games that already broke cost. And with such popular IPs they can even release phone quality games or emulated 10-20 year old parts at $50 for cash grabs. Only stronger competition could stop them, but...
You can't get a new Playstation or Xbox. Srsly, have you tried buying one? You get a notification from Best Buy that they have some in stock and that same minute when you try adding to cart it's already sold out. Despite the demand, the supply chain is so backlogged that less than 5 million PS5s have been sold.
CHINA - did you know that video game consoles were banned there until 2014? The Switch wasn't even launched there officially until 2019. This is a nascent new region for the expansion of the videogame industry, especially today when less than 2 million Switch/Ps4/xbox ones were sold. Of those, 1.3 million were Switch meaning they already have over 2/3s of this nascent new market share. As more chinese come out of poverty and try out these game consoles from their rich software engineer cousins who came to visit them from California, they will demand regulatory change to make it easier for video game consoles to sell in the country.
What about growth outside the videogame market? Well, they might be the future leaders of AR games. Mario Kart Live? Mario Legos? What other toy companies have you seen pushing the boundaries of AR? With their excellent IPs it should be easy to dominate the toys market, with total global market size of $100B.
All that hype is all well but what to the actual numbers say? Well, this baby had a Q1 - Q3 YoY growth in Net Sales of 37.3%! But there's more! The Operating Profit grew by 98.2% and the Net Profit by a similar 91.8%. How is this not a growth company? Stock is up 67% YoY but keeps being valued at low PE 😮
Price target? Do I look like an analyst? I'm just a retard who likes 🚀🚀🚀 and playing games on the couch while eating tendies. Maybe one day we'll be playing Nintendo games on Mars.
Why Index Funds are Not as Safe and Bubbles are Not as Destructive as You Might Believe
According to Morningstar research in the middle of 2019 almost half of all US stocks were part of some passive index fund. This number almost doubled since 2009. In the meantime, active management is on a steady decline, especially active managed funds. Around the same time Dr. Michael Burry compared index funds to CDOs. Let’s look into this case and try to draw something from it for our benefit. 1. How come index funds are compared to CDOs if they only track industries or sectors of economy? What we often miss is that the index fund, instead of being a neutral observer, is an active participant in the fundamentals of the companies that compose a particular index. The fund does so by providing capital and influencing market value of a security (this also opens a window of opportunities for the company behind the ticker to raise capital via bank loans or private investments). What’s so bad about this? Well, passive funds don’t go through balance sheets, there is no fair value assessment, no analysis and no risk taking. They just buy whatever company is big enough to make it into the index. This company can then use provided capital to stay afloat or influence it’s price by share buybacks, dividends or simply pay huge bonuses to it’s management. Just like banks didn’t care about subprime mortgages that were packed into CDOs, index funds managers don’t care about what exactly goes into their ‘soup’. With the banks it was just greed and ignorance – in case of index funds it’s by design. When there is a stable influx of new capital into passive funds, zombie companies are dragged higher and higher. WSB goddess Cathie Wood called this the greatest misallocation of funds in the history. But why is so much cash flowing into index funds? Is it a trend? Is someone incentivized to promote them? Well, yes, but the main reason is different: boomer psychology and our friend, the FED. See, boomers have massive capitals. All those pension funds, retiring firefighters, trust babies, capital heirs – they all seek safety. They don’t try to get 500% returns YOY or lose it all. They are very content with just beating inflation. Throw few percents above inflation and they will be over the moon. For a long time their favorite asset class were treasuries. 2. What is happening to the bond market? In 2016 US bond market was almost $40 trillion in value, compared to less than $20 trillion for the domestic stock market. Now, I haven’t seen yet the data about the size of US bond market of 2020, but everything points that it’s ratio to stock market is deteriorating. The US 10-year government-bond yield fell from nearly 2.00% at the beginning of the year to an all-time low of just 0.31% in early March. That’s what Rick Rule called ‘return free risk’, since allocating capital into these treasuries almost guarantees you to lose money to inflation. https://preview.redd.it/q6r2fhqfu6961.png?width=1372&format=png&auto=webp&s=b72fad038a47ee1a0adca587881f46bafc25cc89 Look at what is happening in Europe: “The ECB, which added 500 billion euros ($606 billion) to its pandemic bond buying program, is set to own around 43% of Germany’s sovereign bond market by the end of next year and around two-fifths of Italian notes, according to Bloomberg Intelligence. That’s up from around 30% and 25% respectively at the end of 2019... Trading volumes in bund futures have collapsed 62% since the ECB started buying bonds, according to Axa, while ranges the lifeblood of traders have nosedived across Europe. In both the safest and riskiest nations, this quarter’s spread between the highest and lowest yields is the tightest it’s been since at least the global financial crisis.” The FED is doing quite the same. Buying bonds (including corporate) all over the place and lowering interest rates to the ground. What’s even more devastating for boomers is that there’s no hope on the horizon: the FED promises to keep interest rates low for the next few years. We are really heading towards Japan situation where the central bank is that fat ugly bully kid playing all by himself in the sandbox. 