Market Value Added (MVA)
Market value added (MVA) is the difference between a firm fair value and its invested capital. MVA is a measure of the value a company has created in excess of the resources already committed to the enterprise.
MVA
GameStop Corp., MVA calculation
US$ in thousands
Based on: 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02).
1 Fair value of debt. See details »
2 Invested capital. See details »
The analysis of Market Value Added (MVA) reveals a period of extreme volatility, characterized by a transition from negative value creation to a massive valuation spike, followed by a gradual decline in market premium.
- Initial Value Destruction (2019-2020)
- During the fiscal years ending February 2, 2019, and February 1, 2020, MVA remained negative, reaching a low of -474,798 thousand US dollars. This indicates that the market fair value was lower than the total invested capital, signifying that the company was perceived as failing to generate returns exceeding its cost of capital during this period.
- Valuation Surge (2021)
- A dramatic shift occurred by January 30, 2021, where MVA escalated to 12,113,436 thousand US dollars. This surge was driven by a substantial increase in the market fair value to 13,769,736 thousand US dollars, while invested capital concurrently decreased to 1,656,300 thousand US dollars. This resulted in an unprecedented expansion of market value relative to the invested capital base.
- Corrective Trend and Normalization (2022-2024)
- From 2022 through 2024, a consistent downward trend in MVA is observed. Market fair value declined from its 2021 peak, settling at 5,062,735 thousand US dollars by February 3, 2024. Consequently, MVA decreased to 3,205,035 thousand US dollars. Despite this contraction, MVA remained positive throughout this interval, indicating that the market continues to value the company above its invested capital, albeit at a significantly reduced premium compared to the 2021 peak.
- Invested Capital Dynamics
- Invested capital exhibited relative stability compared to the volatility of market fair value, fluctuating between 2,995,218 thousand US dollars in 2019 and 1,656,300 thousand US dollars in 2021. The fluctuations in MVA are therefore primarily attributable to shifts in market valuation and investor sentiment rather than fundamental changes in the company's invested capital structure.
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MVA Spread Ratio
GameStop Corp., MVA spread ratio calculation, comparison to benchmarks
| Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Market value added (MVA)1 | 3,205,035) | 5,475,736) | 4,898,079) | 12,113,436) | (474,798) | (328,454) | |
| Invested capital2 | 1,857,700) | 1,936,100) | 2,440,500) | 1,656,300) | 1,926,200) | 2,995,218) | |
| Performance Ratio | |||||||
| MVA spread ratio3 | 172.53% | 282.82% | 200.70% | 731.36% | -24.65% | -10.97% | |
| Benchmarks | |||||||
| MVA Spread Ratio, Competitors4 | |||||||
| Amazon.com Inc. | 578.29% | 487.84% | 342.01% | 728.57% | — | — | |
| Home Depot Inc. | 661.36% | 519.24% | 681.54% | 631.50% | — | — | |
| Lowe’s Cos. Inc. | 603.38% | 500.68% | 587.76% | 457.91% | — | — | |
| TJX Cos. Inc. | 480.00% | 393.67% | 333.18% | 327.36% | — | — | |
Based on: 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02).
1 MVA. See details »
2 Invested capital. See details »
3 2024 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × 3,205,035 ÷ 1,857,700 = 172.53%
4 Click competitor name to see calculations.
The financial trajectory from 2019 to 2024 reflects a period of extreme volatility in market valuation relative to invested capital. The initial phase was marked by negative market value added, indicating that the market valuation was lower than the capital invested in the business. This trend reversed sharply in 2021, coinciding with a massive expansion in market value that far exceeded the underlying capital base, followed by a period of correction and partial stabilization.
- Market Value Added (MVA)
- A significant shift is observed from negative values in 2019 (-$328.45 million) and 2020 (-$474.80 million) to a peak of $12.11 billion in 2021. Following this surge, MVA experienced a notable contraction, fluctuating between $3.21 billion and $5.48 billion through 2024, indicating a sustained but diminished premium over the capital invested.
