GameStop Corp (GME) is gearing up to report its second-quarter earnings on Tuesday, a moment that will shed light on the company’s performance amidst a challenging retail landscape. Wall Street analysts are anticipating a loss of nine cents per share and revenues of $895.67 million, figures that reflect the broader trend of decreased spending on discretionary items, including video games, as consumers grapple with rising inflation.
Despite the headwinds, GameStop has experienced a calmer summer compared to the intense volatility it faced in the first half of 2024 due to its meme stock status. The company has taken steps to bolster its financial position by issuing millions of new shares and is now focusing on tapping into gamer nostalgia by transforming some stores into ‘retro’ locations, featuring a curated selection of older consoles and games.
This strategic shift is reflected in the stock’s performance, which has surged 42.48% over the past year and 45.47% year-to-date. The stock’s bullish momentum is further evidenced by its trading above key moving averages, indicating strong buying pressure. GameStop’s share price of $24.25 currently sits above its eight-day, 20-day, and 50-day simple moving averages, reinforcing the positive trend.
The MACD reading of 0.06 supports this bullish sentiment, while the RSI at 58.28 suggests the stock is nearing overbought territory. Bollinger Bands further solidify the bullish signal, with the price nearing the upper range limit.
However, despite the promising technical indicators, analysts remain skeptical. The consensus analyst rating on GameStop stock stands at a ‘Sell,’ with a price target of $17 a share, implying a significant downside from current levels.
Wedbush analysts are even more bearish, with a price target of $11 on the stock, representing a potential decline of over 50% from current levels.
GameStop closed at $24.25 on Monday, up 1.38%, setting the stage for a pivotal earnings report that will reveal whether the company’s nostalgic strategy can drive growth and appease skeptical investors.
