Hello Apes! Welcome to the summary of My Final GME DD series. There are links to all 3 parts below.
My Final GME DD - Part 3a of 3
My Final GME DD - Part 3b of 3
For the past 5 years it's been theorized that MOASS will occur when the market crashes. And since DFV's livestream on June 7th 2024, it's been theorized that the unwind of the Carry Trade would be the candle that blows the hood off this thing.
"And now, the end is near. And so I face the final curtain. My friend, I'll say it clear. I'll state my case, of which I'm certain."
DISCLAIMER: The information contained in this post is for general information purposes only. Any reliance you place on such information is strictly at your own risk. It is not intended to constitute legal or financial advice and does not take your individual circumstances and financial situation into account. I do not provide personal investment advice and I am not a qualified licensed investment advisor. I am an amateur investor. All information found here, including any ideas, opinions, views, predictions, forecasts, commentaries, suggestions, or stock picks, expressed or implied herein, are for informational, entertainment or educational purposes only and should not be construed as personal investment advice. Conduct your own due diligence, or consult a licensed financial advisor or broker before making any and all investment decisions.
Contents
I. Revisiting May 2024
II. Option Chains
III. Technical Analysis
IV. Fractals
V. Valuation
VI. Japan
VII. Outlook
This post will cover Section VII.
VII. Outlook
I hope you all enjoyed reading my series so far.
This post will sum up all the reasons behind my thesis into a single unified post. For those looking for a TLDR, this post will be the closest you get.
Thesis Conclusion: Squeeze between 12/1/25 - 4/17/26.
a. Part 1
In Part 1 I covered a few key points.
First, I went back in time to 2024 to see what GME looked like when DFV made his move.
I showed what the option chain looked like before he started buying and how drastically it changed by the time he was done.
I did this because I felt like we were at a similar level on 11/21, the day I posted Part 1, as we were in April 2024.
GameStop's price in April 2024 had reached $10/share. That's a price we hadn't seen since February 2021, when GameStop crashed after the January squeeze.
It was the first time price had reached that level in over 3 years.
At that moment, with 25 days to expiration, the May 17th option chain looked uneventful and boring.
Then, between April 23rd - May 10th, over 180,000 calls were added to key strike levels, starting with ATM and NTM calls and ending with OTM calls.
RSI, PMO, and MACD had all bottomed out and stalled near the lows.
Is $20/share the new $10/share?
Next, I looked at our current option chain, including GME1.
Using May 2024 as a template, I specifically looked at expirations with over 25 days to expiration. So, from 12/19/25 onwards.
I then isolated the expirations between January 2026 - January 2028 to show the total open interest for calls.
As of close on 11/19/25, there was 642,573 total open interest (calls), with 296,949 of that making up strikes $25 and below.
Of the 642,573 open interest, 372,767 were GME1.
58% of the total open interest was for the January 16th, 2026 expiration. I concluded that a squeeze would most likely not let that go to waste.
Finally, I looked at fractal patterns.
GME trades based on an algorithm, like the rest of the market.
I identified where I believe GME currently is within the current cycle.
Specifically, I believe we're at late November 2023 or late April 2024. But, gun to my head, I'm leaning towards April 2024.
Depending on where we are, I figured a squeeze would take place by January 2016 or April 2026.
b. Part 2
In Part 2 I took a deep dive into GameStop's financials and recent earnings.
Below is a breakdown of the last 2 quarters:
Q1 2025:
- Operating Income grew 148.9% YoY
- Net Income grew 238.4% YoY
- Diluted EPS grew 181.8% YoY
- EBIT grew 148.89% YoY
Q2 2025:
- Revenue grew 21.78% YoY
- Gross Profit grew 13.79% YoY
- Net Profit Margin was 17.34%
- Operating Income grew 326.4% YoY
- Net Income grew 1039.19% YoY
- Diluted EPS grew 675% YoY
- EBIT grew 326.3% YoY
I then used a diluted share count of 591,539,630 shares to figure out some key metrics that are most important for a company like GameStop.
GameStop is in a unique position. They have $9.2B in cash and Bitcoin, equaling 77% of its diluted market cap (as of 11/23).
Because of this, traditional valuation metrics such as P/E, forward P/E, and cash-adjusted P/E are mathematically unreliable.
As of 11/23, GameStop's enterprise value was $2,708,901,293.71.
Remember, all of these numbers reflect a diluted share count of 591.5M shares.
On a trailing twelve month basis, GameStop has an EV/EBIT ratio of 18.67x. This is a bit high and it reflects past weakness. However, they have an EV/Sales ratio of 0.70x which is insanely low for a business with $9B in cash, no debt (diluted), 17% margins, 21% YoY revenue growth, and rising EBIT.
EBIT strips out non-operating income and ignores tax distortions. I did this to show how the core business looks without being distorted by investment income.
EV/EBIT shows where GameStop has been. EV/Sales show where GameStop is going. And EV/Sales of 0.70x tells you the market hasn't priced in the turnaround yet.
I then looked at forward multiples based on some assumptions that I made.
Stocks trade based on forward guidance. Businesses trade based on where they're going, not where they've been.
The main ratio I looked at was EV/Forward Core Net Income.
Based on a forward core net income of $391.5M, GameStop trades at a EV/Forward Core Net Income of 6.9x.
