GameStop (GME) AI Stock Analysis

• Market Cap: $10.72B
• Dividend Yield: N/A
• Average Volume (3M): 5.13M
• Price to Earnings (P/E): 134.2
• Beta (1Y): 1.25
• Revenue Growth: -24.04%
• EPS Growth: N/A
• Country: US
• Employees: 8,000
• Sector: Consumer Cyclical
• Sector Strength: 53
• Industry: Retail - Discretionary
• EPS (TTM): 0.18
• Shares Outstanding: 446,800,350
• 10 Day Avg. Volume: 4,402,447
• 30 Day Avg. Volume: 5,134,083
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 2.47
• Price to Cash Flow (P/CF): 109.00
• P/FCF Ratio: 134.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $10.00
• Price Target Upside: -58.33% Downside
• Rating Consensus: Moderate Sell
• Number of Analyst Covering: 1

GameStop's overall score reflects financial challenges, particularly in profitability and cash flow, despite a solid balance sheet. The technical analysis suggests a lack of momentum, and high valuation metrics indicate potential overvaluation. However, strategic initiatives like expanding board expertise and service offerings provide some positive outlook.

Positive Factors

Financial Performance

GameStop printed net income slightly ahead of our estimate, driven by better gross margin most likely due to higher used hardware and software sales.

Revenue Mix

GameStop’s bottom-line should benefit from this mix shift towards software, as well as a significantly higher interest income driven by recent share offerings.

Negative Factors

Business Strategy

The company has accelerated store closures in an attempt to save its way to prosperity, and its plans to enter the trading card business are striking in their lack of specificity.

Investor Relations

Management continues to shun investor interaction, forgoing the customary conference call and Q&A session that typically accompanies earnings releases.

Profitability Concerns

GameStop has virtually no chance of returning to profitability in its core business, and its entry into the trading card business follows failed attempts at an omnichannel strategy and at NFT trading.

GameStop Business Overview & Revenue Model

Company Description

GameStop Corp. (GME) is a global retailer primarily engaged in the sale of video games, consumer electronics, and gaming merchandise. Headquartered in Grapevine, Texas, the company operates through its network of retail locations and e-commerce platform. GameStop offers a wide range of new and pre-owned gaming consoles, accessories, and video game titles, catering to both casual and hardcore gamers. In addition to its core gaming business, GameStop also sells collectibles and licensed merchandise, which include apparel and toys related to popular video game franchises.

How the Company Makes Money

GameStop generates revenue through the sale of new and pre-owned video games, gaming consoles, and accessories, both in-store and online. The company's revenue streams include the direct sale of physical and digital video game products, trade-in programs where customers can exchange used games and consoles for store credit, and the sale of collectibles and pop culture merchandise. GameStop also benefits from loyalty programs and subscription services, which provide recurring revenue opportunities. Partnerships with gaming and electronics manufacturers, as well as exclusive product offerings, are significant factors contributing to GameStop's earnings. Additionally, the company has been focusing on enhancing its digital sales channels to capture a larger share of the growing online gaming market.

GameStop Financial Statement Overview

Summary

GameStop's financial performance shows stability in equity but faces profitability and cash flow challenges. The income statement reveals declining revenue trends and negative EBIT margins. The balance sheet is strong in equity but weak in return on equity. Cash flow is consistently negative, despite improvements in operating cash flow.

Income Statement

GameStop's revenue shows a declining trend over the years, with a marginal improvement in net income in the TTM period. Gross profit margins have remained relatively stable, but the company struggles with negative EBIT margins, indicating operational challenges in achieving profitability.

Balance Sheet

The company's balance sheet reveals a strong equity position with a positive debt-to-equity ratio, indicating manageable leverage. However, the return on equity remains weak due to sustained net losses, impacting overall financial health.

Cash Flow

GameStop's cash flow statement highlights challenges with consistently negative free cash flow, though there is an improvement in operating cash flow. The company maintains a strong cash position, but needs to focus on improving cash flow from operations to support long-term stability.

Breakdown
TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Income Statement		Total Revenue
4.33B	5.27B	5.93B	6.01B	5.09B	6.47B
	Gross Profit
1.17B	1.24B	1.37B	1.35B	1.26B	1.91B
	EBIT
-37.10M	-31.70M	-308.90M	-361.80M	-254.70M	-399.60M
	EBITDA
16.60M	24.50M	-240.40M	-291.30M	-214.60M	-292.10M
	Net Income Common Stockholders
63.00M	6.70M	-313.10M	-381.30M	-214.60M	-470.90M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.62B	1.20B	1.39B	1.27B	508.50M	499.40M
	Total Assets
4.04B	2.71B	3.11B	3.50B	2.47B	2.82B
	Total Debt
820.80M	602.80M	616.60M	649.00M	1.05B	1.19B
	Net Debt
-803.60M	-318.90M	-522.40M	-622.40M	538.30M	689.10M
	Total Liabilities
2.71B	1.37B	1.79B	1.90B	2.04B	2.21B
	Stockholders Equity
1.34B	1.34B	1.32B	1.60B	436.70M	611.50M
Cash Flow		Free Cash Flow
-47.90M	-238.60M	52.30M	-496.30M	63.70M	-493.00M
	Operating Cash Flow
-27.60M	-203.70M	108.20M	-434.30M	123.70M	-414.50M
	Investing Cash Flow
268.30M	-33.20M	-222.70M	-64.80M	36.90M	-60.90M
	Financing Cash Flow
3.44B	-11.60M	-7.90M	1.20B	-55.40M	-644.70M

GameStop Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 24.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GME, the sentiment is Negative. The current price of 24 is below the 20-day moving average (MA) of 25.48, below the 50-day MA of 27.71, and below the 200-day MA of 25.08, indicating a bearish trend. The MACD of -0.84 indicates Positive momentum. The RSI at 38.81 is Neutral, neither overbought nor oversold. The STOCH value of 30.88 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GME.

GameStop Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BKE	73 Outperform	$1.95B	9.73	41.12%	3.65%	-4.66%	-13.89%
Sector *	60 Neutral	$13.01B	10.45	0.79%	3.53%	1.60%	-22.47%
GME	50 Neutral	$10.72B	134.23	2.08%	―	-24.04%	―

GameStop Corporate Events

GameStop Reports Q3 Sales Decline, Net Income Surge

In its third-quarter results for 2024, GameStop reported a decline in net sales to $860 million from $1.078 billion in the same quarter of the previous year. Despite the drop in sales, the company saw a net income of $17.4 million, compared to a net loss of $3.1 million in the prior year, and completed an equity offering, raising approximately $400 million, which bolstered its cash reserves to $4.616 billion.