Gamestop Stock: Buy Or Bye?

GameStop's stock has been on a rollercoaster ride over the past few years, with surges driven by social media buzz and the actions of prominent investors like Keith Gill, also known as Roaring Kitty. The stock saw a recent jump of over 37% in early Monday trading in July 2024, following a Reddit post by Gill, who was a key figure in the 2021 GameStop stock short squeeze. While some investors are enthusiastic about the stock's potential, others warn of the risks associated with investing in so-called meme stocks. As of July 2024, the stock is expected to rise 46.41% in the next 3 months, but it's important to carefully consider the risks and volatility of the stock before making any investment decisions.

Gamestop's stock price history

Looking back, the all-time high closing price for GameStop stock was 86.88 on January 27, 2021. Since then, the stock price has experienced a downward trend, with some short-term gains along the way.

On July 8, 2024, the stock price gained 1.12%, rising from $24.18 to $24.45. The stock fluctuated by 5.41% during the trading day, with a day low of $23.85 and a day high of $25.14. Despite this positive trend, some analysts hold a negative evaluation of the stock, expecting it to perform weakly in the upcoming days or weeks.

The stock is considered "very high risk" due to its high volatility, with a daily average volatility of 5.56% in the last week. Analysts predict that the stock is expected to rise 46.41% during the next three months, with a 90% probability of holding a price between $35.80 and $87.80 in this period.

While some investors express confidence in the stock, citing fundamental strengths, others urge caution, recommending investing only if one is comfortable with the potential risk of losing money.

The risks of investing in Gamestop

Investing in any company carries risk, and it is important to understand the risks associated with investing in Gamestop before making a decision. Here are some key risks to consider:

Volatility and Fluctuations

While Gamestop's stock price has historically been relatively stable, it can still experience significant fluctuations. These fluctuations can be caused by news about the company or changes in the industry. For example, the stock price rose from $24.18 to $24.45 on July 8, 2024, a gain of 1.12%. However, the price has been going up and down, and there was a divergence between volume and price, which may be an early warning of possible changes. Gamestop stock is considered "very high risk" due to its high volatility.

Competition from Digital Retailers

Gamestop faces increasing competition from digital retailers such as Amazon and Steam. These companies offer lower prices and more convenient shopping experiences, which could lead to a decline in Gamestop's sales and a decrease in its stock price. With more people turning to digital platforms to purchase games, Gamestop's brick-and-mortar stores have become less popular.

Stagnant Stock Price and Limited Growth Potential

Gamestop's stock price has been relatively stagnant for the past few years, which can be discouraging for investors seeking high returns. While this stability may appeal to some investors, it also indicates less potential for significant growth.

Single-Company Risk

Investing in a single company, such as Gamestop, carries more risk than investing in a diversified portfolio of stocks. If Gamestop's stock price decreases significantly, investors could suffer substantial losses. Additionally, the company's financial performance could be vulnerable to changes in the industry or the economy, further impacting its stock price.

Gamestop's market capitalisation

Market cap is commonly used to measure how much a company is worth and can be calculated by multiplying the share price by the number of outstanding shares. GameStop's share price has fluctuated over time, with a 52-week high of $64.83 and a 52-week low of $9.95. On July 8, 2024, the closing price of a share in GameStop was $24.45.

The company's market cap has been influenced by the activities of amateur investors, who have coordinated on social media platforms such as Reddit to drive up the share price. This has resulted in massive gains for some stocks, with GameStop's share price increasing by more than 700% in a week. This activity has drawn scrutiny from regulators and caused concern among established investors, who have described it as "market manipulation".

Despite the positive trend in GameStop's share price, some analysts hold a negative evaluation of the stock and predict weak performance in the coming days or weeks. However, others remain confident in the company's prospects and continue to encourage investment.

The average investor's opinion on Gamestop

On one hand, some investors argue that Gamestop is a strong buy, particularly at prices below $50. They believe that the stock is undervalued and has the potential to rise significantly. This sentiment is reflected in comments such as "Anything under $50 is a steal based on fundamentals alone" and "I've done so much research. I don't need any luck. I know". These investors have likely studied the company's financials and believe that the stock price does not accurately reflect the company's true value.

Additionally, some investors are anticipating a short squeeze, similar to what occurred in 2021. A short squeeze happens when a stock's price increases rapidly, forcing investors who have bet against the stock (shorted the stock) to buy back their shares to avoid further losses. This can drive the stock price even higher. Comments such as "The real squeeze did not happen yet. BUY AND HOLD" and "The stock is still shorted more than 100%. The real squeeze did not happen yet" indicate that some investors are hoping for a repeat of the 2021 short squeeze that led to overnight fortunes for some.

On the other hand, some investors express caution or negativity towards investing in Gamestop. Comments such as "Stop buying, you will lose everything!" and "Be very careful and look for greener pastures" indicate that some believe the risks of investing in Gamestop outweigh the potential rewards.

Analysts from StockInvest.us also hold a negative view of Gamestop, stating that "Despite the positive trend, we believe Gamestop will perform weakly in the next couple of days or weeks. Therefore, we hold a negative evaluation of this stock". They further add that the stock is considered "very high risk" due to its high volatility.

In summary, the average investor's opinion on Gamestop is varied. Some see it as a valuable investment opportunity, particularly if there is another short squeeze, while others warn of the risks and volatility associated with the stock. It is important to note that investing in the stock market carries inherent risks, and investors should always do their own research and carefully consider their risk tolerance before making any investment decisions.

Gamestop's stock price forecast

Gamestop Stock Price Forecast

As of the end of the trading day on 8 July 2024, the price of a Gamestop (GME) share was $24.45. The stock is expected to rise by 46.41% during the next 3 months and, with a 90% probability, will hold a price between $35.80 and $87.80 at the end of this 3-month period.

The stock is currently rated as a Zacks Rank 2, indicating an above-average return from the GME shares relative to the market in the next few months. The stock also has a VGM Score of A, which is a weighted average of the individual Style Scores, allowing users to focus on the stocks that are the best fit for their personal trading style. The Value Score of C indicates it would be a neutral pick for value investors. The financial health and growth prospects of GME indicate its potential to perform in line with the market. It currently has a Growth Score of A.

Gamestop stock is considered to be "very high risk". The stock is closer to the support from accumulated volume at $23.78 (2.74%) than the resistance at $28.00 (14.52%), which means the trading risk/reward intra-day is attractive, and profit can be made before the stock reaches first resistance.

Gamestop stock holds several negative signals and, despite the positive trend, it is believed that Gamestop will perform weakly in the next couple of days or weeks. Therefore, a negative evaluation of this stock is held.

Gamestop's stock price has been volatile. It jumped more than 37% in morning trading on 2 July 2024, after a Reddit account linked to Keith Gill, aka "Roaring Kitty", shared a screenshot that many speculate could be an image of the shares and call options Gill holds in Gamestop. According to the image, Gill may hold 5 million shares of Gamestop worth $115.7 million as of the closing price on Friday.

Gamestop's stock has been surging due to social media buzz. In May, Gamestop Corp. (GME) shares soared 140% over just a few days after Gill appeared online for the first time in three years. Roaring Kitty's return also pushed up shares of another so-called "meme stock", AMC Entertainment Holdings, Inc. (AMC).

Big hedge funds and other professional investing firms are better equipped to handle the situation this time around, and they could wait longer before pulling out, leaving smaller investors to bear the risk. However, one source notes that more retail traders could jump in on the trend in the coming days.

Gamestop's stock is considered a risky situation, and most people would probably be wise to stay away from it.

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