3. Where to go if the bonds are not so hot? This all causes big money to chase the next best thing. What do people consider safe? Real Estate. And indeed it rose: according to Knight Frank Global House price index US housing prices rose 7% from Q3 2019 to Q3 2020. But that’s a lot of hustle for big money. And that is hardly a passive income, rather a career. So the next best thing is index funds. What can be better than tracking the whole US economy? Never bet against America, am I right? Even if we stumble upon a market crash sending S&P down – the economy will recover, it always does, right? The influx of cash into ETFs is basically a self fulfilling prophecy: it drives prices up and those yearly returns get even more lucrative compared to sexy 0.31% provided by treasuries. The data shows that 2019-2020 saw again a spike in passive management allocation, but I couldn't find more up to date graph Even worse is that actively managed funds and bank investments start to, basically, replicate index funds. That is due to the risk/reward factor: if the funds outperform the market - they get some good rep and few new customers; but when they underperform the market – they get absolutely obliterated. Only few outsiders can risk picking deep value stocks or plays, that are not common portfolio dwellers. Or it takes someone with huge authority like Warren Buffett or Howard Marks. 4. Bubbles everywhere Now, at this point you might be on the edge of your seat, banging your fist and thinking that this is nothing but a bubble and the boomers, index funds and the FED are to blame. Well, it is. Hard truth is that fundamentals in the long run always kick-in. So-called Buffett indicator (total stocks market cap to GDP) is almost at a record high. And on top of that we have Dot.com bubble 2.0 with crazy tech enthusiasm. And a second real estate bubble too. But I urge you to notice, that bubbles are not all the same with the same outcome. Well, they all go burst, but that’s not the point. There are bubbles that I would call ‘General Market Heat’ - situations when too much money goes into the market, causing it to overheat. Then some sort of event, panic, fear, or rumor, not necessary caused by declining fundamentals, sends the market to downward spiral. As an example: panic of 1857, 1929, 1987, etc. The better the fundamentals were and the least the government gets involved – the faster it rebounds. Those bubbles do nothing but attract more speculators and their only result is the number of bankruptcies. Then there are bubbles that I would call ‘Thematic Bubbles’ - those are dedicated to some specific industry or a number of particular stocks that are expected to grow enormously. Tulip Mania in Netherlands (1637), Railway Mania in UK (1840s), Video Games Crash of 1983, Dot Com Bubble (2000). They all chased some particular novelty and all landed on their faces. But doing so they provided huge capital to developing industries. Dot Com Bubble gave us rapid growth of internet usage. Video Games chase of the late 70s and early 80s gave us the golden age of arcade gaming and huge inventions in graphics and game tech. Railway Mania left Britain with the largest system of railroads in the world. And guess who is the biggest exporter of tulips and holds 49 % of the global flower market? Yep, Netherlands, to this day, almost 400 years since the mania! This did not in any way benefit the majority of investors who went down with the bubble. But you can view this as a sacrifice of dumb and greedy people for the benefit of the progress. I get a sense of pride in this noble cause, as a member of WSB community. Back to boomers and index funds. By pouring money into index funds they provide capital both to disruptive industries and to zombie companies. The good thing is that the tech gets the majority of it, since it has the biggest share. Just look at the SPY top 6 holdings: https://preview.redd.it/ien160wku6961.png?width=361&format=png&auto=webp&s=b4fb8528478110ff0f2d5f9e1a793d7b5e5a9085 It’s genuinely good that companies like Tesla will get allocation of billions and billions which they (frankly) do not quite deserve at current fundamentals. This will accelerate their growth. The bad thing is that such allocations cement big tech monopolies, damaging competition. And it also provides liquidity to zombie companies big enough to make it into indexes. Difference is that innovative companies use this cash to reinvest into future growth. That’s exactly why their P/E ratios are so bad. Zombies spend cash on buybacks and management bonuses. Because of how all these companies are tied together in index funds and due to the nature of modern margin calls – once any segment of the stock market falls, there will be a massive dip. Tech can drown any industry stocks with them and vice versa. But the Tech will be able to cut investments, R&D and expansions and become profitable, while zombies with a big debt will go bankrupt. Either way it’s investors, who will bear the pain. 5. What shall we draw from here:
There are huge inflows into the stock market. And the blame is not so much on the kids with RH as it is on the boomers and ‘smart money’ chasing index funds;
If you want to short any of the bubbles as a hedge – do not short the most growing and volatile sectors and ETFs like QQQ, because they benefit from the current market in a long run. And also the premiums are huge due to IV. Rather short slow and steady industries, because they will get nuked just as much in case of a crash, but the premiums you pay now will be much lower;
Passive index funds investing makes ‘price discovery’ and a search for deep value so much more challenging. But not impossible. Basically, Peter Lynch’s advise to look for companies with smaller institutional ownership still lives up today. Does this mean that prices can’t be good or go up under big index allocation? Hell no. But the chance to find a ten-bagger declines.As an anecdote: look into our champion’s GME institutional ownership: on Jan 31 2020 it was 96.6 % and declined to relatively low 66.7 by Sep 30. Exactly before it doubled in the next 3 months;
Some bubbles provide needed capital to developing and hyped industries causing structural change. Unfortunately, it is paid by investors who rarely see any return;
FED is to blame for everything (as always);
WSBers will lose money either way (as always).
