It was once a meme stock to be reckoned with, but then…then life got in the way. But retailer GameStop (GME) carries on, despite the fact that its business model of selling used games is barely hanging on by a thread. Still, it is getting analyst attention, including from one of the biggest names around, Jim Cramer. That attention, though, did GameStop stock few favors. Shares slipped fractionally in Monday afternoon’s trading.
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Basically, Cramer noted what we just did: that GameStop is really not so much about selling and buying used games any more, but has largely pivoted to being a cryptocurrency company that also happens to sell some used games, at least for now. Cramer also had particular praise for the balance sheet, which had been “…clean(ed) up…” along with offering stock.
The move, Cramer noted, was a modest improvement, though perhaps not much. Cramer noted “…GameStop…has now gone all crypto. While that’s a lot better than being just a gaming retailer in secular decline, that’s not saying much. So you’ll see the gaming stuff, and then you’ll see the crypto stuff, and the crypto stuff is what’s going to drive this stock higher, probably.”
The Staplegate Fix
Also, remember when we discovered CEO Ryan Cohen‘s plans to fix the “Staplegate” issue—the one where several Nintendo (NTDOY) consoles were damaged by a company stapler—by auctioning off the stapler for charity? How Cohen offered a pair of his own underpants as well as a celebratory lunch for the winner if certain goals were met? An update on that reveals that it went better for GameStop than you might expect.
The auction ultimately raised $250,000 for charity, and gave GameStop something of a leg up in the market. One source referred to the move as moving “…the narrative away from corporate incompetence and towards community benefit, showcasing a nimble and purpose-driven corporate culture.” And that might be the most welcome outcome of all for GameStop.
Is GameStop a Buy, Sell or Hold?
Turning to Wall Street, analysts have a Moderate Sell consensus rating on GME stock based on one Sell assigned in the past three months from Wedbush analyst Alicia Reese, as indicated by the graphic below. Reese has a five-star rating on TipRanks. After a 1.14% loss in its share price over the past year, the average GME price target of $13.50 per share implies 42.04% downside risk.
