‘There’s No Clarity,’ Says Investor About GameStop Stock

There have been moments during the past few years when GameStop (NYSE:GME) has been at the center of the Wall Street zeitgeist.

Indeed, GameStop has been a darling of day traders and speculators, some of whom have enjoyed some nice profits along the way as share prices spiked (and then quickly retreated) — most recently in May and June of 2024. In both of these instances the runs were driven by social media posts by the investor Keith Gill, also known as Roaring Kitty.

Though GME shares are up some 60% for the past twelve months, in 2025 the stock price has been sliding and is down over 20% year-to-date.

Still, Gill’s activities generated short-term excitement, which the company used to issue shares and raise capital. At the end of 2024, the company had $4.6 billion in cash on hand. Could this large influx help to propel the company onto solid ground in the years ahead?

One investor known by the pseudonym Sungarden Investment Publishing does not see this occurring. In fact, quite the opposite.

“GameStop is (fundamentally) a dying company,” declares the investor. “It is impossible to confidently project a scenario where the company returns to attractive margins and revenue growth.”

Sungarden adds that the game market has migrated from a bricks-and-mortar model to one revolving around online modes of distribution. The investor notes that major players such as Microsoft and Sony both offer alternatives to in-store purchases.

An additional challenge, according to Sungarden, is the commodification of physical games, where players have plenty of purchasing options.

“If you buy a physical game, it doesn’t matter if it’s at GameStop, Amazon, Best Buy, or Mercado Libre, it’s the same game,” the investor explains. In other words, consumers will make decisions based on factors such as price and delivery speed.

Underlining these gloomy trends, Sungarden cites the company’s negative operating income from the last quarter.

Moreover, while GME was successful in raising capital during the bullish peaks, this created massive shareholder dilution, points out Sungarden, as the number of outstanding shares ballooned from ~250 million to 446 million.

Adding insult to injury, the investor does not see any indication that these funds will be deployed effectively. In other words, there’s not much to be hopeful about when it comes to GME, states Sundarden.

“This is a business with very weak moats, in a declining market, and a large cash position (which was raised by diluting shareholders) but where there is no clarity as to whether it will be used efficiently,” concludes Sungarden, who rates GME a Strong Sell. (To watch Sungarden Investment Publishing’s track record, click here)

There are no analyst ratings from the past three months, signifying that Wall Street has minimal interest in GME at present.

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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.