GameStop (GME) – “Swimming Against the Current”

A company we have been tracking and researching for better than two years now is GameStop (GME).  Our initial research on GME was predicated on the thesis that the company was highly overvalued with eroding earnings and reverse network effects.  For reasons described briefly here, we now believe there is value in the stock. However, investors will be unlikely to realize this value.

A Return to Rationality

In July, the current U.S. expansion became the longest on record. Gross Domestic Product (GDP) in the second quarter increased at an annual rate of 2.1% and there are still new jobs being created. While these and other government figures suggest that U.S. and global economies are continuing to expand, there is growing evidence of weakening economies internationally and signs that the current U.S. expansion is losing momentum.