TL;DR: The bond market is similar to boomers wives: sexy in the 80s, not so much today. Constant intrusions by their relatives (the FED) into their relationships makes things even worse. That sends boomers chasing young girls - the stocks. But their dongles aren’t so active anymore, so boomers prefer passive approach, using a dating app - index funds. Unfortunately, there are only so many hot girls among young ladies on the app. This leads to ugly ones receiving attention and money from boomers, which they otherwise wouldn’t deserve. Some of those ladies spend money wisely and will be good to go once the boomer dies out. Others immediately waste it on shopping. Now, if a young man wants to find a truly beautiful lady with reasonable expectations – he has a better chance searching outside of the boomer dating app. Obligatory pictograph of a rocket for those of us who are not yet fully developed for an alphabet 🚀 🚀 🚀
GME Short Squeeze and Ryan Cohen DD for Jim Cramer, The (Man)Child Who Wandered Into the Middle of the GME-Cohen Movie 🚀 🚀 🚀
The Dude:It's like what Lenin said…you look for the person who will benefit, and, uh, uh... Donny:I am the walrus. The Dude:You know what I'm trying to say... Donny:I am the walrus. Walter Sobchak:Shut the fuck up, Donny!V.I. Lenin!Vladimir Illanich Uleninov! Donny:What the fuck is he talking about, Dude? Hello again, GME Gang. What a fun day we had yesterday! Could it continue today? Only Melvin Capital (and maybe Ryan Cohen) knows! And an extra special hello today to our newest WSB lookie-loo, Mr. Cramer (Can I call you Jim? I’m gonna call you Jim). Now Jim, from what I’ve been able to gather, you and your Boomer stocks and your Hot Manic Takes don’t always get a lot of love around here. But that’s not all your fault, Jim. The Paste-Eating Rocket Kids are often good for a solid meme (FYI: it’s pronounced “Mee-Mee.” Feel free to use that on air without verifying). But the Rocket Kids can be a dense bunch and they’re also often one click away from Total Financial Ruin (Quick shout out to SPCE: Pleas fly again). So you have to dig a bit in here to separate the wheat from the chaff, as someone like you actually says in real life. What the fuck even is chaff, Jim? And why do all Boomers seem to think that folksy farm-based idioms are the perfect way to conclude a thought? Anyway. Those of us who watched your teevee clips last week where you reference your interest in WSB know that you, Jim Cramer, might be one of the Olds, but that you also Think Young(TM). https://www.thestreet.com/jim-cramestock-market-advice-moderna-boeing-fed-ftc-dec-15. So we’re going to do our best to help your young-thinkin’ brain find the Needle In the Haystack here so you can get All Your Ducks In a Row on GME. Because we know that you’re a long way from being Put Out to Pasture, and though you may be an out-of-touch millionaire prone to facile yammering, we now like you here, Jim—simply because you mentioned us and that made us blush a bit since we’re needy Millennials who just want our Boomer mommies and daddies to Tell Us They’re Proud of Us. So even though the Paste-Eating Rocket Kids here are often Buying A Pig in a Poke (Christ, please do not ever say that or the kids’ Mee-Mees are gonna fuck you up), we appreciate you recognizing that, every now and then, there’s something worth paying attention to over in this weird little pocket of the Interwebs. And since you’re actually telling your loyal single-finger-typin’ viewers to check out this WSB shitshow, and “if they’re running GME, then do some work on GME,” we assume you might actually be checking this shit out too, since all true Young Thinkers know that What’s Good for the Goose is Good for the Gander. Now, is the GME play as solid as your recent recommendation to buy Bed Bath and Beyond? Who knows? That seems pretty stupid, and I would look it up myself this weekend but my nice little Saturday is already pretty full so I don’t know—I don’t know if I’ll have enough time. But I’ll tell you one thing: the GME play is a lot more fucking fun. Life in a pandemic is boring, but here in this weird WSB place, these kids like fun. And for all your Boomer weirdness, you seem like you still like to have a little fun in this Mad, Mad world of ours. So consider joining us here more often. A word of warning, though: if you don’t like all the dern cuss words we use around here, Jim, well that’s just, like, your opinion man, and we’ll have you know that the Supreme Court has roundly rejected Prior Restraint. First thing’s first: we have a bit of a bone to pick with you (now there I go). The stuff you said last week about GME as the next Blockbuster was D-U-M dumb, Jim. You were a bit out of your fucking element with that. You even made our largest shareholder and conqueror-in-waiting, Mr. Ryan Cohen, send an emoji-only tweet in response, which if you know the super nice-guy Ryan Cohen like all of us do (we actually know nothing), that is pretty much the equivalent of him bringing his dog over to micturate on your and George Sherman’s rug. Now, I myself have never been into the whole brevity thing, but I wanted to take this opportunity to get you up to speed on the GME movie you’ve wandered into. And I know you’re down with this because you told all your viewers that if WSB is talking about GME, then “make sure you know GME.” So before you say something Absolutely Mad again and Cohen sends a tweet with an even less ambiguous emoji, it’s high time that you start Making the Sure here, Jim. Just consider this to be CPT Hubbard delivering you some Orange Sunshine and turning you on to some of that Sweet, Delicious Non-Chaff Wheat you love so goddamn much. Part 1: GME’s Bonkers-Ass Short Interest Now, I’m going to lead with the most crowd-pleasing part of the story here (Get ready, Rocket Kids!), and it’s the one that you did not even seem remotely familiar with in your “Stay out of GameStop, Deadbeat!” rant last week. Maybe that was by design or maybe not. We’ll return to that, Jim. But the point here is: the short interest here is batshit insane. And not just your garden variety Boomer in Rolled Up Sleeves Ranting About Buying Estee Lauder While Hitting Buttons On The Beep-Bop-Boop