Gamestop WTF?

Normally, on a day like this, I’d be like “Heck yeah!” Peloton one of my biggest holdings absolutely crushed it. I mean, I am definitely pleased but then I read about this guy:

WTF?! Apparently, the fact that GameStop now has 3 Chewy veterans ($CHWY also hitting a 52-week high), on their Board of Directors is really making things interesting at GameStop. This was a HUGE short squeeze. Also, the 57.39% that it finished was not even close to the high of the day which was 80% or so. Not gonna lie, I’m definitely FOMO’ing a little bit. I do own shares, but nothing material and I also promptly sold my shares when it hit 65%+ or so.

I then read about this guy on Wall Street Bets

GameStop is a stock that is the antithesis of my investing philosophy, which is to buy stocks in company’s that have strong underlying fundamentals such as high revenue growth, a solid balance sheet, strong FCF growth, high margins, etc.

Investing in GameStop is kinda like buying Bitcoin which imo is pure speculation. Don’t get me wrong, I own some cryptocurrency, but I would never make a “YOLO” type of investment like this guy did. GameStop fundamentally is a uber hyped turnaround play but the biggest key point here about the GameStop investment thesis is that it is based on HOPE that it will turn it around. The underlying fundamentals show massive declines in revenue, huge amounts of debt, etc. However, for those value investors, if you dig more into the numbers a bit more, you can see positive operating cash flow and free cash flow with the ability to cover the debt and a lot of reduction in expenses which should help alter the company’s trajectory. Motley Fool actually had a podcast about GameStop a few months back and I decided to buy some shares around $12.

Portfolio Update

The market continues to rally and I’m now up 18% YTD hitting another ATH. Next week is the start of earnings with Netflix kicking off earnings next Tuesday, January 19, 2021. I believe that this quarter’s earnings results will really have a huge impact on the direction of the market rally.

My Trades

As noted, I closed out of my GameStop position but am considering buying back half due to FOMO considerations and perhaps needing to take a longer term view. However, I still see $GME as a trade and not a long-term investment which means wracking up short-term capital gains which makes me sad.

I also bought a number of 2/19/21 February contracts for $TCS in hopes of striking it big on my speculation that their Q3 earnings report will blow it out of the water. This trade is speculative.

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