With the holiday shopping season now basically upon us, and Black Friday deals already starting to show up, eyes are turning to retailers whose fare is especially popular as a gift. GameStop (NYSE:GME) often factors into holiday shopping, particularly for parents, but there may be some trouble ahead for the company going into the end of the year. GameStop is up, however, nearly 2% in Friday afternoon’s trading.
First, there’s the unexpected wrinkle that CEO Ryan Cohen just cost the company (or potentially just himself) $26,000. Ahead of the World Series, Cohen took to X, formerly Twitter, to challenge the Texas Rangers to win by offering each member of the team a $1,000 gift card should they actually take the title. He made a similar, but far less lucrative, offer to their rival the Arizona Diamondbacks, offering the D-Backs a $5 gift card and a live cactus each. It’s a strange dichotomy, and Cohen didn’t offer much explanation why there would be such difference, but it was what it was.
And then, a report emerged that hit both Kotaku and Yahoo! Finance, dubbed “GameStop Keeps Finding New Ways to Rip People Off.” That’s not a good look under the best of circumstances, but checking out the report is downright unnerving. The report notes that employee benefits are likely to get cut going into 2024, and staff are also being required to replace products under warranty—like PlayStation 5s—with exclusively used products. Since employees are already tracked on the amount of warranties they sell, this represents some potentially significant trouble ahead. In a further blow to customers, the Pro membership program is also losing perk features, including a sharp cut to initial “welcome points” and a complete loss of points for those who renew their membership. All of this appears to be in keeping with an earlier call from Block for “extreme frugality,” but it might well cross the line from cutting fat and into chopping bone.
Is GameStop Stock a Buy or Sell?
Turning to Wall Street, analysts have a Moderate Sell consensus rating on GME stock based on one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average GME price target of $6 per share implies 56.91% downside risk.
