Things have been better for video game retailer GameStop (GME). While its primary business model is in rapid decline, it has seen new life as a meme stock. In fact, it just got a huge upward push from the return of Roaring Kitty, whose unusual X post renewed investor interest in the stock. It didn’t last however as shares ended the day up only about 1%.
Pick the best stocks and maximize your portfolio:
- Discover top-rated stocks from highly ranked analysts with Analyst Top Stocks!
- Easily identify outperforming stocks and invest smarter with Top Smart Score Stocks
Roaring Kitty came back with an unexpected post: a picture of a Time Magazine cover that looked like an issue from 2006. Specifically, it was the issue that declared you—that is, whoever happened to be looking at the cover at the time—to be the Person of the Year.
Trying to figure out just what Roaring Kitty meant by this is puzzling. GameStop options contracts exploded though, with about 300,000 contracts trading hands. That is about 1.5 times the normal rate and saw implied volatility burst to 132%, the highest figure seen in three weeks.
GameStop Improvements
As it turned out, it was not only GME stock that saw gains, but also GameStop cryptocurrency. The GME coin saw a surge that nearly doubled its value at one point. A memecoin struck for Roaring Kitty himself saw a 25% jump.
However, the fundamentals remain wholly not on GameStop’s side. With used games essentially a non-factor, GameStop has little choice but to find a new business model. Its moves into collectibles like Funko Pops have been less than successful, and its trading card services are meeting with some contention on social media.
Is GameStop a Buy or Sell?
Turning to Wall Street, only one analyst, Michael Pachter from Wedbush, is covering GME stock and has a Sell rating. According to him, there is more than 65% downside risk for GameStop based on his price target of $10 per share.
