🏋 GameStop’s weighted pack

Dispersion, or the gap between the S&P 500 and its individual constituents, is sky-high. Pricing in the options market indicates traders expect this “winners take most” regime to last, with the CBOE S&P 500 Dispersion Index still highly elevated.

With dispersion high, and correlations between stocks low, it means that picking winners that deliver serious market-busting returns is easier than ever… but it also means you can blow up your portfolio if you pick the wrong horse in the stable.

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“Pokémon” cards and other memorabilia like plushes and “Magic: The Gathering” cards propelled GameStop’s collectibles business to another huge quarter.

• In its first-quarter earnings report, released Tuesday evening, GameStop reported $348.9 million in sales for its collectibles business, outearning every other category (hardware and software) and accounting for 42% of the company’s overall quarterly revenue. 

• A year earlier, hardware was the biggest contributor, with 47% of sales, and collectibles made up 29%.

• The collectibles division saw 65% year-over-year sales growth and has now posted double-digit gains for six quarters in a row.

• Fueled by card sales, higher revenue and improved margins propelled GameStop to its highest Q1 operating income ever, at $143.3 million.

The retailer has leaned into “Pokémon” cards’ lasting popularity, launching “Power Packs” last year. Recently, GameStop opened up a higher-tier option for customers to spend up to $5,000 to “rip” a digital pack that contains a random PSA-graded card worth, per the company’s site, $5,000 on average. The potential value, depending on what card a customer pulls, eclipses $69,000, according to the company. According to Kotaku, customers who receive one of those cards can choose to ship it, sell it online in GameStop’s marketplace, or store it in a climate-controlled facility in Delaware.

The Takeaway

Professional Sports Authenticator, or PSA, grading is a form of appraisal that began with sports cards but has recently been dominated by “Pokémon.” That business has itself become overwhelmed by GameStop’s collectibles, and PSA this month paused lower-tier grading levels (including those made through its partnership with GameStop) for up to six months, The New York Times reported.

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OpenAI has become an example of what every business school strategy professor tries to hammer into their students’ heads: having a big first-mover advantage does not equate to a durable moat for your business.

That idea is really starting to surface now. One of its main competitors, Anthropic, which OpenAI once discussed merging with, just raised a funding round that values it more than $100 billion higher than OpenAI. Anthropic also just filed its IPO paperwork confidentially with the SEC, meaning it will likely make its stock market debut before OpenAI does, too.

• Way back in December of 2024, we wrote a handful of predictions about what OpenAI might become. In one, we said that “OpenAI is Lyft,” an analysis that involved Sam Altman’s world-beating AI company fumbling the bag so hard that it would lose its lead in the industry. 

• It seemed pretty unlikely: it was the market leader at the time, and “ChatGPT” was on the verge of being AI’s version of a “Kleenex” or “Band-Aid” — a product so popular that one brand name becomes the term people use for it, no matter what company makes it. 

• It turns out, the differentiation in AI products eventually happened — and it’s a big part of the reason OpenAI fell behind. Anthropic leaned hard into coding and other enterprise work, betting it could get companies to pay for AI, and so far it has been right. 

• Meanwhile, OpenAI lost focus, releasing a host of products such as its short-lived, cash-draining Sora, a video app where people could create realistic videos of Altman grilling a Pikachu. 

Past that, there are also warning signs around OpenAI’s financial performance. The Wall Street Journal wrote in April that OpenAI CFO Sarah Friar told fellow executives she’s worried the company might not be able to pay for future computing contracts if revenue doesn’t grow fast enough. The same day, The Information reported that OpenAI had a goal of 1 billion weekly active users by the end of 2025, but as of February 2026, it was still only 90% of the way there. 

The Takeaway

If you’re unfamiliar with the startup world, revenue is usually the easy part. For more than a decade, insanely well-capitalized startups like OpenAI have followed a model of converting venture capital dollars into blockbuster revenue and user growth. 

Usually, turning those users and revenue into cash flow is the harder task, one that can take much longer. And a company’s stock price — which is something OpenAI will soon care a lot more about — is typically a function of the present value of future cash flows. Of course, that’s not always true, especially when a company picks up a cult following. 

Unfortunately for OpenAI, a cult following seems to be exactly what it doesn’t have.

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Like commercial trucks driving 4% slower or longer lines at Costco, gas prices are driving people toward sedans. May sales data from automakers including Toyota, Honda, Subaru, and Hyundai shows an unmissable recent surge in sales of the humble passenger car across the US, as consumers say C-U-later to SUVs.

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• 🏒 NHL: The Las Vegas Aces’ hard-fought 5-4 win on the road against the Carolina Hurricanes has put them in the driver’s seat in this Stanley Cup series, with prediction markets* hiking their chances of hoisting the cup from 41% heading into the game to 59% the following day. 

• 🎬 “Disclosure Day”: While the global embargo for film reviews of “Disclosure Day,” the new film from Steven Spielberg, doesn’t lift until next Tuesday, the early scuttlebutt is good. Prediction markets are giving it a 19% chance of coming in above 95% on Rotten Tomatoes, and a 69% chance it rates above 85%. 

*Event contracts are offered through Robinhood Derivatives, LLC — probabilities referenced or sourced from KalshiEx LLC or ForecastEx LLC.

• Premarket earnings: Ciena Corp. and X-Energy 

• Postmarket earnings: Planet Labs and Samsara