One of the biggest concerns for many years was GameStop's high level of debt. And, this was also one of the reasons for the shorters' high conviction over the doom of the company.
Well ... in the beginning of May, the company announced it took advantage of the elevated price of GME, issued ~3.5 million shares to the market, and raised roughly half a billion dollars.
And ... supposedly with this new war chest, paid off essentially all of its outstanding debt. The debt that shorters thought had the company cornered and set to crumble.
Now, the question is, is the current price of GME somewhat reasonable or completely whacko. I am of the opinion that it may be high, but it's really not that insane given all the supposedly positive things happening within the company that point to massive change and its valuation relative to market conditions.
At its current range, it moves between 10B-20B, which I can understand people wanting to say it's high af.
However, look at our current market environment. We have a ton of companies doing less than 500M, 300M, 200M in revenue a quarter ... some barely profitable, many aren't profitable at all ... being valued at 20B, 30B, 50B ... 90B+ ... DDOG, CRWD, NET, DKNG, DASH ... SHOP is at 153B valuation off <1B quarterly revenue.
Yet, somehow GME with 2B+ revenue last quarter at something like 15B valuation is completely bonkers and deserves more criticism and spotlight compared to all these other, imo, more bonkers companies.
Even Chewy itself has revenue/earnings comparable to GameStop, yet was valued at nearly 50B just 3 months back.
The thing that GameStop doesn't have compared to many of these other companies is actual revenue growth. Its revenue figures completely stagnated for many years, and began dropping the past couple.
I'm not saying these are bad companies or anything. And comparing GameStop to these other companies isn't exactly apples to apples. I just don't understand when people call GameStop insanely overvalued, but conveniently fail to associate all these other instances of even more outlandish valuations.
If the company can reestablish growth, its valuation is gonna go way past what it is now judging by how the stocks of all these other companies have performed.
Now, as for the whole "squeeze" and the superstonk community, yeah, there's a lot of nuttiness and straight-up conspiracy theory there. I've lost track of the number of times the community believed something was gonna happen on some date, and nothing of significance ends up happening unsurprisingly.
However, I also don't believe that there's absolutely nothing fishy going on with the short situation.
Some of the accusations on naked shorting, hiding shorts, DTCC being irresponsible, SEC not doing their job do have merit to an extent. However, I believe a lot of the theories there put it all on steroids, and the actual truth is somewhere in the middle.
The '$10 Million is the Floor' is completely loco. However, I wouldn't rule out the possibility of a further squeeze either. It would be a couple thousand at best imo.
There just isn't a whole lot of transparency. And there are tactics to hide the size of positions from public knowledge. So, the amount of actual exposure currently at stake against GME isn't clear.