Stock Analysis and Trades Thread

[RH | 4,895]

Well here's a question I'd not recommend 99% of the time, but do you guys have any recommendations for promising, trash penny stocks?

I ask because I have an old brokerage account that has a balance of about $8.  I could go through the ordeal of setting up new bank accounts and withdrawing it, or I could have fun gambling (that's right, I said gamble!) with those few bucks.

I'm not looking to buy/sell with any high frequency, but I might as well sink this money into some very-small cap company with a stock price of $.10-.50.  I've always stayed away from those because they are mostly gambles but in this case, if anyone knows of a really small company that is at least conducting their business well, I'd appreciate the recommendations.

Edited October 7, 2020 by RH

[arch_8ngel | 1,597]

Absolutely unbelievable surge in Gamestop today... currently up 44% on the day - due to a "partnership" with Microsoft.

Have to say that is out of left field, and it isn't even entirely clear how it benefits Gamestop, since the bulk of the announcement just sounds like Gamestop employees are going to be using Microsoft hardware/software for store operations.

[jonebone | 1,307]

Yup Gamestop to the moon, haha. Still have close to a thousand shares so I'm happy to finally be positive on them. Was way too early but it was a no brainer it would take off at next generation when they were backwards compatible. Dont overthink the news, really was just as simple as that.

[a3quit4s | 4,091]

@arch_8ngel totally agree. They basically get to not even sell consoles for no upfront money and bundle some sort of pass with it. They needed to drive people to the stores with money to buy the other worthless crap they sell not poor people who can’t even afford the console. This 100% benefits Microsoft. 
 

@jonebone i see your point but when I go to GameStop they have walls and walls filled with Xbox one games that they clearly aren’t selling; why would a next gen console amplify those sales when people already own the games they want? It’s nice the partnership drove people to buy the stock but I’d still dump it before people realize you can’t make money selling no margin consoles to poor people who will probably start missing payments after the first month. If they really got the partnership with Microsoft to build out cloud infrastructure they need to double down on closing brick and mortar. 

[a3quit4s | 4,091]

Just now, a3quit4s said:

@arch_8ngel totally agree. They basically get to not even sell consoles for no upfront money and bundle some sort of pass with it. They needed to drive people to the stores with money to buy the other worthless crap they sell not poor people who can’t even afford the console. This 100% benefits Microsoft. 
 

@jonebone i see your point but when I go to GameStop they have walls and walls filled with Xbox one games that they clearly aren’t selling; why would a next gen console amplify those sales when people already own the games they want? It’s nice the partnership drove people to buy the stock but I’d still dump it before people realize you can’t make money selling no margin consoles to poor people who will probably start missing payments after the first month. If they really got the partnership with Microsoft to build out cloud infrastructure they need to double down on closing brick and mortar. 

Edit: I be curious on what Burry does with the stock now, sells while high or wait for something higher. 

[arch_8ngel | 1,597]

1 hour ago, jonebone said:

Yup Gamestop to the moon, haha. Still have close to a thousand shares so I'm happy to finally be positive on them. Was way too early but it was a no brainer it would take off at next generation when they were backwards compatible. Dont overthink the news, really was just as simple as that.

Next generation backward compatibility was already known and priced in with the previous bump in price, right?

Without this announcement of some kind of not-quite-clear "partnership" with Microsoft, they were worth 40% less (and after-hours it is even higher).

 

Or was XBox compatibility not known yet?  I haven't really kept up with the current gen console news.

Edited October 8, 2020 by arch_8ngel

[arch_8ngel | 1,597]

39 minutes ago, a3quit4s said:

@arch_8ngel totally agree. They basically get to not even sell consoles for no upfront money and bundle some sort of pass with it. They needed to drive people to the stores with money to buy the other worthless crap they sell not poor people who can’t even afford the console. This 100% benefits Microsoft. 
 

Yeah, that part of the "partnership" makes no sense at all, in terms of benefiting Gamestop, unless they're being paid MORE by Microsoft than they would have made on the margin in console price plus average attach rate.