Machine kind of insanity. Really and truly fucking nuts. So to TL/DR this shit for you, Jim (to use the parlance of our times): GME is themost shorted stocktrading today—by far. https://financhill.com/most-heavily-shorted-stocks-today How shorted? Well, the value of shares short exceeds the market cap of the company; there are currently more shares short than the total number of shares outstanding. And when factoring in the institutional and insider ownership, the total short percentage of float is nearly 300%. https://www.gurufocus.com/term/FloatPercentageOfTSO/GME/Float-Percentage-Of-Total-Shares-Outstanding/GameStop-Corp Even higher, actually, now that Cohen’s interest is over 10%. Now, I’m not a numbers whiz like you, but that level of short interest and the small available float seems pretty fucked up to me. Like: “how is that even legal?” fucked up. And just for a frame of reference, the third most shorted security right now is your beloved Bed Bath and Beyond, with a short percentage of float at a nice and tidy 69%. Are you starting to gather why some of us in this weird little pocket of the Interwebs are a little excited about GME? You see, as u/Jeffamazon and RodAlzmann u/Uberkikz11 and others have explained in these here corners and on the twitter machine with their top-notch DD, and as I will translate to you in lingo you can dig, the short sellers got way over their skiis on this one expecting a bankruptcy in Spring of 2020 that never came. And yet, amazingly, the short interest has only increased since then—there has effectively been no covering in the aggregate and, in fact, the short percentage has only gone up. And now, on the threshold of 2021, we all sit atop a massive powder keg wondering what is going to be the thing that finally lights this shit up. And at the end of this little missive, I’m going to tell you what I think that thing might be (Spoiler: It’s Ryan Cohen! Better start getting used to seeing his name, Jim, because this dude does not fuck around and he’s not going anywhere). https://www.reddit.com/wallstreetbets/comments/k4csaa/the_real_greatest_short_burn_of_the_century_part/ https://twitter.com/RodAlzmann https://thecollective.finance/2020/10/gamestop-gme-a-squeeze-to-44-from-14-can-be-justified-fundamentally-100-of-the-shares-are-short-watch-out/ Part 2: GameStop Isn’t Going Bankrupt and People Actually Want to Buy Shit There So, you foul mouthed little prick, a bonkers-ass short interest is neat and all, but why is Jim Cramer wrong when Jim Cramer compares GME to Blockbuster you might be asking yourself in the third person. First, the most obvious answer, Jim, which you should fucking know already: Blockbuster was nearly $1 Billion in debt and missing debt payments left and right when it was delisted way back in 2010. That was also when there was a bit of a credit crunch, if you recall, right after that whole Housing Crash Unpleasantness that you saw coming from a mile away and from which you made hundreds of millions of dollars due to your contrarian foresight—I’m sorry, I’m clearly confusing you with Christian Bale starring as Dr. Michael Burry, weirdo head of Scion Asset Management, which also holds about 1.4M shares of GME (You really gotta start looking into this stuff, Jim. This story is made for TV, man—and you Boomers were raised by TV and you turned out TV!). Also, in 2010 when Netflix is ripping and when Blockbuster was about to be delisted and bankrupt, an analyst noted the obvious fact that Blockbuster had “nothing on the horizon that makes it look like Blockbuster is going to be more profitable.” https://www.reuters.com/article/us-blockbusteblockbuster-wins-debt-reprieve-forced-to-delist-idUSTRE66052720100702 But Jim, if your Blockbuster comparison has any plausibility, GameStop must have a major debt problem then, right? And yet just last month GameStop repaid $125M in debt several months ahead of time. It’s also really weird that over the past year management bought back a ton of shares, taking the OS from 102M down to just under 70M (making a short squeeze even more likely, my Rocket Children). The weirdness continues with a soon-to-be-bankrupt company holding almost $500M in cash on hand. And according to George Sherman’s “Thine Omnichannel Shalt Be The Omni-est Channel of Them All” Conference Call following Q3, by March 2021 GME will have retired a total of $500M in debt and returned $200M to shareholders through stock buy backs. I’m no expert here, and I do not presently own a Beep-Bop-Boop Machine, but that’s all pretty weird shit to be doing if you’re about to go bankrupt. No, no – I get it: who the fuck actually looks at balance sheets anyway before spouting off about what a stock is going to do? I sure as hell don’t. That’s why I follow my man u/Uberkikz11, since that dude is a GME DD Encyclopedia and was born to crunch numbers. No, when Really Smart People make the Blockbuster comparison, it’s usually just Mouth Sounds for: A B&M Store That Used to Be Popular But Now Is Not Because Technology, QED. But here even the Really Smart People might be missing something as well. They’re right in the sense that GME must use this new console cycle window and cash influx to quickly pivot to a tech-first gaming company (more on that and our boy RC shortly!), but they’re wrong on the timing and relevance of this Super Smart Insight. So fine, they’re doing ok on debt and cash. But who even goes to that 90s-Ass-Looking Cluttered Mall Geekery anymore anyways? I confess: in my darkest moments, as the short sellers manipulate the fuck out of this stock and I curse the names Bell and Sherman, I too have wondered this. But it turns out that, just like I have no idea why anyone listens to Maroon 5 or eats at Applebee’s, apparently a lot of people in America do shit that I do not. Crazy huh? So here is some pretty neat data showing us how out of touch we might be here, Jim: First, when a pretty large sample size of people were recently asked the question: which of the following stores or websites do you plan to buy holiday gifts from? The #5 response from United States Americans was none other than GameStop (Ticker, Jim: GME). Only Walmart, Amazon, Target, and Dollar Store (poor people