It’s been 16 months since then GameStop Corp. (NYSE: GME) released into the stratosphere fueled by extreme commercial euphoria.
Since its sudden return to Earth, there have been some minor ignitions, but none of the epic variety. Still, loyal fans of meme action have been prepared for the upcoming release.
Signs of a possible sequel have returned.
Driven by a much-needed market rebound, GameStop’s 43% increase last week made it one of the best-performing stocks among US stocks. Better yet, the video game retailer turned into a mixed media bag regained its 50 days in high volume.
While it is often a bullish move that prevents a prolonged demonstration, with GameStop we have seen this act before. In March 2022, a 10-day rally that brought the shares to about $ 200 cents was received by a short sellers attack and a market weakness that quickly dragged them below $ 100.
Could this time be really different?
Why did GameStop stocks increase?
On May 23, GameStop launched a new digital portfolio for cryptocurrencies and non-consumable tokens (NFT). The Ethereum-based portfolio will allow players and collectors to store and transact these two assets directly from a web browser.
The launch is part of GameStop’s broader ambitions in the NFT space as it continues to diversify away from its traditional video game retail business. In the coming weeks, the company plans to launch its own NFT market in an attempt to take advantage of a hot alternative investment area and stimulate growth. Last month, Technavio released a report estimating that the global digital artwork market will grow at a rate of 35% over the next five years.
News from the GameStop portfolio was far from terrifying. He has been transparent about his NFT plans and an immersion in cryptography. In fact, the actions barely moved on the news.
The news, however, rekindled the fire, as it once again talked on social media about the popular game of memes. It wasn’t long before GameStop became the most popular name on both Wall Street Bets and Reddit’s Stocktwits.
When does GameStop report earnings?
What also helped lift the talk mill was the announcement by management of the first quarter earnings date, which came on the same day as the launch of the GameStop portfolio. The company plans to report first-quarter performance after the market closes on June 1st. This was a little earlier than expected, which seemed to excite the retail masses.
Of course, what happened after the fourth quarter earnings release is still fresh in the minds of traders. GameStop reported better-than-expected revenue of $ 2.25 billion and stocks topped $ 100 over the next seven days.
This time, the street will look for revenue of about $ 1.3 billion in the non-holiday quarter, which would be a slight improvement over the previous year. Net loss is expected to worsen as the company continues to spend heavily on new platforms and marketing to reinvent itself.
As we learned last time, the end result will probably matter little. The signs of traction around the new strategy would theoretically carry some weight. But frankly, just the fact that the beloved GameStop has the stage may be all it takes to release more buying pressure.
Is it a GameStop stock purchase?
If you ask Wall Street research companies, GameStop is definitely not a purchase. Of the few companies that cover it, most have ratings and sales targets well below the current price. The general opinion is that few actions are as disconnected from the basics as GameStop. When it started to rebound last week, the Wedbush analyst quickly reiterated its “sell” rating and the $ 30 price target.
Technical indicators, on the other hand, seem more bullish. GameStop is accumulating a double fund at the $ 80 level. A significant increase could be expected if it is able to exceed $ 160, which would disrupt the downward trend that began in November 2021.
A high-volume crossover of the 50-day moving average above 200 days would also be constructive. If that happens, $ 200 will probably not be left behind. A move to $ 300 or $ 400 seems unlikely at this time, but it can’t be ruled out with GameStop. It will largely depend on the importance of the shorts to participate.
However, as usual, the decision to buy GameStop refers to the possibility of WallStreetBets and other social media armies getting behind the action and forcing a little pressure. There is no doubt that about 24% of the float has fallen short and market sentiment has improved in recent days.
Long-term investors who care about the fundamentals better deal with this. Social media marketers hold firm control.