For a company with 15-20% net margins, 21.78% YoY revenue growth, 326.4% YoY operating income growth, surging net income growth, and no debt, this represents a massive discount.
Again, I say no debt because I'm figuring in dilution from the convertible bonds via a diluted share count of 591.5M shares.
An EV/Forward Core Net Income of 6.9x might be normal for a company with 2-4% margins, not for one with 17% margins and growing revenue and operating income.
Even Best Buy trades at 12x - 14x EV/Forward Core Net Income despite only having 4% - 5% net margins.
When you add in the fact that GameStop has a huge optionality factor and a safety net of $9B+ in cash and bitcoin which generates $440M/year in net income, you realize GameStop should be trading closer to 20x EV/Forward Core Net Income.
Watching them come out with new products and platforms like PowerPacks shows this optionality in action.
I concluded Part 2 with my belief that fair value for GameStop currently sits around $40 - $45 per diluted share, or $52.50 - $59.50 based on todays share count.
But we all know that this doesn't matter when we have companies like PLTR and OPEN trading at ridiculous valuations.
c. Part 3
Part 3 dealt with the Japanese carry trade and systematic risk.
Since December 2022 we've had:
- a major policy change from Japan which allowed their domestic rates to drift higher
- rate cuts and expectations of rate cuts in the US which have brought rates lower
- USDJPY peaking and making lower highs
- SPX and Nikkei making ATH's
- Japanese reserves crashing as liquidity and funding are pulled from the system
All of these are classic buildup factors leading to an unwind of the carry trade.
The last factor we need in order for the yen to strengthen is a catalyst.
We have the Fed cutting rates within the next 2 weeks which should cause the US10Y and USD to drop lower.
And we have a Bank of Japan meeting on December 18th and 19th where I expect them to either:
- Announce a rate hike
- Release a statement saying they'll allow rates to go higher/normalize
- Announce yen intervention
I believe this could be the catalyst.
As you can see in the table below, Japanese reserves have plummeted roughly 85% as of November 27th, down to 61.5T yen.
An unwind of the carry trade coincides with a major risk-off event.
And a major risk-off event means markets plummet.
Assets that carry traders bought with borrowed money begin to fall. This causes their leverage ratio to explode, which forces them to deleverage.
As markets plummet, the value of short seller's collateral falls, VaR increases, and brokers raise margin requirements.
As risk models and margin headroom adjust, collateral becomes insufficient relative to risk.
And when volatility explodes, as is the case in a forced deleveraging, short positions become impossible to fund and maintain.
Liquidity collapses, borrow costs spike, and prime brokers demand cash.
This causes forced buy-ins.
Shorts have no choice but to buy shares, buy calls, and close out short positions.
If they can't, then they're liquidated.
This is what leads to a short squeeze where positions are forced to close no matter the price.
Here's how an unwind can lead to a short squeeze:
- The yen strengthens.
- Assets crash and collateral shrinks.
- VaR explodes and borrowing capacity collapses.
- Brokers demand capital, leading to margin calls.
- Firms deleverage and are forced to close short positions.
- Squeezes begin as liquidity vanishes at the bid.
- Liquidations occur as the market experiences a fire sale.
ChatGPT words it better than me:
Price-insensitive liquidation...I like how that sounds.
d. Putting It All Together
Now let's get back to the conclusion of my thesis, that GameStop will squeeze by April 17th, 2026.
Let's see what we have between now and then:
- Two major earnings reports from GameStop which will show a successful transformation of GameStop's business, balance sheet, and income statement.
- Three Bank of Japan meetings, with Board member Kazuyuki Maso saying they won't wait until the spring to announce a rate hike or yen intervention.
- Three Fed meetings where they're expected to cut rates at least once or twice, with the next cut coming on December 10th.
In addition to the above events, we have:
- A loaded January 16th option chain with a huge amount of GME1 calls tied to warrants.
- A current fractal pattern on the chart resembling late cycle 2024.
- An EV/Forward Core Net Income multiple that is unjustifiable at current growth rates and net margin levels.
In my opinion GameStop will most likely squeeze by January 16th, but definitely by April 17th.
As I said earlier, I believe fair value for GameStop currently sits around $40 - $45 per diluted share given a Forward Core Net Income of $391.5M, a $9.2B cash safety net that generates a recurring $400M+ per year in net income, no debt after figuring in dilution, and an optionality factor pointing to huge potential upside.
Well, as of yesterday there are 722,762 calls with strikes of $40 and below between January 16th, 2026 - January 21st, 2028.
That means that if GameStop were to trade at fair value, there would be 722,762 calls in the money. And that's not including any expirations before January 16th, 2026.
We may have a perfect sequence of events that all come to a head by January 16th:
- GameStop Earnings beat December 9th
- Fed Rate Cut December 10th
- BoJ rate hike or yen intervention December 19th
If the BoJ gives risk-off vibes on December 19th, then we can have a situation where markets plummet fast.
This will happen right after the Fed cuts rates and GameStop posts an unbelievable Q3.
And when this all goes down, there will be 720,000 calls with strike prices of $40 and below that are ready to go in the money.
Or, I'm off by a few months and it takes some more time for the stress to break through.
We'll see.
