Keith Gill’s GameStop investment thesis: August 2020 vs June 2024
Is this the moment we found out the kitty has no clothes?
Thesis drift is a helluva thing. After watching Keith Gill’s livestream, I’m struck by how much different the bull case for GameStop sounds now relative to 2020.
In short, he confirmed my view that GameStop is about two people: Keith Gill, who enables the company to raise lots of money from retail investors, and Ryan Cohen, who would hopefully use that money wisely to reinvent the business. But that’s what it is: hope.
Of course, Gill may feel more restrained from getting into the nuts and bolts of investment theses – and is under no obligation to share his views – but the deep intellectual rigor that underpinned his original bullish stance on the company has vanished, at least from the public eye.
Here are some quotes from Keith Gill’s August 2020 livestream where he unpacked his thinking on GameStop:
“at a market cap of $260 million and an enterprise value of about $100 million, the downside is limited”
“...a reasonably fair net asset value of about $400 million...”
“Over the next 18 months, GameStop could generate enough free cash flow to pay off its debt, exhaust its buyback authorization, and still have an adequate financial foundation to continue pursuing new revenue streams”
“...it trades so cheaply and is so heavily shorted, that all that may be needed to revalue its stock is a shift in sentiment”
“I’m just a security analyst in search of asymmetric upside”
“It’s highly unlikely GameStop’s equity is worth less than $250 million”
“GameStop’s legacy business is probably worth between $500 million and $1.5 billion”
“There’s a non-zero chance that GameStop successfully reinvents itself”
And here are some quotes from Keith Gill’s livestream on GameStop just now:
“If you remember my previous thoughts on the company and the opportunity, there was kind of like a two-part thesis to it, and that second part of the thesis is a reinvention of the business model or a transformation, whatever you want to call it”
“It becomes a bet on the management, in particular, of course, Ryan fucking Cohen”
“I felt like I see enough where I believe this guy, I believe he might be able to do it”
“He seems like he has those characteristics in the way he approaches this, seems like he might be able to do this, it’s kind of based on feel”
“The question marks will be: Well, what has he done? What is he doing? What’s the plan? Those are fair questions, but you know, do you really think he’s been doing nothing?”
“I think we’ve seen enough from him to think he’s got a good head on his shoulders, and he’s, again, we haven’t seen anything, it’s speculation”
“We don’t know a plan”
“...even the legacy business, cutting costs, trying to stabilize some cash flows, but now it’s all about the transformation, and that cash pile is growing”
“I personally don’t think three years is too long in this case -- five years, 10 years, alright”
“In this case, the absence of evidence is not evidence of absence”
“I think with a significant amount of capital, I don’t know, let’s see where it goes from here”
“Reminds me of the Dark Knight, you post a couple of memes, a couple of screenshots, and everyone loses their minds! Chill, chill, chill, it’s OK”
“‘We thought he wasn’t crazy.’ That’s your bad, for thinking I’m all there.”