buy gifts too, Jim) were ahead of little old GameStop. That’s higher than Nike, Macy’s, the Apple Store—and double the response of Bed Bath and Fucking Beyond in every category they surveyed. Check it: (h/t to my man u/snowk88) https://stocktwits.com/snowk88/message/260983915 That’s kinda crazy huh? See Jim, when you Think Young(TM), you really can learn something new every day. And by following our man u/snowk88 (@snowk88 over at stocktwits), I learn lots of cool shit. But guess who already knew that? The guy that wrote this bad-ass letter that identifies GME’s brand and customer data as being one of the most valuable things GME has going for it. https://s.wsj.net/public/resources/documents/RC_Ventures_Letter_to_GameStop.pdf So now we know that Real Life People actually buy shit at GameStop here in the year of our lord 2020. But like that analyst from 2010 said about Blockbuster, there must not be anything on the horizon for GameStop to be more profitable in 2021, right? Now, I will admit that being a bit bearish on GME in December of 2020 would make more sense if, say, GameStop were the nation’s largest purveyor of limp and half-lit pumpkin spice-scented candles and we were exiting the apogee of Shitty Candle Season. But as it turns out, GameStop is currently selling basically the most sought-after items that exist in the marketplace right now—where demand for the Xbox and Ps5 is far outpacing supply and is projected to continue well into 2021. https://www.gamesindustry.biz/articles/2020-11-17-microsoft-expects-xbox-series-x-s-shortages-until-q2-2021 I don’t really need to get into the details on that here, because it’s pretty goddamn obvious, but I think 2020 GameStop at the precipice of a new console cycle might be in a bit of a better position than, say, 2010 Blockbuster relying on the latest Adam Sandler release to lift its sagging rental numbers. But I don’t know. Millions of people don’t watch my show looking for Candid Analysis from me and my folksy man-of-the-people-lookin’ rolled-up sleeves. Part 3:Ryan Cohen is the Sword of Damocles Hanging Over the Short Sellers’ Dumbass Heads And now we’ve gotten to the best part. It’s my favorite part of all of this, Jim, and if you give this a little time, I think it will be yours too. You see, all that corporate bla bla bla about balance sheets and console cycles and early debt repayment and overleveraged short sellers and brand recognition is neat and all—and definitely worth a second look by itself. Maybe even a little Beep-Bop-Boop on the ol’ sound machine—I don’t know your methods. But the real thing that’s about to rip all our faces off here is the business and investment decisions of a mild-mannered wunderkind named Ryan Cohen. Now you can revisit my prior epistle if you want to know a bit more about the involvement of Mr. Ryan Cohen in Le AffairGameStop. https://www.reddit.com/wallstreetbets/comments/kakxrm/gme_tribe_a_story_about_how_ryan_cohen_is_about/. My fly-by-night theory of his lawyer’s possible use of the consent solicitation could have probably marinated for another day, but the thrust of my argument there was that Cohen and his attorney have been laying the groundwork to come after GameStop for a while now. And that Cohen was likely emboldened by the humiliating, lame-ass CC performance by some dude with a mid-century comic-strip sounding name that we’ll all soon know only as: The Guy With the Punchable Face Who Used to Be CEO of GameStop. But here is where things get really interesting. This is a story in the making, Jim, for fucks sake - take notes! This Monday, on December 21, Mr. Ryan Cohen filed a revised 13D showing that last week he started buying a shit-ton of shares—starting on Tuesday December 15th—which is the day after the stock price inexplicably plunged on Monday the 14th and the very same day you were yammering on the teevee about GME being Blockbuster! Instead of listening to you, however, Cohen started buying more GME shares (super-sleuth dark pool watchers u/rgrAi and u/snowk88 noticed in real-time that there was some very large accumulation taking place), which culminated in the big reveal that Cohen purchased a total of 2,501,000 additional shares last week—500,000 of which were purchased on Friday December 18, 2020 at the price of $16.02 a share. Ryan Cohen is still the single largest shareholder of GME with 9,001,000 shares in total, taking his ownership of GME above the 10% threshold from 9.98% to 12.9%. And so he apparently thinks that the floor for his investment is $16.02 per share. Is he still buying? We’ll know soon. But yesterday seemed like a little taste of what it might look like if a large buyer steps in to prevent short sellers from manipulating all of my nervous little Rocket Children here and their delicate little paper hands. There was another thing we learned from this 13D filing: Ryan Cohen has apparently hired a new attorney and law firm. Instead of the great Christopher Davis of Kline Kaplan, now Ryan Cohen is represented by Ryan P. Nebel, a partner with Olshan Frome Wolosky, LLP. Now, if you’re familiar with my prior ramblings, you might wonder if I was a bit confused, and maybe even a little sad, at this sudden change from my man C. Davis. And you might be a little right. But then the wonder of the internet allowed me to learn a bit about these new lawyers. And holy shit, things are about to get fun. Now, I liked what I knew about Chris Davis and he seems like a genuine bad ass activist attorney. But the folks at Olshan Frome and Wolosky, LLP are Next Level Players and really seem tailor-made for this exact situation. First off, Olshan is ranked as the top global lawfirm for Activist Attorneys. https://www.olshanlaw.com/assets/htmldocuments/Bloomberg%20Activism%20League%20Tables%20H12020.pdf (H/t @flummoxed at stocktwits). They seem to be the go-to law firm for major proxy battles initiated by activist investors. But possibly even more important is that Olshan is the same firm that represented Hestia and Permit in their successful proxy battle earlier this year to appoint two new directors to the GME Board. I’m not going into the fine details of that, because this is already a bit of a long-form Idiot’s New Yorker