Prices for Pokémon trading cards are soaring, beating the benchmark S&P 500 and sparking a wave of risky speculation https://t.co/XDZPvw0e3c ...

Core Insights - GameStop's collectibles, including Pokémon trading cards, now represent over 25% of sales for the half-year results, an increase from 16.4% a year ago [1] - The company's Q2 sales exceeded analysts' expectations, with a revenue surprise of +18%, reaching $972.2 million, up from $798.3 million a year ago [2][5] - Despite closing 590 stores in 2024 and planning further closures, GameStop's sales rose over 21%, indicating efficiency in remaining stores [3][4] Financial Performance - GameStop reported a fiscal Q2 net revenue increase of +21.78% year-over-year, from $798.3 million to $972.2 million, despite having fewer stores open [5] - Free cash flow (FCF) grew significantly, reaching $113.3 million, up 73.8% year-over-year from $65.5 million [8] - The net operating FCF rose +29.6% year-over-year to $33.7 million, indicating improved cash generation from operations [9] Valuation Insights - GameStop's stock is considered undervalued, with a Sum-of-the-Parts (SOTP) assessment suggesting a value over $31 per share [6][12] - The company's stores could generate an estimated $135 million in FCF over the next 12 months, leading to a valuation of $8.32 billion for the stores alone [13] - Including net cash and Bitcoin holdings, the total SOTP value of GME stock is estimated at $31.02 per share, representing a +24.4% upside from its current price [17][18] Strategic Considerations - GameStop's management anticipates closing more stores in fiscal 2025, including divesting its French stores and selling its Canadian operations, which accounted for 4.7% of Q2 2024 sales [4] - The company maintains a significant cash position of $8.6944 billion, with net cash after accounting for convertible debt at $4.5335 billion [12] - GameStop's Bitcoin holdings remain unchanged at 4,710 BTC, valued at approximately $544.96 million, contributing to the overall valuation [14] Investment Opportunities - Selling short out-of-the-money (OTM) put options is suggested as a strategy to generate income while waiting for the stock to appreciate [19] - The potential for a +37.4% upside if GME reaches $31.00 is highlighted, along with an expected return of 5.73% over the next three months from short-put yields [21][22]

Prices for Pokémon trading cards are soaring like a Charizard, beating the benchmark S&P 500 and sparking a wave of risky speculation https://t.co/wLyrzg0uOp ...