Writing about GameStop (NYSE:GME) stock is never my favorite thing to do. It’s not because I dislike the company or the product — I’ve spent plenty of my hard-earned cash there over the years. It’s because I don’t think that the stock behaves rationally.
Case in point: GameStop stock was less than $100 in early January, and I was declaring the stock a certain loser. And it was about time — the company’s stock blew up in the spring of 2021 when retail traders on the Reddit r/WallStreetBets subreddit rallied around the company and tried to execute a short squeeze against hedge funds that bet against the company.
It was a great story that captured a lot of attention when people desperately needed something to focus amid the Covid-19 pandemic. And while GME stock never sustained its jump from $20 to nearly $500, it still managed to be incredibly overvalued over the next few quarters.
Even now, the stock’s fundamentals aren’t great — but they are better than they were a couple of years ago. Revenue in the fourth quarter came in at $2.25 billion, which beat analysts’ expectations for $2.22 billion. The company still posted a loss, however, of $1.86 per share.
For all of 2021, GameStop posted revenue of more than $6 billion while losing $381 million for the full year. And it ended the year with more than $1.2 billion in cash and cash equivalents.
But there’s reason for hope. And I don’t say that lightly.
First of all, GME stock is up more than 3% today as it’s again showing some resilience by bouncing off the $140 resistance level yet again. GameStop stock spiked late last month to nearly $200 when the company announced plans for a stock split to be paid via dividends. And while it didn’t remain close to $200, it hasn’t fallen back to its lows from late January, either.
On top of that, GameStop Chairman Ryan Cohen made news in March when he bought 100,000 shares of GME stock for $10.2 million, giving him an 11.9% stake in the company. Cohen, who is the former CEO of Chewy (NYSE:CHWY), has a lot of admirers on Reddit, StockTwits and other forums.
Do I think GameStop is a great stock to buy? No, not at all. But I’m also starting to think the r/WallStreetBets apes are going to keep this ride going for the foreseeable future. GameStop stock may even manage to end the year in the black.
That would be a huge achievement for both the Reddit crowd and for GameStop’s board.
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