I'll have to read more about this as they clarify what the "partnership" entails, but it basically just sounds like they were converted to a Microsoft distribution center for "free" Xbox consoles that bundle with a subscription for a bunch of online gaming content.

[jonebone | 1,307]

You guys are overthinking it still. Its as simple as low stocks go lower and high stocks go higher. Nothing more.

It should have never been as low as $3. It was severely oversold as everyone piled on. It probably shouldn't be 11 or 12 or whatever it is now either, but hype knows no bounds. Now that the upward momentum is here this will be one to ride for months. Plenty of pull backs will come along but we are no where close to where highs will run.

[jonebone | 1,307]

Also its not just about the profits and who cares that they don't make money on consoles. They make money on the industry as a whole.

Here's the analogy. You just got laid off, you have no income. Oh, but you got $1,000,000 in your bank account and $1,000,000 in video games in the basement. Are you going to panic or be screwed by not having income? Of course not cause your cash flow will be fine for quite the foreseeable future. Same here, Gamestop has at least another 5 to 7 years before I'd be worried about anything.

[arch_8ngel | 1,597]

17 minutes ago, jonebone said:

You guys are overthinking it still. Its as simple as low stocks go lower and high stocks go higher. Nothing more.

It should have never been as low as $3. It was severely oversold as everyone piled on. It probably shouldn't be 11 or 12 or whatever it is now either, but hype knows no bounds. Now that the upward momentum is here this will be one to ride for months. Plenty of pull backs will come along but we are no where close to where highs will run.

Well, the reality here is there was apparently an enormous short squeeze that was kicked off by the news which certainly helped the upward momentum.

But in the current age of meme stock buying kids on Robinhood, you're probably right that "stonks only go up" or whatever it is the kids say

 

[jonebone | 1,307]

50 minutes ago, arch_8ngel said:

Well, the reality here is there was apparently an enormous short squeeze that was kicked off by the news which certainly helped the upward momentum.

But in the current age of meme stock buying kids on Robinhood, you're probably right that "stonks only go up" or whatever it is the kids say

 

Yes the short squeeze is real. It was something absurd that 90% or even closer to 100% of the stock owners were holding short positions. And GME had bought back several millions in shares on their own. When 9 of 10 people owning a stock are only owning it with the sole purpose of selling at a cheaper price then what do you expect when the stock reverses? Short squeeze is real, you don't want to short against a trend. Even when a stock seems way too overvalued like Tesla, you don't go against the trends. Thousands of other opportunities out there.

[arch_8ngel | 1,597]

16 minutes ago, jonebone said:

And GME had bought back several millions in shares on their own.

Yeah, there is absolutely the valid point that it takes a lot less to move the value of a share of GME today than it did a year ago.

Still... +45% (plus whatever momentum carries through for the rest of this run) is bonkers when their announcement amounts to a point-of-sale upgrade and a deal to sell XBox consoles on an apparently rent-to-own basis. (haven't seen any details, if there are any, on what the "partnership" actually entails in a financial sense)

 

EDIT:  but don't get me wrong -- I'm genuinely happy for your that hanging in there worked out

Edited October 9, 2020 by arch_8ngel

[Californication | 1,477]

Anyone thing FDX is going to run until Christmas?

[a3quit4s | 4,091]

9 hours ago, arch_8ngel said:

Yeah, there is absolutely the valid point that it takes a lot less to move the value of a share of GME today than it did a year ago.

Still... +45% (plus whatever momentum carries through for the rest of this run) is bonkers when their announcement amounts to a point-of-sale upgrade and a deal to sell XBox consoles on an apparently rent-to-own basis. (haven't seen any details, if there are any, on what the "partnership" actually entails in a financial sense)

 

EDIT:  but don't get me wrong -- I'm genuinely happy for your that hanging in there worked out

The rent to own program isn’t even exclusive to GameStop it’s available at all the retailers that people actually still shop at. It’s called Xbox all access https://www.xbox.com/en-US/xbox-all-access

This partnership is all smoke and mirrors. Yeah I get what @jonebone says about having money in the bank for GameStop, but GameStop is going to burn through that like no ones business. Honestly, it’s not even a partnership, GameStop signed up for Azure and Office like any other company and are acting like Microsoft fucking bought them out. 

