GME stock price analysis: What next for GameStop after the surge?
The GME stock price popped by over 6% on Thursday as investors cheered its ongoing turnaround, and after Ryan Cohen, the Chief Executive Officer, bought 1 million shares in a sign of confidence in the embattled company. GameStop rose to $23, up from the year-to-date low of $20.
GME stock price rises as CEO continues buying
GameStop, a company that sells gaming consoles, collectibles, and video games, received a boost when the CEO bought 1 million shares, bringing his total ownership to 9.3%.
The purchase came a few weeks after the board gave him a big incentive to boost the stock price and profitability. He will receive the option to buy millions of shares at $20 each if the market capitalization jumps from the current $10 billion to $100 billion and if the EBITDA hits $10 billion.
Insider purchases are some of the best catalysts for stocks because these people often have privileged information that the rest of the public lacks. For example, the Atlassian stock price has crashed sharply in the past few years as key insiders have continued selling the shares.
GameStop also continued to shut down stores in the United States. It has already shut down over 1,000 stores in the past few years, and the management expects to cut over 400 more this month.
Store closures can help a company remove the least productive ones in a firm. It then helps maintain the most profitable ones while cutting costs.
GameStop’s business has come under pressure in the past few years as demand for games and consoles from retailers has softened a bit. More customers have continued to buy consoles and games online, a trend that will likely continue in the foreseeable future.
Therefore, its annual revenue and profitability has been in a strong downward trend in the past few years. Its annual revenue moved from $8.2 billion in 2019 to $5.2 billion in 2024. Analysts expect that its annual revenue in 2025 will be about $3.8 billion. In the future, there is a likelihood that the revenue will tumble below $1 billion in the next decade.
GameStop’s pivot to Bitcoin accumulation has also not worked as it happened when Bitcoin was in a strong downward trend, and demand for Bitcoin treasury companies has waned. Most of the MicroStrategy copycats are at a loss, and it is unclear whether they will rebound soon.
On the positive side, GameStop has a great balance sheet, helped by the capital raising it engaged in during the meme stock frenzy in 2021. It has over $7 billion in cash and little debt.
GameStop stock price technical analysis
The daily timeframe chart shows that the GME stock popped this week after Ryan Cohen’s purchases. This rebound happened after the stock formed a double-bottom pattern at $20 and a neckline at $24. A double-bottom is one of the most common bullish reversal signs in technical analysis.
The stock formed an up-gap on Thursday and is now above the 50-day and 100-day Exponential Moving Averages (EMA). Therefore, the most likely GME stock price forecast is bullish, with the next key target being at $25.
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