A while back, it was officially announced that GameStop (NYSE:GME) CEO Ryan Cohen would be authorized to buy and sell the stocks of other companies with the retailer’s money, leading to some declaring that GameStop was now effectively a hedge fund that occasionally bought and sold games. Now, though, some are wondering if those moves ever happened at all. Nevertheless, investors are piling into the former meme stock, as shares were up nearly 3.5% during Thursday afternoon’s trading.
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Speculation started up comparatively recently, as investors wondered if Cohen would actually make moves with the cash hoard GameStop built up. With the fourth-quarter earnings report revealing that GameStop had over a billion bucks backstopping it, some began to wonder if GameStop would turn investor. After all, with $1.199 billion parked in a U.S. bank offering up a 4.75% CD rate, GameStop could stand to pull in over $56 million a year. Admittedly, that’s barely a patch on the $1.79 billion in revenue it pulled in by itself last quarter, but it’s still a far cry from out of business.
Are GameStop Insiders Buying In?
So, where exactly does GameStop go from here? Reports noted that insiders are buying in; director Lawrence Cheng picked up 10,000 shares valued at around $112,238 just recently. However, a look at the TipRanks Insider Trading Sentiment Tool reveals that overall sentiment is rated Negative.
And despite high praise for Cohen himself, who picked up substantial amounts of GameStop stock before the meme stock run-up, GameStop’s revenues are still on a downward trend. Furthermore, its primary business model of buying and selling used games and gaming hardware looks jeopardized by changing market dynamics that will focus on digital distribution and a potential end to the console concept.
Is GameStop a Buy, Sell, or Hold?
Turning to Wall Street, GME stock is considered a Moderate Sell by Michael Pachter, the lone analyst covering the stock. After a 49.48% loss in its share price over the past year, the average GME price target of $5.60 per share implies 50.38% upside potential.