article, but GameStop just went through a proxy fight last year with Activist Investors Hestia Capital and Permit Capital, which resulted in two Board seats for our shareholder buds from Hestia and Permit. So, it’s reasonable to assume that the attorneys at Olshan might know their way around GameStop at this point and where the pressure points are here. http://www.globallegalchronicle.com/hestia-capital-and-permit-capitals-two-new-directors-to-the-gamestop-board/ https://www.olshanlaw.com/resources-mentions-HestiaCapital-PermitCapital-GameStop-BoardofDirectors-ShareholderActivism.html And if you follow u/snowk88 over at stocktwits (@snowk88)— you’d also find a wealth of DD on how Olshan rolls when entering these activist-investor-replaces-dumbass-boards-and-CEOs type disputes. To bottom line it: they get it fucking done. https://stocktwits.com/snowk88/message/266158534 https://stocktwits.com/snowk88/message/266155112 https://stocktwits.com/snowk88/message/266153175 But what else did we learn from the 13D? We learned that Ryan Cohen is definitely not going anywhere any time soon. Specifically, the filing notes that RC Ventures intends to continue to engage in discussions with GameStop’s board “regarding means to drive stockholder value, including through changes to the composition of the board and other corporate governance enhancements." And while RC Ventures “desires to come to an amicable resolution with [GameStop, it] will not hesitate to take any actions that it believes are necessary to protect the best interests of all stockholders.” I really like that last part, don’t you? And although I thought his November 16th letter was pretty goddamn clear, this 13D just ratcheted up the transparency level here. In sum, Ryan Cohen has all of our backs and he’s going to replace this Board and Sherman with people that are on the level and that will help implement his vision. And now seems like a good time to return to those “Ryan Cohen: Boy Genius” articles that were definitely NOT part of a well-coordinated pre-hostile takeover media campaign initiated earlier this year. I think there might be a few things in those articles that Mr. Cohen wanted all of us shareholders (as well as the short sellers and the Board he’s about to replace) to really and truly understand. Recall also that Cohen is not one for diversification or for playing it safe. So here’s a few choice nuggets for you to ponder: *** Bloomberg, June 2020: https://www.bloomberg.com/news/articles/2020-06-05/chewy-founder-cashes-out-bets-on-apple-wells-fargo · "It's too hard to find, at least for me, what I consider great ideas," he says. "When I find things I have a lot of conviction in, I go all-in." · Cohen uses the word “conviction” a lot. He says it’s something he learned from his father, who ran a glassware importing business in Montreal where Cohen grew up. “He taught me how to block the noise from the masses,” says Cohen. “To have a point of view and have conviction and not waver.” · He wouldn’t, however, recommend his [non-diversified] investment approach to everyone. “You need to have the temperament to block the noise,” he says. “Sometimes it feels like a roller coaster.” · He likens his obsessive focus on building Chewy to his approach to stock picking. "I don't want to swing for a single," he says. *** You hear that, Jim? Our man Cohen likes idioms too! But fuck those farm idioms, Jim – we’re upgrading to the Sportsball kind now. So what’s the takeaway here? I’d say that Cohen has his Eye On The Ball and that it’s time for all short sellers and the Board to Throw in The Towel because Ryan Goddamn Cohen likes to Take the Bull By The Horns and will ensure that he Hits a Homerun for shareholders that believe in his vision. Here’s a few more things Mr. Cohen wants all of us to know: *** Forbes, August 2020: https://www.forbes.com/sites/zackfriedman/2020/08/16/entrepreneur-chewy-founder-ryan-cohen-shares-his-best-advice/?sh=41e1370e5840 · “For me, each no sounded like they just didn’t understand my vision. It was frustrating at times, but never discouraging. Those ‘no’s never made me doubt my strategy – it was the opposite. I was motivated by all the rejections and they just got me fired up.” · “I understood that thinking big was likely going to be misunderstood along the way. I’m contrarian by nature, so being misunderstood often validates what I’m doing. It wasn’t until Chewy boxes were on doorsteps across the country that the bulk of investors started to recognize our formula.” · “[M]y biggest risk would have been not taking risk. The risk of going head-to-head against Amazon. The risk of insourcing fulfillment. The risk of building a company in Florida rather than a popular tech hub. The risk of spending $3 million a month on TV ads, more than Home Depot HD -0.1%'s budget. The risk of hiring expensive executives even though we weren’t profitable. These decisions were some of the most controversial and required me being comfortable betting against conventional wisdom, and were often contrary to the advice of my board. Suffice it to say, I was not the most popular board member.” · “Dad never swayed when he believed in something. I never compromised my vision, regardless how many investors turned me down I was not going to give up on building Chewy into the world’s biggest online pet retailer. I love to be challenged, and I’m flexible on details, but I’m never willing to give up.” *** Goddamn it, Ryan. I was done having children but now you’ve forced me into getting back on that train just so I can name this future child Ryan Fucking Cohen. Thanks a lot, asshole. But to return to my point: are those the statements of a man that seems likely to walk away at this point? Or is Cohen trying to tell us all to get ready because he is going All In on this shit? So where does this leave us? After a huge week where Cohen buys 2.5M more shares and then the SP skyrockets to $20 yesterday on that news? Well, this is where I want to tip my cap to my man Justin Dopierala over at Seeking Alpha and allow him to conclude this section. He, along with his pal Dmitriy Kozin have been pretty clear-eyed on all this shit for a while now and they both deserve some credit. And I know I gave