[a3quit4s | 4,091]

2 minutes ago, a3quit4s said:

The rent to own program isn’t even exclusive to GameStop it’s available at all the retailers that people actually still shop at. It’s called Xbox all access https://www.xbox.com/en-US/xbox-all-access

This partnership is all smoke and mirrors. Yeah I get what @jonebone says about having money in the bank for GameStop, but GameStop is going to burn through that like no ones business. Honestly, it’s not even a partnership, GameStop signed up for Azure and Office 365 like any other company and are acting like Microsoft fucking bought them out. 

Edit: I am still wondering who takes the risk on the Xbox all access thing, if GameStop sells the console do they get paid or is it a third party? Since it claims to be 0% APR it can’t be a third party because console have basically no margin so where is the profit for a third party?

Edited October 9, 2020 by a3quit4s

[arch_8ngel | 1,597]

2 hours ago, a3quit4s said:

Honestly, it’s not even a partnership, GameStop signed up for Azure and Office like any other company and are acting like Microsoft fucking bought them out. 

That is certainly how it sounded in the releases I read, I agree. Will be interesting to see what the reality of the deal actually is.

[arch_8ngel | 1,597]

2 hours ago, a3quit4s said:

Edit: I am still wondering who takes the risk on the Xbox all access thing, if GameStop sells the console do they get paid or is it a third party? Since it claims to be 0% APR it can’t be a third party because console have basically no margin so where is the profit for a third party?

My thought is that Microsoft must be shouldering the financing on these, and still paying the stores their normal cut, since their margin on the consoles is obviously much higher. 

And from rough numbers I saw mentioned, it doesn't REALLY work out to 0% APR, does it? It's not as abusive as classical rent-to-own, but it definitely didn't look like 0% financing.

[jonebone | 1,307]

11 hours ago, Californication said:

Anyone thing FDX is going to run until Christmas?

I own some FDX when I bought in during the COVID mess expecting shipping to surge, but I can't recommend them at these levels.  I'm in 11 shares at $122.17 and they're sitting at $271 now.  Wish I bought more of course but I just was dabbling in some $1-$1.5k positions across the board in a variety of stocks.

The reason I picked FDX over UPS back then was due to FDX having much lower debt levels while UPS is debt ridden.  I have much better "personal experiences" with UPS than FDX (nicer delivery guys, see more UPS trucks than FDX, etc.), but I liked the FDX fundamentals much more.

Owning a shipper is a no brainer in COVID, just not sure how much higher they'll run.  I also expect significant stock market uncertainty around election time.  I personally am not initiating any new longs between now and election time. 

Edited October 9, 2020 by jonebone

[Kguillemette | 1,543]

https://www.yahoo.com/news/red-sox-owner-fenway-sports-005545591.html

 

Investing in an mlb is probably not a great use of money given the state of mlb right now, but holy shit do I want to own a share of the Boston Red Sox! 

[a3quit4s | 4,091]

This is a much better article on how GameStop is benefitting from the Microsoft deal, it makes more sense to me now given the profit sharing aspect of GameStop signing people up for Xbox. I wonder how Best Buy will react to that since Microsoft is now giving them better profit margins. It will take more time to recover but there really isn’t a point to owning an Xbox without game pass (formerly Xbox live)

https://news.google.com/articles/CAIiEMAHIq5ZDS5snLt756jvMRoqFggEKg0IACoGCAowkqEGMJBZMLLouwY?hl=en-US&gl=US&ceid=US%3Aen

[RH | 4,895]

Ok, completely ignorant, arm chair guess about GME and MS.  First, people rarely walk in and get a new system without a game.  So, GME has the benefit of knowing they will take a little profit from new gamers also buying a game when they get the xbox.  By adding financing where they pay much less out the door, they may end up buying 2-3 games on day one, rather than just one game.  Pair that with an extra controller or two, or other peripherals and they are making solid money.

