Shares of the video game and related products retailer GameStop (NYSE:GME) have jumped nearly 64% year-to-date. Despite GME stock appreciating significantly in value, individual investors have a Very Positive view of the company. It’s important to highlight that the number of portfolios (tracked by TipRanks) holding the stock increased by 40.7% in the last 30 days.
The catalyst behind GameStop’s recent rally is the backing from Keith Gill, widely known as Roaring Kitty, a prominent influencer in the meme stock community. Gill’s endorsement sparked significant social media buzz, amplifying investor enthusiasm.
Overall, among the 740,493 portfolios monitored by TipRanks, 0.5% have invested in GME stock.
Learn more about TipRanks’ powerful Investor Sentiment tool here.
GME’s Financials Under Pressure
GME’s financials are under pressure. GameStop reported a drop in its top line in Fiscal 2023. Moreover, the trend has continued in Fiscal 2024, with Q1 registering a decline of 28.7%. This downtrend reflects the impact of a challenging macroeconomic environment on consumer discretionary spending. Adjusted net loss stood at $36.7 million, or $0.12 per share, in Q1.
To bolster its financial position and capitalize on growth opportunities, GameStop recently completed an “at-the-market” equity offering, raising $2.137 billion. Though this move enhanced the company’s financial flexibility, it exerted downward pressure on the stock price due to the issuance of shares at a discount.
Is GME Stock a Good Buy?
GameStop’s efforts to raise capital will bolster its financial flexibility and help the company capitalize on new growth opportunities, potentially through strategic acquisitions or investments. However, pressure on consumers’ discretionary spending could keep the stock highly volatile in the near term.
In light of current challenges, Wedbush analyst Michael Pachter adopted a bearish stance on GME stock. On June 11, the analyst reiterated a Sell rating on GameStop. His price target of 11 suggests a significant downside potential of 61.67% from current levels.
