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Why I still think GameStop is a trap

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This is The Takeaway from today’s Morning Brief, which you can sign up to receive in your inbox every morning along with:

Sometimes there is no middle ground in the cutthroat world of business.

You are either a winner.

Or you are a loser.

A winner wins because they are doing something better than everyone else, usually over a long stretch of time. Through a mixture of perseverance, creativity, and executional excellence, the winner builds on their success and widens their lead.

There is a dose of luck to this too.

A loser, well, does the complete opposite of this playbook.

I return with this simple message following another wild week of trading in shares of GameStop (GME) — one dominated by an unverified social media account allegedly led by a guy known for a red headband, lame T-shirts, and a penchant for flexing his alleged dollars in a trading account.

GameStop stinks. It’s 100% going to be a long-term loser. Maybe 110%.

And you know what, friends?

To reiterate this point, I’m not going to use a lick of the sophisticated analysis I taught myself while covering 55 retail companies as an independent stock analyst. I will do two things.

First, point out that the company’s first quarter sales cratered 29% year over year. The company lost $32.3 million in the quarter compared to a loss of $50.5 million a year earlier.

The business trends are getting WORSE!

Here are those numbers via the company’s laughably brief earnings release Friday morning.

Second, I’m going to link to the company’s latest annual report here, then add these rapid-fire observations:

  1. The company refuses to aggressively shrink a store base that numbers 4,169 locations worldwide. Shops that sell similar products such as Walmart (WMT) are aggressively investing in AI and same-day delivery services — practically making visits to competing stores a waste of time.

  2. The company is losing gobs of money amid a persistent, structural downtrend in sales.

  3. Margins are under pressure, and have been.

  4. The company is overly reliant on consoles — 56.8% of sales came from hardware and accessories last year. But console sales face an increasingly grim outlook as PCs and smartphones compete for market share.

  5. The three objectives listed under the “business strategy” section — establish retail excellence, achieve profitability, and leverage brand value — aren’t being consistently executed on.

You GME fans may not want to admit this, but fundamentally analyzing a company still matters. That’s how the mechanisms of the market work. That’s how true wealth is built.

“You can never lose sight of the fundamentals,” Interactive Brokers chief strategist Steve Sosnick said on my “Opening Bid” podcast (video above), adding that GameStop’s top and bottom lines will likely stay under pressure.

Keith Keith

Keith “Roaring Kitty” Gill toils away on a Yahoo Finance GameStop chart on Friday, making his return to streaming about stocks on his YouTube channel. (Brian Sozzi)

It’s why this stock has gone from a high of $66 when “activist investor” turned CEO Ryan Cohen joined the board in January 2021 to a low of $9.95 in mid-April, before the latest bout of Keith Gill shenanigans. Shares closed at $28.22 on Friday.

Cohen has done squat to reverse the company’s future trajectory. In the meantime, the performance of the company has been terrible. I stand by everything I wrote in my open letter to Cohen on June 9, 2023, when the stock was trading at $23.

In fact, I’ll take this a step further — I personally invite Cohen to Yahoo Finance’s big fall Invest conference (distinguished speaker list from 2023 here) to debate me on the main stage about what in the world he is doing with GameStop.

Ryan, the event is Nov. 12 in New York City. My email is below.

You owe it to your legion of supporters to discuss what you are doing with their public support and dollars.

And don’t message me that Cohen has saved the company with its recent $933.4 million cash grab via a share offering and another $75 million planned offering disclosed on Friday. All this does is ensure the company could keep buying inventory for a few years while also exiting a plethora of leases for stores that most of America doesn’t visit.

What does winning look like in the consumer space? Check out these links:

You want to debate me on GameStop today?

I am waving you into the octagon on X — I’ll be here all day @BrianSozzi answering your messages. Any inappropriate message and I will block your account. I want to hear your honest analysis on this company and why you love it.

In the meantime, enjoy reading GameStop’s 10-K.

Still can’t get enough GameStop? Here’s what noted value investor Jonathan Boyar had to say about the company on “Opening Bid“.

