To the moon —
Retail investors attempt to force yet another short squeeze because Cohen becomes chairman.
GameStop’s stock price is coming to the historic highs it attained during the zenith of its meme-stock volatility in January. The stock’s continuous growth over the past months comes as the company prepares to announce its quarterly earnings after the market closed Wednesday evening. Shareholders, meanwhile, formally elected Chewy co-founder Ryan Cohen as chairman of the board.
As of Wednesday afternoon, GameStop stock is trading at around $325 per share, up nearly 10 percentage by a Tuesday closing price of $300. That number is off slightly from the inventory’s all-time high closing cost of $347. 51 on January 27 (although the stock spiked very briefly to an all-time high of $483 in currency trading on January 28). Now’s close might easily approach or surpass the January 29 closing cost of $325, that has been the stock’s second-highest point in history.
After the historical highs of January, GameStop stock plummeted to below $60 per share from the time February rolled around, and it sank as low as $40. 59 by February 19, only after it turned out to be a central theme in that a House Committee on Financial Services hearing. By early March, though, excited retail investors’d once again bidding the price up to approximately $260, and it gradually sank down to a recent minimum of $143. 20 only a month past.
GameStop’s company is still fighting
GameStop inventory’s latest increase comes before the day’s quarterly earnings report, during the couple analysts still tracking the highly volatile inventory anticipate the company to announce its fourth operating loss in five quarters. But the same analysts say the expected quarterly loss of $67 million should be lower than it had been a year ago ($98.8 million) amid what could be the organization’s first high-income annual earnings gain in nearly three years.
In March, when GameStop declared worse-than-expected fiscal 2020 earnings, its stock price promptly increased from $181. 75 to $120. 25, losing about a third of its value in a single day. But people who held on the inventory made it back–and more–the very following day, when the stock closed at $183. 75 on March 25.
That ought to be considerable evidence (as if more is needed) that GameStop’s stock price still has little if anything to do with all the daily fundamentals of its retail industry. For context, when GameStop announced fiscal 2018 earnings of $8.3 billion in April 2019, its market cap was $1.3 billion, or about 15 percentage of annual revenues. Today, that market cap is just over $22 billion, or roughly five times its fiscal 2020 earnings of $5. 43 billion. )
The simple fact that those depressed earnings formally ended the company’s 14-year run on the Fortune 500 doesn’t appear to have fazed retail shareholders. “As long as retail investors largely remain enthusiastic about GameStop’s prospects, however, the major question marks don’t matter much in terms of share price action,” Wedbush Morgan analyst Michael Pachter wrote in a recent note to investors, in which he set a $39 price target for the stock.
The future’s so bright… ?
So what is driving all of the buyer enthusiasm, if not basic business success? Part of this movement is due to exuberance over Ryan Cohen, who is ascending to chairman of their organization’s board of directors under a year later he bought a 10 percent stake last August. Though Cohen’s new position atop the organization’s board was expected for months, it became official after a vote at a shareholder meeting today.
While Ryan has made vague gestures toward”building a powerful e-commerce platform that provides competitive pricing, broad gaming selection, fast shipping, and a truly high-touch experience that excites and delights customers,” he failed to outline any specific strategy for realizing that vision at today’s shareholder meeting.
“You won’t find us talking a big game, making a bunch of lofty promises, or telegraphing our strategy to the competition,” Cohen told the investors gathered in GameStop’s hometown of Grapevine, Texas (as reported by Bloomberg). “We’re fortunate to have such a special set of investors holding the organization’s shares. You guys inspire u