If this partnership sways buyers to go with GME vs. other outlets, GME gets that profit. It makes sense.

Also, I know there are questions on the financing, but it wouldn't surprise me that GME has profits to be made on the people that make 4-6 payments and then default/return their consoles.  I mean, I'm not sure how you repo a console, but if you can refurb and resell it at $50 less than MSRP, you've probably made a profit on the default.  I doubt that will be a high percent, but with those two dynamics in play, I think it's some what compelling to at least give this play a try.

Edited October 12, 2020 by RH

[arch_8ngel | 1,597]

4 minutes ago, a3quit4s said:

This is a much better article on how GameStop is benefitting from the Microsoft deal, it makes more sense to me now given the profit sharing aspect of GameStop signing people up for Xbox. I wonder how Best Buy will react to that since Microsoft is now giving them better profit margins. It will take more time to recover but there really isn’t a point to owning an Xbox without game pass (formerly Xbox live)

https://news.google.com/articles/CAIiEMAHIq5ZDS5snLt756jvMRoqFggEKg0IACoGCAowkqEGMJBZMLLouwY?hl=en-US&gl=US&ceid=US%3Aen

I wonder who the credit servicer is for the All Access "rent to own" portion, and what is the expected default rate?

[arch_8ngel | 1,597]

1 minute ago, RH said:

Ok, completely ignorant, arm chair guess about GME and MS.  First, people rarely walk in and get a new system without game.  So, GME has the benefit of knowing they will take a little profit from new gamers also buying a game when they get the xbox.  By adding financing where they pay much less out the door, they may end up buying 2-3 games on day one, rather than just one game.  Pair that with an extra controller or two, or other peripherals and they are making solid money.

If this partnership sways buyers to go with GME vs. other outlets, GME gets that profit. It makes sense.

Also, I know there are questions on the financing, but it wouldn't surprise me that GME has profits to be made on the people that make 4-6 payments and then default/return their consults.  I mean, I'm not sure how you repo a console, but if you can refurb and resell it at $50 less than MSRP, you've probably made a profit on the default.  I doubt that will be a high percent, but with those to dynamics in play, I think it's some what compelling to at least give this play a try.

That's a good point that the rent-to-own XBox situation is almost certainly going to increase average attach-rate.

 

EDIT: but your point about refurb-and-resell -- if Pachter's numbers are right, at 6 payments in, Gamestop only earned about $20.

They have almost no room to mark it down at that point.  Any refurb-and-resell incentive to make it meaningfully more attractive than buying your own brand-new-zero-down console would have to be backstopped by Microsoft.

 

Edited October 12, 2020 by arch_8ngel

[a3quit4s | 4,091]

There are rumblings that PlayStation will announce this kind of system as well for PS5 in conjunction with GameStop. There is a smart argument in the article about even though they will be making more on consoles that doesn’t add up to what they made in the preowned market. GameStop will also be getting a piece of every Xbox subscription service they sell which is monthly revenue for them. It’ll be interesting to see how this pans out. I still think they need to majorly reduce storefronts and stop tapping into their savings though 

[arch_8ngel | 1,597]

Just now, a3quit4s said:

There are rumblings that PlayStation will announce this kind of system as well for PS5 in conjunction with GameStop. There is a smart argument in the article about even though they will be making more on consoles that doesn’t add up to what they made in the preowned market. GameStop will also be getting a piece of every Xbox subscription service they sell which is monthly revenue for them. It’ll be interesting to see how this pans out. I still think they need to majorly reduce storefronts and stop tapping into their savings though 

Microsoft has deep enough coffers that they can easily afford to not get paid up front for their consoles.

It would surprise me a little bit if Sony could easily afford to cover that kind of financing themselves -- then again, they probably have the credit rating to issue bonds to do it, rather than handling it like MIcrosoft could easily do out of their massive income/cash-hoard.

 

I DO think that them converting the "spiky" console-release-cycle income to much more steady subscription-service income is almost certainly a good thing, though.  Running a boom-and-bust business is really tough.