my main man Justin a bit of a hard time in my last novella, but the dude is sharp as hell and helped a lot of us see the forest through the trees here. And you should also definitely invite him to join your poker nights (seriously: check out the dude’s tweet in response to our own Rod Alzmann’s introduction of the #WeWantCohen hashtag right after the Q3 call debacle). https://twitter.com/DOMOCAPITAL/status/1336446055685230592. You have no comment on a potential takeover involving Ryan Cohen, Justin after your hour-long googly-eyed call together? Can’t believe you’re just preemptively leaving the WSJ and Bloomberg hanging like that. Justin, I love you dude, but if I’m holding pocket Kings I’m folding after that tweet because that twinkle in your eye lets me know you’re about to drop two Aces on my ass. Anyway. Here is what our man Dopierala thinks might happen here soon (and he called this way back on November 17th- and sorry - no links here, per the mods, as apparently no Alpha must ever be Sought from these parts): I think a very likely outcome at this point is a majority slate next shareholder meeting where Cohen takes over BOD and then makes himself CEO. A majority slate proxy battle would require all institutions to call in shares and would force a squeeze. We’re intrigued, Justin. Please continue: If Ryan Cohen successfully negotiates a purchase price with the Board then the shareholders will have to vote on it. Unlike the proxy battle where Hestia and Permit were running a minority slate of directors, an offer to purchase GameStop would force institutions like Vanguard and Blackrock to call in their shares. By doing so, the shorts would be forced to close out their positions and GameStop would finally have the greatest short squeeze of all-time. Ironically, Cohen could use this opportunity to sell all of his shares and use the proceeds to entirely fund the acquisition of GameStop going down as the first person in history to acquire a billion dollar company... for absolutely nothing. In fact, his acquisition price would be less than zero. And now is when I get to speculate on what I think is going to happen here. But I do not necessarily think Cohen is going to put an offer to buy GME to take private. That would definitely trigger a MOASS, but I’m not sure I see it given the attorneys he’s hired and his recent buys up to $16 and the amount of cash that would take. Like Dopierala’s first comment, though, I think Cohen is going to nominate directors to replace nearly the entire Board of Directors with a vote happening at the annual meeting and once that Board is in place, they’ll appoint Cohen as CEO. And as Justin notes, if he nominates a majority slate of directors, shares will have to be called in to vote. And this vote and proxy battle will make the prior minority slate Hesita/Permit battle, and the tiny short squeeze that took place when that happened, look tame by comparison. Now everyone: get your calendars out. Because the date to nominate directors here is in Mid-March, and my super-smart corporate lawyer buds inform me that it’s standard practice to file about 7-10 days prior. So, if this actually happening, we should be seeing something on this by early March. But even though early March is now the mark on the wall, today’s insane price action caused me to think about all of this a bit harder and speculate a bit more. And a major h/t to my buds on the stocktwits board, especially u/rgrAi (@amarbar) for all the sharp analysis on this. But if you were Ryan Cohen and you knew this company was hugely undervalued and you had a high level of CONVICTION here and also knew you needed shareholder votes to sweep out these dumbasses and implement your vision—then how would you play this with the short interest here as crazy as it is? I’d keep buying. Why? Well, lots of reasons, you smart alecks. First, so I have more guaranteed votes (duh?). Second, so that when the building starts burning and short hedge funds run for the exits they find that a mild-mannered Millennial with super-good ideas has sealed off all the doors and windows. That’s gruesomely delicious, isn’t it? Why else, CPT? Well, finally, and maybe most importantly, because I would want to excite and delight all my fellow shareholders by triggering a slow-burn short squeeze, raising the SP significantly, so that I can once again make the point (as he did in the Nov 16 letter) that the incompetent management that caused a HUGE drop in SP following that utterly incompetent Q3 call and the shelf registration, had nothing to do with the SP increase that again happened once Cohen announced his intent and started buying. Not the console cycle, not the cost containment measures, not the buybacks and not the early debt reduction. Nope: rightly or wrongly, shareholders will see Ryan Cohen buying shares and the corresponding SP increase and everyone—especially all new buyers who are delighted at their good fortune and swept up by Ryan Cohen Fever 2021—will start getting #WeWantCohen tattoos on their ass they’ll be so happy. And all of us, newly enriched by Ryan Cohen’s Big Canadian Balls and tactical brilliance, will crawl over glass to vote for him over The Boomer Artist Formally Known As GameStop’s CEO. I could be very wrong on this last point in particular, but if we start seeing 13Ds drop here shortly, things should get very fun very quickly. Part 4: A Return to Our Short-Squeeze-to-Da-Moon Discussion: Who’s Side Are You Fucking On, Jim? Now, Jim, given the fast friendship we’re creating here, and all we’ve been through over the past 5000 words, I hesitate in bringing this up. But we’ve all seen the video, Jim. You know the one I’m talking about. Yes, the one where you actually tell the truth about how short selling hedge funds manipulate the market to knock down the price of perfectly good securities that many hard-working people invest in—many normal-ass people all assuming they wont ever have to Point Where On The Dolly The Invisible Hand of the Economy Touched Them. But that’s not life now is it Jim? And fuck those poor-ass rubes for not knowing how to play the game with you sophisticated Masters of the