The Rundown - GameStop Invests in Bitcoin, Dollar Tree Sells Family Dollar for $1 Billion

Episode Date: March 26, 2025

Stock market update for March 26, 2025.

Public.com presents the rundown. Your daily market update in five minutes. My name is Zaid Admani, and today is Wednesday, March 26th. In today's episode, we tell you why consumer confidence is tanking and what Wall Street is expecting for the upcoming earnings season. We also tell you about GameStop's plans to buy Bitcoin and why private equity is taking over family dollar. Then stick around to the end of the show to find out why Nvidia's stock is dropping

and why bonuses hit record highs on Wall Street despite looming layoffs. We got a great show for you today. Let's go. The stock market squeezed out another win on Tuesday, but just barely. The S&P 500 was up 0.2%. The NASDAQ added 0.5%. And that's despite some bad data coming out regarding consumer confidence. According to the conference board, the Consumer Confidence Index fell for the fourth consecutive month,

and it's currently sitting at a four-year low. Now, this is based on survey data, which I don't like to put too much weight on. I much prefer hard data like earnings or GDP or jobs data. But then again, headlines over the last few weeks haven't been great with all the uncertainty around tariffs and talks of recession, so it's easy to see why consumers might be feeling a bit uneasy. But the good news is the markets have been making a mini comeback over the past couple of weeks. And we are going to get some hard data pretty soon because earnings season is right around the corner.

Q1 is wrapping up, and in about two weeks, we're going to start getting earnings data from corporate America. Right now, Wall Street is expecting earnings growth for S&P 500 companies to be around 7.7%, which would be the lowest since 2023. But if earnings come in strong, I mean, the markets could go back to rallying. So we've got a pretty important earnings season coming up. I'm already starting to get prepared. The OGs know that I get hyped for earnings season. So make sure you guys are subscribed to the podcast to stay in the loop. Let's run through some headlines.

And we got to start with GameStop. GameStop has a new business strategy, buying Bitcoin. The gaming retailer and OG meme stock put out a one-sentence press release yesterday, saying that their board unanimously approved a plan to buy Bitcoin. The company will use some of its $4.6 billion in cash that they have to buy Bitcoin and add it to their balance sheet. Now, there have been rumors that GameStop was planning to do this for weeks, In fact, the CEO of GameStop Ryan Cohen even posted a picture on X with Michael Saylor, the executive chairman of Micro Strategy.

He's the dude who started the whole trend of buying Bitcoin using corporate profits. Micro Strategy has over $40 billion worth of Bitcoin at this point. So I think Michael Saylor was able to convince Ryan Cohen to do the same thing. Now, as for GameStop's actual business, well, it continues to decline because, remember, they sell physical video games at brick and mortar locations. It's kind of a tough business to be in right now. The revenues were down 28% to $1.3 billion last quarter. They did make a profit of $131 million, which is nice to see.

And their adjusted earnings per share of 30 cents was higher than expected. But it's hard to see where GameStop's growth will come from moving forward. You know, it's not really a secret here, but people just don't buy physical games anymore. More than 70% of video game sales are digital these days. So GameStop doesn't really have a pathway to growth. So I think at this point, maybe it makes sense for GameStop to be. a Bitcoin holding company that just happens to sell video games on the side. The market seemed to like this news.

GameStop shares are up around 10% this morning in reaction to this announcement. Honestly, I'm surprised it took GameStop this long to do this. They probably should have done it last year. Let's shift gears and talk about another struggling business, Dollar Tree. Dollar Tree announced this morning that they are selling the family dollar business to private equity for about a billion dollars. See, Dollar Tree has been trying to turn around their main business, and they're starting off by dumping family dollar, which has been struggling to grow. Dollar tree actually acquired family dollar

back in 2015, paying around $9 billion at the time. So not a great ROI for them. But sometimes it's just better to cut losses. Dollar Tree says they're going to use the billion dollars from the sale to invest in more growth of their core business. This may be kind of surprising, but Dollar tree and Family Dollar have pretty different businesses, even though they have very similar names. Family Dollar is mostly located in urban areas and they sell everything from food and cleaning products and hygiene products, pretty much everything. Dollar Tree, on the other hand, are mostly located in suburbs, and they're kind of a party supply store. You know, they got balloons and party plates and hallmark cards, things like that. So their businesses are pretty

