GameStop only makes money because you gave it money (to buy Treasuries)
Stop me if you’ve heard this before:
GameStop is still terrible at being a retailer. But it’s not bad at being a money-market fund.
The seller of video games and other collectibles said net sales of $860.3 million were below Wall Street’s expectations for $887.5 million for the 13-week period ending November 2, and declined relative to the same period in 2023.
As a result, third-quarter operating losses ballooned to $33.4 million. But the company booked net income of $17.4 million — yet that’s entirely because of all the cash that management is sitting on thanks to retail investors, which they’ve invested in short-term US government securities.
Shares of GameStop were down 3.6% ahead of earnings, ending below where they were when Keith Gill tweeted an image with a message that could be interpreted as “Time You Cover” last week. The stock has swung between extending declines and clawing back some losses early in the after-hours session.
Call volumes have typically been 5x higher than put volumes over the past month, but options action was much more balanced today ahead of the report, with many bearish options that expire this Friday seeing a jump in demand.
The fourth quarter — the one we’re in now — is typically a banner period for GameStop thanks to holiday shopping.