Universe, amirite? https://www.reddit.com/dashpay/comments/93evx4/jim_cramer_reveals_dirty_tricks_short_sellers_use/ https://dealbook.nytimes.com/2007/03/20/cramer-market-manipulato So where are you in this whole GME/Cohen story, Jim? You candidly (gleefully?) acknowledge that a prime strategy that shorts deploy is to spread negative rumors that are then amplified by Big Smart Trustworthy Financial Media Titans like yourself to shake out unsophisticated retail players like my Rocket Kids here—who because of their tiny paper hands and you mean short selling brutes often subsist on paste and paste alone. So for this particular security, are you the one helping with the manipulation and actively creating the “new truth” or are you just one of the Useful Idiots that these short sellers use to manipulate with an anodyne, TV media-ready comparison like: GameStop Is The Next Blockbuster? And how in the fuck does this fit into your Think Young(TM) project, Jim? Because if there is one thing that we over at WSB fucking hate, it’s a bunch of Manipulative Short Selling Boomer Fuckwads. Why on earth would a hip Young Thinker like you want to be included in that crew, Jim? And I know we’re all friends here now, Jim, but I need to push back a bit on some of what you said in that video in such a cavalier whatareyagonnado manner. So if I understand you, short and distort and fomenting negative reactions from retail players based on deliberately false narratives is illegal, but still easy as fuck to do "because the SEC doesn't understand it." But you fucking do understand it, Jim! So why are you helping those short and distorters break the law here? Why are you being such an obtuse dumbshit? Just check out what happens to the borrow rate and short selling every time there is any good news for GME: https://stocktwits.com/Slantedangles/message/264519950 (h/t @slantedangles). This manipulation isn't just happening with GME; it is happening everywhere. It’s baked into the cake. And that is pretty fucked up that we all just accept it because whatareyagonnado. I think that one thing that those of us who truly do Think Young(TM) have a hard time understanding is at what point in your lives do you Boomers all finally come to realize that it’s maybe time to stop playing the game like you have been? What point do you finally have enough where doing the right thing matters more than getting paid? Maybe start by telling the truth more often—and maybe don’t go out of your way to help those corrupt-ass hedge fund managers who continually fuck over average people merely because they were stupid enough to believe you all. What contempt you Masters of the Universe have for all of them—for all of us. There is a bigger story here on GME and this out-of-control short interest (naked shorting, counterfeit shares) http://counterfeitingstock.com/CS2.0/CounterfeitingStock.html than even Ryan Cohen and the inevitable short squeeze we’re about to witness here. And it begins and ends with people like you and Melvin Capital and Bank of America not giving a fuck about the rules while thinking you’re smarter than the rest of us who do—but who lack power to do anything about it. And you know what? Maybe you are smarter than us. You certainly know how to play this game pretty well, as that video shows. But if I know my old school 1980s movies like I think I do, this is usually the part of the story where the rag-tag kids from across the tracks come over to show you hubristic rich fuckheads what happens when you fuck a stranger in the ass. Now I myself have never dabbled in pacifism, Jim, so this isn’t too much of a stretch for me, but seeing that video of yours and seeing the insane short interest and all the manipulation here makes me want to burn the whole corrupt system to the ground—while barricading the doors to trap in those arrogant-ass short sellers who lie and cheat and distort to profit off average people. And though I’m certain that this larger battle is not driving him, maybe that result is one that Ryan Cohen wouldn’t mind too. Though he’s a polite Canadian and would probably just let everyone know that he’s not really mad, just disappointed. But me? I’m an Angry American and I say: Block the fucking doors and windows and light that shit up. So maybe this epistle will be useful for your Think Young(TM) project and cause you to reflect a bit more on what’s really going on out there with this whole GME thing and the likely illegal shorting that has driven the short percentage of float to these insane levels, drawing in new retail shorts too stupid to know what’s even happening. Or maybe it wont cause you to reflect in the slightest (count me as one of those cynical types that see your overtures to WSB as a transparent play for greater market share from the Young Crowd since your old-ass audience is dying and/or switching to bonds). But in a few months when all the Billy Ray Valentines and Louis Winthorpes assembled here are toasting each other in stupid shirts on a white-sand beach somewhere, we do not want you to look back on your knee-jerk boomer-ass dismissal of GME and your Useful Idiot blathering with that same tinge of regret and longing you feel when you look at a pre-Client 9 picture of you and your old roomie: warm-toes-and-hosiery-enthusiast E. Spitzer, Esq. In conclusion: GME = Blockbuster comparisons are for Simps and Corrupt Short-and-Distorters. Don’t be like them, Jim. And to my Rocket Children: the only weapon we wield in this stupid game is Diamond Hands with a float like this. Toughen the fuck up. And Happy Holidays everyone. --CPT Hubbard TL/DR: Jim Cramer likes farm-based idioms and apparently being a useful idiot to scummy short selling hedge funds. DD on the GME turnaround is solid and overleveraged short sellers should be shitting themselves. Ryan Cohen, our polite, hard-working Canadian benefactor is about to rip all our fucking faces off and trigger a MOASS. Probably even by early March, if that time is good for you (he’ll text before he comes). And fuck infinite regress: It’s rockets all the way down here. 🚀🚀🚀 Now: diamond hands, motherfuckers. **This is a shitpost and is only to be used as investment and life advice for Mr. Jim Cramer, Esq.
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