Fundamentals, analyst ratings, technical charts; all are used to determine whether a stock is ripe for the picking or not. However, in GameStop’s (NYSE:GME) case, all are completely redundant.
For the investor looking for big returns, however, that matters little as the stock has been one of the market’s biggest winners, yet again, in recent times. And that is down to its status as the meme stock king. The market’s unique segment reserved for the speculating retailer has been having something of a renaissance, put into action by Roaring Kitty – the alias of Keith Gill, the man who set off the original meme stock shenanigans – who returned to social media activity last month.
Some investors have been enjoying the spoils, but one market watcher observing the madness unfold yet again is 5-star investor Daniel Jones, who reaffirmed a Sell rating on the shares in April, only to watch the shares take off by 163% since, thereby making mincemeat of the S&P 500’s 5% gain seen during the same period.
“To be clear,” says Jones, “I have stated in multiple instances that we could see extreme short-term fluctuations that send shares of GameStop higher, so I am not all that surprised by this movement. But at the end of the day, the picture for the company looks truly bleak.”
Jones points out GameStop’s recent quarterly readout showed big declines in revenue, specifically in hardware and software sales. Furthermore, despite raising capital to strengthen its financial position, potentially facilitating investments aimed at diversifying its business, Jones remains skeptical about the company’s future amid the evolving landscape of the video game industry and its core operations.
While Jones notes the company has taken steps to improve the bottom-line, ultimately that doesn’t alter the fact that the retail space for video games is “destined to eventually disappear.”
Does all that stuff really matter to GME investors trying to catch another leg up of the stock that has shown fundamental analysis is useless? Probably not, but in any case, Jones, who’s ranked in the top 4% of TipRanks’ stock experts, rates GME shares as a Sell. (To watch Jones’ track record, click here)
The Wall Street view here is mostly absent with only one analyst currently tracking GME’s progress. That analyst rates the shares a Sell, too. (See GameStop stock forecast)
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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.
