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Matt Levine

How Will the GameStop Game Stop?

Plus a little AMC.


What is the endgame for the GameStop Corp. trade? You could imagine a story like “the stock keeps going up to $1,000 as people realize this is really a $70 billion company with enormous ability to grow earnings and expand margins, and then it stays there as GameStop executes on its new plan and becomes the dominant player in the video game industry.” That is the sensible endgame, the normal one, the sort of endgame that, for instance, Tesla Inc. bulls imagine for Tesla. The stock rockets up because the market comes to understand and believe the company’s long-term vision; investors look past today’s relatively modest results and value the company based on what it will do in the future. Then the future arrives, the company does what people expected, and the valuation is justified.

This is quite hard to imagine, and I don’t think many GameStop bulls expect it to go this way, but I guess it’s on the menu.