GameStop stock prediction: is GME a good stock to buy?
GameStop stock predictions have frequently proved wrong this year, but what does the latest price rise indicate?
- Classic meme stock
- The first meme stock cycle
- The second cycle
- GameStop stock: buy or sell?
- GameStop price prediction for 2021
- GameStop stock prediction for 2025
GameStop, the Texas-based video games retailer whose shares soared from below $10 to almost $500 early this year before dropping to below $150, is back in the news again after its stock rose by more than 40 per cent in three weeks. What does this mean for the GameStop price prediction?
The US global video game, consumer electronics, and gaming merchandise retailer has seen three surges in its stock price this year, the last two, in March and June, both failing just south of $350 a share
At the end of August the stock jumped above the $210 level, with reports that institutional firms including JP Morgan and Fidelity and the hedge funds Marshall Wace had purchased shares for a total of around $6m. (https://fintel.io/so/us/gme) Will GME stock continue the rally for further gains or fall back once again?
The company released its Q1 2021 results last June, when it claimed to be recovering previous losses, and will release its Q2 results on September 8. In the light of the latest news, what is the GameStop price prediction for this year?
Classic meme stock
When assessing whether GameStop is a good stock to buy, it is crucial to realise that much of the movement in GME stock is not related to the company’s performance. Instead it is a classic "meme stock", its price reacting to surges in viral activities on social media and the like.
This was the case in January 2021 when, after going viral thanks to activity on Reddit’s Wallstreetbets retail investing forum, when the GameStop stock price went from $17.25 to $483, an increase of 2,700 per cent.
Nevertheless, GameStop has not managed to generate a profit since 2017. More than 1,000 stores closed in 2019 and 2020 as the pandemic apparently hit the company hard.
However, the 2021 outlook seems to be more optimistic, with the company announcing in June:
“A second-quarter sales trends continuing to reflect momentum, with May total sales increasing approximately 27% compared to last year”
The first meme stock cycle
Meanwhile, the company completed the so-called meme or long-short cycle twice. Generally, as a meme stock company release new information, a bullish spiral starts on its stocks price, followed by a profit-taking one.
After the first clamorous enthusiasm recorded in January, GameStop witnessed a second rise in March 2021, as it announced the expansion of its North American fulfilment network through its entry into a lease of a 700,000 square-foot centre in Pennsylvania.
The second cycle
The second cycle accompanied the company's last results as GME posted a positive Q1 2021, with it recovering, though not completely, from losses. GameStop witnessed an operating loss of $40.8m, against a $108m loss in the 2irst financial quarter of 2020
Net sales increased by just over 25 to $1.277bn, against $1.021bn ia year earlier“overcoming a nearly 12% reduction in the company’s global store base due to strategic de-densification efforts, and continued store closures across Europe due to the COVID-19 pandemic”.
The announcement again lifted investors' sentiment, with the share price rising to a new $302 peak after having fluctuating a long time around the $160 level. However, the profit-taking stage of the meme cycle brought the GameStop stock price back to the previous support of around $160.
GameStop stock: buy or sell?
On Wednesday 24 August, the attention of some institutional investors on the stock seems to have triggered another meme cycle, with the price share jumped to a $212 level before moving back to $202 support on Thursday 26.
GameStop price prediction for 2021
As this could be the third GME meme cycle it is difficult to predict where does the price is going, however, some analysts are providing their GameStop price prediction.
Walletinvestor's GameStop stock prediction 2021 sees GME target price at $166.772 in December 2021 or moving among a $133.104 support and a $199.373 resistance.
Gov.capital seems to be more optimistic, predicting a GME stock price in December 2021 of around $191, moving in a $163-$220 price range.
GameStop stock prediction for 2025
The same Gov.capital provides investors with a GME stock prediction 2025 for December of around $367, with the price of the stock moving in the $312-$422 area.
Gamestop sounds like one of the most interesting stocks to look at. However, its dramatic rises and falls suggest caution is needed. Do your own research and always compares risks and possible benefits before investing.
On Wednesday 24 August, the attention of some institutional investors on the stock seems to have triggered another meme cycle with the price share jumped to the actual $212 level. Beware of possible profit-taking sessions to follow.
You can buy Gamestop shares on Currency.com, always carefully pondering benefits and risks.