Why GME is the next TSLA. A case for going LONG GME. via /r/wallstreetbets #stocks #wallstreetbets #investing


Why GME is the next TSLA. A case for going LONG GME.

First off, congrats to everyone that made bank from that price action this week. It has been a refreshing change from all of the loss porn. Even though my tits remain jacked for the rest of the week and the short term momentum, I want to discuss my thoughts on GME, why it is a great LONG play based on fundamentals, and why I think it will be the next TSLA.

First, these two companies have some essential similarities for my comparison

  1. They have a huge retail following and remarkably loyal/enthusiastic investor base
  2. Charismatic, passionate, and incredibly successful leaders in Cohen and Elon
  3. The companies are developing new tech to be leaders in a mostly untapped market

My comparison on the fundamental side will focus on current day GME as compared to TSLA in 2017.

………………………………….TSLA (2017)………. GME (today)

Market cap……………………….71b……………………10b

Share Price………………………..70………………………141

Revenue…………………………..11b……………………..6.1b

EPS…………………………………-2.37……………………. -5.25

Current Assets…………………6.5b…………………….2.6b

Current Liabilities……………..7.6b……………………1.3b

Long term debt………………..11.6b………………….40m (yes, million)

So, looking at these numbers they are not perfect, but I think the same thing ultimately held TSLA back that will hold GME back from a fundamental perspective. This being EPS. Both companies proving to grow revenue, but not turning profit or creating cash flow. From a balance sheet perspective, GME is actually quite a bit better here with 2:1 assets:liabilities and essentially no long term debt. The cash burn for GME is a result of their investment into new streams of revenue and will hopefully start to show improvement in regard to EPS with the marketplace launch. This same lack of cash flow generation held back TSLA for years, but they did eventually turn positive in 2020 and guess what happened to the share price? Yep, rocket emojis.

Tesla share price went from 130 in Jan, 2020 to 793 in Jan, 2021 (adjusted price for splits)

I think long term, if you believe in the marketplace as a good move for the business of GME (as I do), we could see similar price action with institutional adoption and closed short positions over time.

A couple of other things GME has working in their favor:

  1. Insiders really believe. Insider buys 104k shares the last 2 days, sells 743 shares (form 4 filing)
  2. Shrinking float. 76m shares – 13.6m(18% insiders) – 21.3m(28% institutions) – 10m (DRS) = 31.1m

TLDR: GME is the next TSLA (in terms of stock performance). Once the marketplace starts to generate revenue and EPS turns positive we will see a TSLA-style run.

Disclosure: 343 shares at 153 average

I like the stock

Submitted March 24, 2022 at 04:47AM by The_Lotus_Kid
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