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GameStop - AI Stock Analysis

Analysis generated February 25, 2025

GameStop Corp. (NYSE: GME) is a leading global retailer of video games, consumer electronics, and gaming merchandise. Established in 1984, the company operates thousands of stores across the United States and international markets. GameStop has undergone significant transformations recently, shifting its focus towards a digital-first strategy and exploring new business ventures, including NFTs and e-commerce.

Fundamental Analysis

For the latest quarter, GameStop reported a revenue of $798 million. This represents a decrease of 9.47% compared to the previous quarter and a significant year-over-year decline of 31.41%. The decline in revenue is a cause for concern, suggesting challenges in maintaining sales growth in the face of competitive pressures and market saturation.

The net income for the last quarter stood at $15 million, marking a robust increase of 145.82% over the previous quarter. This indicates positive growth and profitability. This is further emphasized by the substantial 628.57% year-over-year increase in net income, suggesting that GameStop has managed to cut costs or improve profit margins effectively.

EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) for the same period was $14 million. This figure represents a 57.40% increase over the prior quarter but a 260.00% decrease year-over-year, signaling potentially unstable earnings.

The current Price-to-Earnings (P/E) ratio stands at 132.1. This high P/E ratio might indicate an overvalued stock, suggesting the market expects significant future growth that may or may not materialize.

Technical Analysis

Today's stock price for GameStop is $25.00, which has decreased by 9.97% over the last month but shows a substantial year-over-year increase of 82.75%, indicating a positive long-term trend. Despite this, the trend is currently bearish.

The SMA10 (Simple Moving Average over 10 days) is $26.33, which is lower than the previous SMA10 of $26.53. This suggests a potential downward trend in price movement.

The Relative Strength Index (RSI) is at 63.2, indicating a neutral condition. Although it is not in overbought or oversold territory, it does not provide a decisive entry or exit point.

Alternative Data Analysis

GameStop has 4,506 open positions, down by 47% in the last couple of months, indicating possible efforts to improve margins or cut costs; a concerning sign for a company looking to grow.

Employee sentiment signals a low business outlook, with only 19% of employees expressing a positive view of the company's future. This is troubling as it can affect productivity and morale.

However, customer acquisition metrics show positive trends. GameStop's website attracted an estimated 19 million visitors, up by 19% recently, while daily mobile app downloads stand at 1,900, an 11% boost in the last couple of months.

On the social media front, GameStop has 2.2 million followers on Instagram and 1.9 million followers on Twitter, albeit with no significant changes in follower numbers, suggesting stable but stagnating customer engagement.

Finally, GameStop’s AltIndex AI score is 38, a bearish signal indicating a recommendation to sell based on a comprehensive analysis of fundamental, technical, and alternative data.

Conclusion of Stock Analysis and Recommendation

GameStop shows a mixed performance across different analytics dimensions. While its year-over-year net income growth of 628.57% and recent positive customer acquisition trends are encouraging, the significant revenue decline of 31.41% and a high P/E ratio of 132.1 raise concerns about the stock’s valuation and sustainability of its business model.

The technical analysis underscores a potential short-term bearish trend, while the alternative data presents a mixed picture, with positive customer acquisition trends countered by low employee sentiment and declining job openings.

Based on these analyses, a prudent recommendation would be to approach GameStop’s stock with caution. While there are positive signs in terms of profitability and customer acquisition, there are significant risks and uncertainties that must be carefully considered.

Disclaimer: This AI stock analysis, generated by an experimental AI tool, is for informational purposes only and not financial advice. Information is based on publicly available data and may not always be accurate or current.