Brian Sozzi is Yahoo Finance’s Executive Editor. He is also the host of the “Opening Bid” podcast. Follow Sozzi on Twitter/X @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations, or anything else? Email brian.sozzi@yahoofinance.com. Are you a CEO and want to come on Yahoo Finance Live? Email Brian Sozzi.

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For sale: A piece of California’s country music history

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The famed Buck Owens Crystal Palace, where music legends including Willie Nelson, Dwight Yoakam, Garth Brooks and a young Taylor Swift have played, is up for sale, with the foundation that runs the Bakersfield venue planning to list it for $7 million on Monday.

The nightclub, museum and steakhouse was owned by its namesake Buck Owens, the country music trailblazer who bucked the slick commercial melodies of Nashville for a distinctly West Coast twang. Owens opened the Crystal Palace in 1996, watching it become a premier venue for the biggest names in country music, including himself. Buck and the Buckaroos played there every Friday and Saturday night until his death in 2006.

Jim Shaw, a member of the Buckaroos and a director of the Buck Owens Private Foundation, said that after 28 years of running the famed venue, the Owens family plans to step back and find new owners amid a challenging business climate. The foundation said in a statement that “since Buck’s passing in 2006, we’ve tried to maintain the excellence that he expected, even as it became more and more difficult during these challenging times of increasing food and labor costs.”

The venue is not closing and scheduled events will continue as planned, Shaw said.

“It’s business as usual for now,” Shaw said. “Ideally, someone who wants to keep it exactly as it is will come forward.”

Owens’ youngest son, Johnny Owens, wrote on Facebook that the family’s hope “is that a buyer steps forward with a vision for the future and a reverence” for his father and the Bakersfield Sound.

The Crystal Palace, located on Buck Owens Boulevard, is a major tourism staple for Bakersfield. The 18,000-square-foot venue is next to the city’s downtown entrance.

“It’s the No. 1 tourist attraction in Bakersfield,” Shaw said. “There are people stepping forward and we are waiting to see what happens. I am getting a lot of phone calls. I’m anxious to see what happens.”



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2nd local radio host says they were given questions ahead of Biden interview

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A second local radio host on Saturday told ABC News that he was provided a list of questions in advance of his interview with President Joe Biden this week.

“Yes, I was given some questions for Biden,” Earl Ingram of CivicMedia told ABC News. Ingram, a prominent host of a Wisconsin radio station, interviewed Biden this week in the wake of his debate performance.

Ingram said he was given five questions and ended up asking four of them.

“I didn’t get a chance to ask him all the things I wanted to ask,” he said.

Ingram is the second interviewer who now says they were provided questions by Biden aides to ask the president this week. Earlier today, another local radio host who interviewed Biden this week told CNN she was given questions to ask Biden before the interview.

PHOTO: President Joe Biden speaks to supporters during a campaign rally at Sherman Middle School, on July 5, 2024, in Madison, Wisconsin.  (Scott Olson/Getty Images)PHOTO: President Joe Biden speaks to supporters during a campaign rally at Sherman Middle School, on July 5, 2024, in Madison, Wisconsin.  (Scott Olson/Getty Images)

PHOTO: President Joe Biden speaks to supporters during a campaign rally at Sherman Middle School, on July 5, 2024, in Madison, Wisconsin. (Scott Olson/Getty Images)

“We do not condition interviews on acceptance of these questions, and hosts are always free to ask the questions they think will best inform their listeners,” the Biden campaign told ABC News on Saturday.

Ingram told ABC he didn’t see anything necessarily wrong with the practice. “To think that I was gonna get an opportunity to ask any question to the President of the United States, I think, is a bit more than anybody should expect,” he said.

He continued that he was grateful for the opportunity to interview Biden at all.

“Certainly the fact that they gave me this opportunity … meant a lot to me,” Ingram said.

MORE: Wealthy Democratic donors sound alarm over Biden staying in race

On CNN earlier today, Andrea Lawful-Sanders, the host of WURD’s “The Source,” said Biden officials provided her with a list of eight questions ahead of their interview with Biden.

“The questions were sent to me for approval; I approved of them,” she said.

“I got several questions — eight of them,” she continued. “And the four that were chosen were the ones that I approved.”

