GameStop (NYSE:GME) Shares Gap Up – What’s Next?

GameStop Corp. (NYSE:GME)’s share price gapped up before the market opened on Monday . The stock had previously closed at $17.87, but opened at $18.75. GameStop shares last traded at $18.56, with a volume of 3,130,395 shares trading hands.

GameStop News Summary

Here are the key news stories impacting GameStop this week:

• Positive Sentiment: GameStop expects second-quarter net income of approximately $290 million to $310 million, well above the $168.6 million reported a year earlier. The projected improvement helped drive the stock’s rally. GameStop Expects Higher Profit Despite Lower Sales
• Positive Sentiment: GameStop amended its convertible-note exchange agreements so approximately $358.4 million will be settled in cash rather than stock. The change removes a significant near-term dilution overhang for shareholders. GameStop Announces Amendment to Convertible Notes Exchange
• Positive Sentiment: The preliminary results prompted a positive market reaction, with investors emphasizing earnings growth and balance-sheet flexibility. An analyst upgrade to Buy also provided an additional sentiment boost. GameStop Stock in Rally Mode After Preliminary Q2 Results
• Neutral Sentiment: The earnings improvement may partly reflect non-core factors, including GameStop’s equity stake in eBay, rather than a broad recovery in its retail business.
• Negative Sentiment: Second-quarter net sales are expected to fall to approximately $780 million–$800 million from $972 million a year earlier. Planned store closures and GameStop’s exit from France are contributing to the decline. GameStop expects lower quarterly sales on store closures, France exit
• Negative Sentiment: The preliminary report does not eliminate longer-term concerns about GameStop’s shrinking core retail business. The company’s improved profit outlook therefore appears more supportive of the stock’s near-term sentiment than evidence of sustained revenue growth. GameStop preliminary Q2 report: does it change the investment thesis?

Analyst Ratings Changes

Several analysts recently issued reports on GME shares. Wall Street Zen upgraded shares of GameStop from a “hold” rating to a “buy” rating in a research report on Sunday. Weiss Ratings reiterated a “hold (c)” rating on shares of GameStop in a research report on Wednesday, July 29th. One analyst has rated the stock with a Hold rating, According to data from MarketBeat, the stock currently has an average rating of “Hold”.

GameStop Stock Performance

The company has a market cap of $8.37 billion, a P/E ratio of 14.14 and a beta of 1.79. The business’s 50 day simple moving average is $20.52 and its 200 day simple moving average is $22.28. The company has a current ratio of 12.40, a quick ratio of 11.91 and a debt-to-equity ratio of 0.71.

GameStop (NYSE:GME) last posted its quarterly earnings results on Tuesday, June 2nd. The company reported $0.30 earnings per share for the quarter, topping analysts’ consensus estimates of $0.16 by $0.14. The business had revenue of $835.30 million during the quarter, compared to analyst estimates of $766.63 million. GameStop had a net margin of 20.45% and a return on equity of 13.75%. The company’s revenue was up 14.0% on a year-over-year basis. During the same period in the prior year, the business posted $0.17 earnings per share.

Insider Transactions at GameStop

In related news, General Counsel Mark Haymond Robinson sold 3,957 shares of GameStop stock in a transaction that occurred on Monday, July 6th. The stock was sold at an average price of $22.62, for a total transaction of $89,507.34. Following the sale, the general counsel owned 104,190 shares of the company’s stock, valued at approximately $2,356,777.80. This trade represents a 3.66% decrease in their position. The sale was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, insider Daniel William Moore sold 7,085 shares of the company’s stock in a transaction that occurred on Wednesday, July 1st. The stock was sold at an average price of $22.38, for a total value of $158,562.30. Following the completion of the transaction, the insider owned 115,125 shares of the company’s stock, valued at $2,576,497.50. The trade was a 5.80% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. Over the last three months, insiders have sold 18,125 shares of company stock worth $406,587. Insiders own 9.50% of the company’s stock.

Hedge Funds Weigh In On GameStop

Several hedge funds have recently modified their holdings of GME. Northwestern Mutual Wealth Management Co. boosted its position in shares of GameStop by 308.9% during the third quarter. Northwestern Mutual Wealth Management Co. now owns 969 shares of the company’s stock worth $26,000 after acquiring an additional 732 shares during the last quarter. EverSource Wealth Advisors LLC lifted its stake in GameStop by 226.6% in the 2nd quarter. EverSource Wealth Advisors LLC now owns 1,277 shares of the company’s stock worth $31,000 after purchasing an additional 886 shares in the last quarter. Advisory Services Network LLC bought a new position in shares of GameStop during the 3rd quarter valued at about $39,000. Los Angeles Capital Management LLC purchased a new position in shares of GameStop during the fourth quarter valued at about $39,000. Finally, Rockefeller Capital Management L.P. increased its holdings in shares of GameStop by 805.6% in the fourth quarter. Rockefeller Capital Management L.P. now owns 2,264 shares of the company’s stock worth $45,000 after purchasing an additional 2,014 shares during the last quarter. Hedge funds and other institutional investors own 29.21% of the company’s stock.

GameStop Company Profile

GameStop Corp. (NYSE:GME) is a global specialty retailer focused on video games, gaming consoles, consumer electronics and related accessories. The company operates a network of physical retail stores alongside an e-commerce platform, offering new and pre-owned products spanning the latest game software, hardware, collectibles and lifestyle merchandise. GameStop’s retail footprint is complemented by digital marketplaces for trade-ins and online purchases, as well as a membership program that provides exclusive content and rewards.

Originally founded in 1984 as Babbage’s in Dallas, Texas, the company adopted the GameStop name in 1999 following its merger with Software Etc.