There's something else going on. The other companies known for being meme stocks are doing substantially worse in terms of share price. AMC is below what it was before early 2021, down 90% from its high. That holds for most of them. Bed, Bath, and Beyond famously went bankrupt.
Meanwhile, yeah, Gamestop is down about 75% from its high. But it's also 2.5x its post-top low, and... um, about 24x its 2020 low. Go ahead and check. Makes at least some sense, when you understand that they stemmed an EPS bleed and turned it into a profitable company.
A sinking company buying a healthy company several times larger and more profitable doesn't make sense. The eBay board and shareholders would be crazy to participate in this fantasy. GME shareholders are already known to be of questionable judgment, so whatever they do is SNAFU. So, it's not surprising GameStop would try something crazy, what's surprising is anyone is taking it seriously.
Shrinking. Which is smart, if you see a recession on the horizon or in-progress. If profit is increasing anyway? Well, that's either a miracle or someone who really knows what they're doing. You understand that profit is supposed to go DOWN when revenue declines, right? Which is bad. But Gamestop is doing the opposite. Which is...?
Not smart. If a recession is coming, the last thing you want is to reduce your revenue in advance. Or during! That's like saying, better to take some poison now if there's a flu going around I might catch!
And yes their profitability has gone up. Due to massive cuts. Slashing stores, slashing normal investment in stores, and laying off everyone they can.
This is what you do when your business model is completely failing -- you stop all normal investment that sustains the business for the long term, so you can make more profit in the short term. But it's not sustainable. It's what happens when you realize you're going out of business, and you want to take out as much money as you can, while you still can.
So the increased profit isn't a good sign in this case. It's precisely the opposite -- the end is near for this business model. It is indeed sinking.
And their desperate and nonsensical bid for eBay is another sign of this -- a kind of Hail Mary pass since their original business model is busted.
OK, great, they've maybe backed off of the iceberg that was sinking them, I guess through cost-cutting and layoffs. Good for them.
That doesn't mean it's a reasonable idea for GME to buy a company with ten times their revenue and five times their market cap, that hasn't been declining every year for a decade. This is a ridiculous stunt by a ridiculous CEO, and shouldn't be taken seriously. If somehow all the grownups did allow such a merger and the insane leverage that would be required, it would sink both companies.
Revenue continues to decline year over year. Nothing about the business has materially changed the trajectory they have been on throughout all of this. https://www.macrotrends.net/stocks/charts/GME/gamestop/reven...