GameStop Has Gained Nearly 30% This Week
History doesn’t always repeat itself, but it often rhymes. Perhaps this is what investors are thinking as the original meme stock GameStop (NYSE:GME) extended its short squeeze-like behavior this week. The stock gained nearly 30% over the past week of trading, and is looking to gain momentum ahead of its earnings call on June 1st. The market has also been awaiting news on GameStop’s stock split that was announced earlier this year.
If indeed GameStop is squeezing again, it could be trouble for the more than 22% of the shares that are currently held in short positions. GameStop has once again found itself as the top trending ticker on social media sites like Reddit, Twitter, and Stocktwits this week, and its daily average trading volume has far exceeded its recent figures.
GameStop Enters the World of Web3
Although most investors have been awaiting news on the upcoming NFT marketplace that GameStop is creating with Immutable X, the company surprised many earlier this week when it announced a different product. In partnership with Loopring, GameStop is releasing a non-custodial NFT and crypto wallet. This is the company’s first foray into the Web3 world, and looks to be a major part of Chairman Ryan Cohen’s digital transformation plan for GameStop.
The wallet announcement was unexpected, but investors are still likely more excited about the NFT marketplace. Still, GameStop might have waited too long as the broader NFT and crypto markets are currently experiencing a similar correction to the equities market. It remains to be seen if the NFT marketplace will have the same impact as it would have if they launched it at the peak of the NFT market.
GameStop Earnings Preview
GameStop has been a tricky company to forecast earnings for. For the fiscal fourth quarter, GameStop saw an earnings miss with a loss of $-1.86 per share although it did manage to grow its sales on a year over year basis. With all of the CAPEX that GameStop is spending on these new transformation projects, it remains uncertain what kind of earnings we will see from quarter to quarter. I know that retail traders aren’t usually ones to care about Wall Street analysts, but it should be noted that the median price target amongst analysts for GameStop’s stock is $30.00 according to TipRanks.
Is GameStop A Buy?
In the past I’ve been critical of meme stocks. I’ve admittedly missed out on the short squeeze gains but I’m personally okay with that. Had I jumped in with AMC (NYSE:AMC) I would have lost all of those gains over the past year anyways. GameStop is sitting at an interesting crossroads in its business. One the one hand, I am a crypto bull and I believe in the future of Web3 and its potential. On the other hand, I generally like to invest in stocks that have strong businesses and have a high potential for growth and profitability in the future. This is where GameStop confuses me. At its current price levels, I wouldn’t be opposed to buying now and holding the stock through a potential squeeze, as well as a bullish catalyst like the upcoming stock split announcement.
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