Veteran trader takes second look at GameStop after earnings

GameStop closed about 1,000, or about a quarter, of its stores worldwide within the past year. It said it expected to close significantly more in coming months but hadn’t yet identified which ones.

Guilfoyle, whose career dates back to the floor of the New York Stock Exchange in the 1980s, said Cohen was taking a page out of Saylor’s bitcoin book.

Strategy “has been a major investor in bitcoin for years, and with its bitcoin holdings dwarfing its actual business, [it] has become known on Wall Street as something of a proxy for bitcoin itself, though there are now ETFs that get that done for investors,” the Wall Street veteran said.

Guilfoyle said GameStop had “one of the strongest balance sheets you will ever find in corporate America.”

“Talk about a turnaround story based upon fiscal discipline despite a core business that remains in decline,” he said. “This management team has done an outstanding job.”

Guilfoyle said he was not investing in GameStop right now but noted that it was hard not to invest in growing cash flows and strong balance sheets.

“Who doesn’t love fiscal discipline, especially when it works?” he asked. “This firm does have those things going for it.”

Wedbush analysts kept their underpeform rating on GameStop, while boosting their stock price target to $11.50 from $10.

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“We admire management’s resolve to run the business efficiently, and based upon the results for the quarter, are more confident than we have been in the past that GameStop can achieve breakeven results for the foreseeable future,” the investment firm said in a research note entitled “Saving Its Way to Prosperity.”

Wedbush said GameStop’s presumed intention to invest in bitcoin “could impact its interest income, but for the time being we are going to assume that GameStop can continue to generate $220 million in interest income for the foreseeable future.”

“While it is arguable that the Q4 results are not sustainable, we did not expect GameStop to even approach operating breakeven ever again,” the firm said. “We were wrong, and it is clear that the company’s operations have some value, albeit not as great as its share price suggests.”

“We will revisit our price target and investment thesis should GameStop again prove us wrong and return to operating profitability,” Wedbush said.

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