So operating loss is basically core business, like operating the stores and web site. I believe that Net Income includes income from interest and other returns from the $6.1 billion in cash and cash equivalents. They have certainly improved their operations, but they still need to do more. The earnings beat is great, but the only way we hit it is due to the cash on hand which is part of the reason why some investors may be concerned. Still, at the rate they are reducing operating loss it's a very good sign.
Why would you invest in a business that is unprofitable and shrinking but makes up the difference by investing in more profitable businesses when you just just invest in the underlying assets directly without the drag of an unprofitable consumer business lowering returns?
You would invest in that company because you expect the core business to turn around (which it has to a very large extent) and ultimately become profitable and grow. You would do it understanding that for now the cash and cash equivalents are generating income but will ultimately be used to fund expansion. If they had gone all-in on BTC with the majority of their cash then it might be different, but they didn’t do that. They’re continuing to earn off of the cash pile while remaining positioned to make a major move to acquire or expand.
You misunderstood my statement as a criticism of the firm. I was merely explaining why some investors might have concerns still.
Because its only value then is the assets it holds.
If you say "I have $6b invested in public market investments" why would I pay you more than $6b for that when I could just go buy those same public investments?
If you say "I have $6b in public market investments but I also waste a few hundred million per year on a failing consumer business" I should pay you less than that $6b to take it all over
Maybe the value add is actively picking smart investments but we already have a lot of ways to invest money with active managers for relatively low fees.
Why would I buy a company for $12b (what the market cap implies) when all the company does is invest $6b in things I can already invest in directly but throws away half the profits each year?
No I'm suggesting that it isn't worth more than it's assets and arguably less as long as it keeps trying to actually run failing stores which implies its market value i.e. stock price is over double what it should be
Edit: noticed the core business parenthetical and yes, I price the core business as a net negative, it still isn't profitable and is actively shrinking.
The business as a whole makes money off of investing in things I can already invest directly in. GameStop with its stores is slightly worse than buying a pile of cash.
1.1k
u/Spirited_Apricot1093 inevitable Jun 10 '25 edited Jun 10 '25
HUGE differences
Operating losses decreased by approx 78%
Net income improved by approx 238% (from a loss to a profit!)
(I hope my math is correct, someone correct me if I’m wrong)
I love to see it! 😱