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Can’t Stop, Won’t Stop

GameStop.

The minute you hear that name, chances are you had some kind of visceral reaction. Was it happiness or elation? Probably not. I don’t actually know if there is a positive “visceral” reaction to anything.

For me in particular, GameStop is like OG Pawn Stars. It’s a place where you took your old games and got $7 in-store credit and watched them slap a $45 price tag when they placed it back up on the shelf. And the staff would shadow your footsteps trying to upsell you on subscriptions or preorders when you were really just killing time near the movie theater (remember those?) or before getting a haircut (remember those?). That pushy behavior makes a bit more sense when you realized the insane quota requirements management levied on the near-minimum wage workers. And who can forget the time when that same management asserted that its stores were “essential retail” and thus should remain open in the middle of a pandemic. Suffice it to say, this is not a chain with a particularly great reputation. Even amongst its target audience.

Why bring this up now? Well, there are two things going on. Technically three, but I’ll get to that.

The first is that the stock price has rocketed up in the last week. Back in March, GameStop stock was trading at $2.80. Nearly everyone, myself included, felt like it was really going to be the next Blockbuster: a former retail giant in its niche who chose hubris over innovation, and let the world pass it by. If you have been in a GameStop lately, you can see that they’re trying – nearly 50% of the store is now gaming merchandise, like Minecraft T-shirts and various tchotchkes that wouldn’t be out of place in a Hot Topic. Which, okay, good for them and whomever is out there buying those sort of things. But as both Microsoft and Sony release flagship consoles with digital-only editions at a lower price-point, surely the days of physical media and those who focus on selling it are numbered?

Remember when I said GameStop was at $2.80/share in March? Friday it closed down 11% to… $35.50. It was really at about $20 on Tuesday (1/12) before it rocketed up to a high of $41 mid-Thursday, and now here we are.

What happened? Last Monday, Ryan Cohen from Chewy.com fame and two of his executive buddies landed seats on the GameStop board of directors, after owning 13% of all the shares. What’s Chewy.com? It’s a place to order online pet food. Which… yeah. If you’re older than 35, that may remind you of Pets.com back in the heady 2000 internet-bubble days. The difference here is Ryan founded Chewy in 2011 and sold it to PetSmart in 2017 for $3.35 billion. It’s now worth $44+ billion. And all this was done despite Amazon being a thing. Apparently their relentless focus on customer service is what puts them over the top with most people.

In that regard, the speculation here is that Ryan can pull the same magic with GameStop. And I can see it. The current retail experience cannot possibly be worse, so any meaningful improvements would do wonders. Plus the online shopping experience… well, it’s not that bad, when there are things actually in stock. Can’t really blame GameStop for that specifically though; just try finding a non-scalped Switch anywhere for MSRP. Point being, there is room for improvement.

One the biggest advantages and reasons I care about this at all though, is the simple reality of resale. If not GameStop, then where? Craigslist, Facebook Marketplace, eBay? People do it, I guess, but I prefer to not have to rehearse hostage negotiations strategies before heading to a parking lot to acquire luxury goods. “OK, I’ll hold the envelope in my left hand and take the Vita in my right.” Places like eBay might be good for buying things – there are some customer-focused policies to cover situations where you open the box to find a literal brick inside – but from a seller-standpoint, it’s nerve-wracking. Those same customer-focused policies make it easy for buyers to scam you by claiming it broke in transit or claim you sent a brick. That gets us back to hostage negotiation wherein the correct move is to film yourself putting the console in a box, which probably wouldn’t hold up in court anyway. Maybe you can get UPS to vouch for you, or pack it themselves?

So, yeah. I like the possibility of rolling in somewhere with this unused PS3 and get $5 for it or whatever. The local Pawn Shop sure as shit won’t take it (I asked), and my only other option would be to throw it away via Good Will. Just kidding, I still hold out hope that one day I will turn it on.

Anyway, there’s all that. Back in 2019 I had some schadenfreude over GameStop’s then-collapsing stock price ($3-$5) but pointed out how I wish them to stick around for resale purposes. And at that time, I also mentioned resale of digital goods. Even if they somehow pulled digital resale off, it probably won’t be the bounty that it may have been back then: Steam and the Epic Store would directly compete (if forced), and the Game Pass reality we live in means less people are buying licenses to games to begin with. There is some speculation that GameStop could instead start leveraging themselves into being a physical meeting space for gamers, or start selling PC parts like a mini-Microcenter (one of the best retail stores for that, but only 25 in the whole US). That’s probably the better avenue to take, IMO, as they already have stores everywhere and I’d love to have a place to go to see if a mechanical keyboard is any good or to see the difference between a VA, TN, and IPS computer monitor in-person. Price-match Amazon in-store with something I can take home that minute? Now we’re talking.

We shall see where things go.

[Edit] In the interest of full disclosure, I’ve been selling puts on GameStop stock since November. Selling puts is not the same thing as buying puts – selling means I’ve been betting that its stock will go up and not back down. I am not recommending any financial advice here.