- Invested Capital
- Invested capital demonstrated comparatively lower volatility than market valuation. The amount decreased from $2.99 billion in 2019 to a low of $1.66 billion in 2021, before rising to a peak of $2.44 billion in 2022 and subsequently settling at $1.86 billion by February 2024.
- MVA Spread Ratio
- The MVA spread ratio mirrors the volatility of the MVA, moving from a low of -24.65% in 2020 to an anomalous peak of 731.36% in 2021. Although the ratio declined in the following years, it remained positive, concluding the period at 172.53% in 2024. This indicates that the market continued to value the entity significantly above its invested capital, despite the substantial retreat from the 2021 high.
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MVA Margin
GameStop Corp., MVA margin calculation, comparison to benchmarks
| Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Market value added (MVA)1 | 3,205,035) | 5,475,736) | 4,898,079) | 12,113,436) | (474,798) | (328,454) | |
| Net sales | 5,272,800) | 5,927,200) | 6,010,700) | 5,089,800) | 6,466,000) | 8,285,300) | |
| Add: Increase (decrease) in deferred revenue | (83,300) | 69,600) | 22,400) | 3,400) | (7,700) | (8,200) | |
| Adjusted net sales | 5,189,500) | 5,996,800) | 6,033,100) | 5,093,200) | 6,458,300) | 8,277,100) | |
| Performance Ratio | |||||||
| MVA margin2 | 61.76% | 91.31% | 81.19% | 237.84% | -7.35% | -3.97% | |
| Benchmarks | |||||||
| MVA Margin, Competitors3 | |||||||
| Amazon.com Inc. | 338.36% | 274.96% | 178.50% | 312.93% | — | — | |
| Home Depot Inc. | 242.57% | 182.42% | 216.66% | 237.60% | — | — | |
| Lowe’s Cos. Inc. | 181.37% | 127.78% | 159.89% | 145.00% | — | — | |
| TJX Cos. Inc. | 186.85% | 160.74% | 135.17% | 227.93% | — | — | |
Based on: 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02).
1 MVA. See details »
2 2024 Calculation
MVA margin = 100 × MVA ÷ Adjusted net sales
= 100 × 3,205,035 ÷ 5,189,500 = 61.76%
3 Click competitor name to see calculations.
An analysis of the financial metrics from February 2019 to February 2024 reveals a period of extreme volatility in market value creation, characterized by a dramatic reversal in value and a subsequent gradual decline from a peak high.
- Market Value Added (MVA) Trends
- The MVA exhibited a negative trajectory in the early period, decreasing from -328,454 thousand US$ in 2019 to -474,798 thousand US$ in 2020. A substantial shift occurred in 2021, where the MVA surged to a peak of 12,113,436 thousand US$. Following this peak, the MVA experienced a sharp correction to 4,898,079 thousand US$ in 2022, followed by a slight recovery to 5,475,736 thousand US$ in 2023, and a further decrease to 3,205,035 thousand US$ by February 2024.
- MVA Margin Fluctuations
- The MVA margin closely mirrored the trends of the absolute MVA but with amplified percentage swings. The margin deepened its negative position from -3.97% in 2019 to -7.35% in 2020. In 2021, the margin reached an exceptional high of 237.84%, indicating that the market value added far exceeded the adjusted net sales. This figure corrected sharply to 81.19% in 2022 and 91.31% in 2023, before declining to 61.76% in 2024.
- Correlation with Adjusted Net Sales
- Adjusted net sales showed a general downward trend over the observed period, falling from 8,277,100 thousand US$ in 2019 to 5,189,500 thousand US$ in 2024. The divergence between declining sales and the massive spike in MVA during 2021 suggests that the surge in market value was driven by factors independent of organic revenue growth. The subsequent decline in the MVA margin from 2023 to 2024 coincides with a reduction in net sales, indicating a contraction in the market's valuation premium relative to the company's sales performance.
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