different. So Dollar Tree is hoping that this billion dollars from the sale will help them get back to growth. Family Dollar will now be in the hands of two private equity companies, Brigade Capital and Macellum Capital. So we'll see what these guys end up doing with Family Dollar. Don't be surprised if Family Dollar ends up going into bankruptcy in a few years, like other retailers that got taken over by private equity. Party City, Joanne Fabrics, Big Lots. Yeah, it's not a great list. Let's talk about some stocks making moves today. Shares of Chewy are rising this morning after the pet e-commerce platform recorded an earnings beat for the quarter.

Chewy's CEO noted the beat was driven by solid growth of active customers and good performance in AutoShed. ship product deliveries. I mean, it sounds like a dream business if you can just get pet owners to auto purchase dog food in other pet necessities every few weeks. As a result, shares of Chewy are up more than 4% this morning in reaction to these earnings. Now, the flip side, shares of Nvidia are following this morning after Chinese regulators created a rule that would stop Chinese tech giants like Alibaba and Tencent from buying Nvidia chips due to energy efficiency concerns. See, NVIDIA has a special chip they made for the Chinese market called the H20 chip. This was in response to U.S. export controls on their state-of-the-art chips to China.

So they created this less powerful chip. And this chip would fail to satisfy China's new rules. So they won't be able to sell them over there. Nvidia plans to meet with Chinese regulators and they're prepared to make modifications to its chip if required. We'll see what happens, but investors are kind of nervous right now and shares of NVIDIA are down nearly 3% on this news. Let's wrap the show with a fun fact. The bonus pool on Wall Street last year was a record $47.5 billion. And the average cash bonus jumped to $245,000.

That's almost a third more than it was in 2023, and it's the first significant bump since the pandemic. Before last year, bonuses had peaked in 2021 at $240,000, and they fell off a cliff in 2022, dropping by more than 25%. but it looks like bonuses are making a comeback. And there's a lot of people working on Wall Street these days, too. Heading into 2025, employment for Wall Street securities

reached its highest level in 30 years, topping the peak from the year 2000. But don't be surprised if you start seeing fewer finance pros rocking Patagonia vests all around Manhattan. Deal flow is already starting to slow down, and layoffs are looming. Low performers are already getting canned at Bank of America and J.P. Morgan.

Stanley just said it plans to lay off about 2,000 workers, and Goldman Sachs said earlier this month it expects to trim about 3 to 5% of its staff this spring. So while the bonuses are great, the threats of layoffs still remain. Well, all right, guys, that's the rundown for today. Hope you guys enjoyed today's episode. I know we've been kind of in a slow period lately, but things are going to start picking back up. We got the reciprocal tariffs going into effect next week. We also have the TikTok sale deadline next week.

That's not getting a lot of attention these days. And then in a couple weeks, we're going to start getting Q1 earnings results. So things are about to start picking back up. Enjoy this calm while you can. And let's hope the stock market can stack some wins while we're in a calm period. As always, if you guys enjoy this show, consider giving us a five-star rating on Apple or Spotify. Don't forget to vote in today's Spotify poll.

Leave us a comment on Spotify. All that engagement really does help us out, and it helps other people find the show. Thank you guys so much for listening. Shout out to Mike and Connor for all the help behind the scenes. And we'll see you guys back here tomorrow. This is the rundown, your real-time resource for news events and trends in the markets. All views presented in the show reflect the opinions of the guests.

You should not take any mention of a publicly traded security as recommendation to buy, sell or hold that security. Rundown guests are not financial advisors and are not affiliated with public holdings, board subsidiaries. You should make your own financial and investment decisions or consult. Respected professionals. Learn more at public.com disclosures. In partnership with Zayidmani, brokerage services for U.S. listed, registered securities are offered by Open to the Public Investing Incorporated, member FINRA and SIPC.