Responding to Lawful-Sanders, Biden campaign spokesperson Lauren Hitt said in a statement that it’s not “uncommon” for interviewees to share topics they would prefer. She noted that Lawful-Sanders was “free” to ask any questions she saw fit. She also noted that it was the campaign who sent over the questions and not the White House as other reports claim.

Lawful-Sanders did note in her interview with CNN that she ultimately “approved” the questions provided.

“It’s not at all an uncommon practice for interviewees to share topics they would prefer. These questions were relevant to news of the day – the president was asked about this debate performance as well as what he’d delivered for black Americans,” the statement said.

“We do not condition interviews on acceptance of these questions, and hosts are always free to ask the questions they think will best inform their listeners. In addition to these interviews, the President also participated in a press gaggle yesterday as well as an interview with ABC. Americans have had several opportunities to see him unscripted since the debate.”

A source familiar with the Biden booking operation told ABC News that moving forward they will “refrain” from offering suggested questions to interviewers.

“While interview hosts have always been free to ask whatever questions they please, moving forward we will refrain from offering suggested questions.”

2nd local radio host says they were given questions ahead of Biden interview originally appeared on abcnews.go.com



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President George W. Bush turns 78 years old

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George W. Bush, born on July 6, 1946, in New Haven, Connecticut, was the 43rd President of the United States.

Bush was born to parents Barbara Bush and former President George H. W. Bush. He has five siblings; Jeb Bush, Marvin Bush, Neil Bush, Dorothy Bush Koch and Pauline Robinson Bush. Pauline was diagnosed with leukemia and passed away at age three.

He was formerly the Republican Governor of Texas from 1995 to 2000.

WHY FORMER PRESIDENT GEORGE W. BUSH IS WINNING … THE POST-PRESIDENCY

Bush was first elected to the White House in November 2000, and officially began his first term as president in January 2001, after he defeated Democrat Al Gore during the presidential election. Bush was reelected to his second term as the incumbent in November 2004, when he prevailed over Democrat John Kerry, and led the United States until January 2009 before handing over his torch to former President Barack Obama.

Bush married Laura Bush on November 5, 1977, the day after her 31st birthday, in her hometown of Midland, Texas. The couple were engaged in September 1977, and married less than two months later in a Methodist church. Bush and Laura met at a barbecue, and he took her to play mini-golf on their first date. 

The Bush’s share twin daughters, Barbara Pierce Bush and Jenna Bush Hager, born on November 25, 1981. Today, the couple also share four grandchildren; Mila, Poppy, Hal and Cora.

GEORGE BUSH, FORMER FIRST LADY ISSUE STATEMENT ON AFGHANISTAN WITH MESSAGE TO US TROOPS, VETERANS

During his presidency, Bush cared for his English springer spaniel, Spot Fetcher, who accompanied him to meetings in the Oval Office and on adventures throughout the White House. The dog was born to his parent’s dog, Millie.

On September 11, 2001, less than one year into Bush’s presidency, the Twin Towers in New York City were attacked by terrorists when airplanes hit both buildings, causing a collapse and thousands of lives lost. At the time, Bush was reading to elementary-aged children at a school in Sarasota, Florida. He was calmly and quietly advised of the attacks and quickly returned to Washington, where he was briefed alongside Vice President Dick Cheney.

Bush was regarded highly for his poise while learning of the attacks and for his demonstration of patriotism and leadership in the uncertain days and weeks following the hijackings of multiple planes on the day that shook America to her core.

SADDAM CAPTURED ‘LIKE A RAT’ IN RAID

On December 30, 2003, during Bush’s first term as POTUS, Saddam Hussein, the Iraqi leader and executor of the 9/11 attacks on the U.S., was captured by the American military

In the early morning of December 30, 2006, during Bush’s presidency, Hussein was hanged and executed for his crimes against humanity. Americans across the nation celebrated the death of Hussein and applauded Bush for promising the country he would take him out and following through.

While Bush was regarded for his dealings with the terrorist attacks, the signing of No Child Left Behind Act and the Patriot Act and the creation of the United States Department of Homeland Security, many Americans were unhappy with the sanctions of interrogation techniques, the war in Iraq and taxes while he was president.

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