Hello Friends With Financial Benefits,
I've done some calculations to calculate average retail spending on direct registered shares in the previous quarters, and I make a prediction for the registered shares-count in Q3 of FY2022.
In this post I make the following claims:
- Retail spends on average $600 million per quarter on directly registered GameStop shares (excluding other brokers!)
- GameStop will report between 90.1 to 90.33 million shares directly registered in Q3 FY2022 (an increase of 18.8-19.0 million shares compared to previous quarter)
Limitations to my calculation/prediction:
Research and estimations are never perfect, and limitations can influence the accuracy of said estimations.
These are the limitations that I'm aware of: - We have only 4 officially reported registered share-counts by GameStop
- Yahoo Finance only provides historical data on a daily level
- The calculation assumes that retail is buying the shares evenly distributed among volume traded. In reality this isn't always the case (eg retail fomo-ing in, shorts hammering the price, options hedging moving the price etc etc...)
Methodology
Sharing conclusions without sharing the methodology would be kind of useless... So here we go, these are the steps I took to conclude my claims:
- Gathering data
- Calculate total volume traded per Fiscal Quarter
- Calculate volume weighted average price (I used two separate ways for this)
- Estimate retails $ spend on registered shares per quarter using the average prices found in step 3.
Step 1: Gathering data For the historical trading data I've used Yahoo Finance. Note that YF only provides historical data on a daily level.
For the end and starting dates of quarters, and the registered share-counts, I used GameStop's quarterly report SEC filings. These can be found on their investor relations website.
Note that in Q3'21, Q4'21 and Q1'22, the registered share counts were in pre-split values, as the split had not happened yet at that time. For the sake of the calculations, I've converted these to post-split values. Other than this, the pre-split values are not used in other calculations.
Step 2: Calculating total volume traded per Fiscal Quarter To calculate this, I've downloaded the historical data from YF til now. I marked the dates to each quarter, and then summed up the daily volumes in that quarter.
Q2 volume is empty as anything from before july 31st isnt relevant for this calculation, I only needed the end date of Q2. The first trading day of Fiscal Q3 was 8/2/21, and the last day was 10/30/21. Step 3.1: Calculating volume weighted average price (method 1: HIGH-LOW average) Calculation:
(High+Low)/2= HI-LO avg price
Volume of the day / Volume traded in the quarter = volume weight %
HI-LO avg price * volume weight = HI-LO % weighted
Sum up all HI-LO % weighted values to conclude the volume weighted HI-LO Average price
Step 3.2: Calculating volume weighted average price (method 2: OPEN-CLOSE average) Calculation:
(Open+Close)/2= OPEN-CLOSE avg price
Volume of the day / Volume traded in the quarter = volume weight %
OPEN-CLOSE avg price * volume weight = OPEN-CLOSE % weighted
Sum up all OPEN-CLOSE % weighted values to conclude the volume weighted OPEN-CLOSE Average price
https://preview.redd.it/ofdju4gmltx91.png?width=829&format=png&auto=webp&s=c3128ea54141a2f69b8a06cf76acf174a135be51 Step 4: Estimating retails $ spend on registered shares per quarter using the average prices found in step 3. Multiply the post-split registered share increase with the 2 different averages, to get a range on retails spending on registered shares.
The average spend per quarter has seen a huge uptick in the first quarter it was reported for (Q3 FY2021), but after that it has been in a similar range. Admittingly, the range is still very wide due to the fact we only have 4 official datapoints from GameStop. I think its fair to assume that the uptick in Q3'21 was not because retail was buying more at a higher price, but simply because the majority of shareholders were transferring shares they already owned.
Because of this, I believe that the average spending from the last 3 quarters gives us a more accurate view. Interestingly, the average of the last 3 quarters and the averages of the last 2 quarters is almost the same at $580 million spend on registered shares alone per quarter.
I think retail is buying slightly more than the $580 million average spending, because this dip is... irresistable! I predict that retail spends $600 million in Q3 FY2022 on registered shares alone (this excludes other brokers!).
With my prediction of an average $600 million spend per quarter on registered shares alone, I conclude that we will see an increase between 18.8 to 19.0 million shares.
Feel free to poke holes in my calculations!
My interpretation
I estimate that retail spends about $600 million per quarter on directly registering GameStop shares. That is of course
excluding any other share that is bought outside of Computershare. My assumption is that the majority of GameStop holders either have only a small portion directly registered, or nothing at all. Although it is harder to prove,
I assume that retail is in fact buying a multiple of this $ amount in shares in regular brokers every quarter. Other data points, such as brokers reporting high buy/sell ratios on GME, the slowing rate of DRS-account growth and the very small amount of volume the DRS purchases take in comparison to quarterly volume traded (about 1.4 to 2.8% per quarter) suggest the same.
I estimate that GameStop will report between 90.10 and 90.33 Million shares registered in Q3 of FY 2022. This would imply that around 29.6% of the Total Shares Outstanding would be directly registered In my opinion, the speed at which a small portion of the retail investor base is buying up GameStop is an indicator that it is not impossible that retail already owns the entire company.
So what is retails buying power per quarter? My calculations say its
at least $600 million per quarter, but a multiple of that is far more likely. Is it $1 Billion? $1.5 Billion? $2 Billion?!? GameStops current marketcap is (only!) 8 Billion dollars...
I really can't stress this enough:
The growing share-count reported by GameStop really is only the tip of the iceberg...
- Tendie Baron
