• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Jim Cramer

Jim Cramer: Buy GameStop For What It's Worth

It's just a question of how high or low the stock can go.
By JIM CRAMER Jan 25, 2021 | 06:14 AM EST
Stocks quotes in this article: GME, CHWY, HLF

The battle lines being drawn. Nobody's right if everybody's wrong. Young people speaking their minds, getting so much resistance from behind.

Those are the lyrics of a song, "For What It's Worth" by Buffalo Springfield, a 55-year-old classic, an anti-Vietnam war song. Oddly it might be an anthem for the younger investors who have flooded the Wall Street Bets site with positive commentary about GameStop (GME) , the long-in-decline brick and mortar store that has been the target of perpetual shorts all the way down from $47 five years ago to $4 in 2020.

Not that long ago, many on Wall Street considered GameStop a goner. Several iterations of management and several attempts at restructuring have failed, a combination of the video games gone digital and the mall gone bye-bye.

Until an important confluence of events occurred, starting with a shortage of the new Playstation and Xbox devices, devices that GameStop features, and the addition of Ryan Cohen, the founder of the phenomenally success Chewy (CHWY) , to the board of GameStop just last week. Cohen took a 14% stake in the chain last August and the presumption is that he's got a plan to save the chain.

Now the company's been silent the whole way, but the stock has ramped from $17 to $65 in the last few weeks with a pitstop and a halt in trading at $76 on Friday. Today it looks up another 20 points as short sellers are being forced to cover because they can't find shares to borrow to sell anymore.

It's been an incredible win for the buyers of GameStop, including the vociferous Wall Street Bettors, who managed to get in before the levitation. I salute you!

And it has been an incredibly bad wager by the short sellers who have borrowed about 150% of the entire stock available, meaning that they have overextended their bets and been unable to cover as this run has gone on.

So what's this all about? I think it amounts to a street fight somewhat like the one that Bill Ackman waged against the longs in the epic battle over the Herbalife (HLF) . In that case Ackman spread the story that Herbalife was a fraud. The longs, including Carl Icahn, regarded it as a legitimate company. Did Icahn want to burn the shorts? It doesn't matter; he has the right to be vocal about whatever he thinks is right as long as he's not being fraudulent and he wasn't.

So, back to GameStop. I think the stock has gotten overvalued, and the insider selling has been pretty aggressive. I also think that one could argue that Cohen is a miracle worker and if the company were to take advantage of the stock's new height and sold stock it could actually reinvent itself in a solid way.

If you are short the stock you may think that the Wall Street Bettors are acting in concert and should have to file as such. If, together, including options, which has been the preferred way to advance the stock, the government might question their disclosure. And some market makers who sold out of the money calls to these people might squawk to the government that they are manipulating the stock to create a short squeeze in concert hurting the market makers illegally to do so. I think that's lame, but they might try to claim that. Remember, in court, anyone can claim anything.

Me? I think the longs have every right to press their case; is it much different from a Wall Street analyst saying the stock should go to the moon? In my view it is protected free speech. If they like the stock and want to cheerlead about it, more power to them! It's shareholder democracy not shareholder contempt like I hear so often on TV, and I like it.

The only thing that the government may be upset with is if it is a glorified pump and dump scheme. I have seen no evidence of that. To me the fight is just about the value and I have to agree that the shorts can make a good case that the stock is too high unless there is a plan by the company to raise capital and deploy it intelligently.

It's a valuation short and those are always tough to prevail over.

Where do I come out? Is everyone right? Conceivably. But unless the Wall Street Bettors have committed some kind of fraud, which I can't find, then it is just a question of how high or low the stock can go. And if you want to buy it, you want to rely less on cheerleading or possible governmental examination and more on for what it's worth.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no position in the stocks mentioned.

TAGS: Short-selling | Investing | Markets | Stocks | Trading | Video Games | Gaming | Jim Cramer |

More from Jim Cramer

Jim Cramer: I'll Put My Money With 'Boring but Lucrative' Any Day

Jim Cramer
Sep 29, 2021 1:28 PM EDT

Let's look at that recent downgrade of 'dull' Morgan Stanley and see why exciting is best left for the stadiums and amusement parks -- and not stocks.

Jim Cramer: America's Toughest Job? Finding Workers

Jim Cramer
Sep 28, 2021 12:17 PM EDT

It's the question of our time: Where are the people willing to take on these better paying gigs? Let's see what's going on and what we need to happen.

Jim Cramer: Here's How Analysts Can Be Off By a Wide Margin

Jim Cramer
Sep 24, 2021 12:02 PM EDT

Let's look at the reactions to Nike, Costco and Salesforce to see what happens when they're viewed from a real world perspective.

Jim Cramer: It's Pure Insanity That We Don't Make Chips Here in the U.S.

Jim Cramer
Sep 23, 2021 11:05 AM EDT

While the big guns meet at the White House about the global chip shortage, the president and these companies are approaching this all wrong.

Jim Cramer: Go Ahead, Have a Cow, but I Say Powell and Xi Are Bulls

Jim Cramer
Sep 22, 2021 3:51 PM EDT

We rallied, because China's President Xi and Fed Chair Powell made decisions that they knew would lead to rallies.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 01:44 PM EDT STEPHEN GUILFOYLE

    Stocks Under $10 Portfolio

    We're making a series of trades here.
  • 03:07 PM EDT PAUL PRICE

    Why Is Walmart Down Big Today?

    Besides its poor earnings report Walmart was way...
  • 07:14 PM EDT PAUL PRICE

    A New, Very Scary Movie

  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login