After its meme-driven 12,000% rally that took GameStop (GME 1.23%) from $0.64 to a record high of $120 in January 2021, things have never really been the same -- for the company and for investors. While efforts to recreate that speculative mania of yore continue, the results have been sporadic and unsustainable, and the stock has largely languished ever since.
Currently, the Grapevine, Texas-based specialty retailer is sitting on a 28% year-to-date slump, miles behind the double-digit gains of the large-cap benchmark indexes. More importantly, GameStop is also currently trailing 90% of the companies in the S&P Midcap 400 (MDY 1.21%), of which it is a member, thanks to its current market value of $9.9 billion.
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From its 2021 peak, GameStop is now down about 80%. More recently, the stock has slumped about 37% from the 52-week high of $35.81 it hit in late May. Even so, the retail chain and e-commerce business is still a fan favorite in the stock trading chatrooms and blogs.
On Wall Street, however, not a single analyst currently has a published opinion or price target on GameStop, leaving investors with little to guide them besides company filings, news reports, and even a random shoutout from the official White House Twitter account.
Q3 results are coming soon
Although the date has not been confirmed yet, GameStop is expected to release its Q3 results in early December. According to Koyfin data, it is projected to report EPS of $0.20 on $987 million in revenue, marking year-on-year gains of 230% and 15% respectively.
NYSE: GME
Key Data Points
On a trailing earnings trend basis, GameStop has "beaten" those EPS estimates five quarters in a row, but has fallen short on sales 6 of 7 times. Because there is no transparency around those "estimates," they obviously need to be taken with a grain of salt.
On a forward price-to-earnings basis, the video game and console retailer is currently trading at 25.6 times expected earnings over the next 12 months, which is about 45% higher than the 17.7 times average P/E for the Midcap index.
It's also worth noting that there is currently a 16% short interest in GameStop, a bearish overhang that ranks seventh in the Midcap 400.
On the plus side, after several challenging years, there is definitely a turnaround afoot as GameStop's Q2 earnings release in September saw its revenues rise 22% from a year ago, and its net income rebound more than 10 times from $14.8 million to $168.6 million.
There's also the reality that GameStop ended Q2 with $8.7 billion in cash and equivalents -- more than double the year-ago figure -- which amounts to almost 90% of the retailer's market cap. If nothing else, that cash hoard should serve as a floor in the market, and help speculative traders feel slightly less worried if they're insistent upon taking the risks, and hitting the meme-stock reset button once again.
