GameStop: Why It's Hard To Bet Against Them (In The Short Term)

Summary

• I give GameStop Corp. a hold rating.
• The company suffers from negative annual free cash flow and low-quality earnings.
• GameStop is also overvalued in metrics such as forward P/E and price-to-book value (when paired alongside return on assets and return on equity ratios).
• But the company also has a lack of long-term debt, with total assets worth $6.24 billion, which includes $4.58 billion worth of cash and cash equivalents.
• The company also carries the identity of being a meme stock and, therefore, has unpredictable short-term price movement.

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Investment Thesis

I give GameStop Corp. (NYSE:GME) a hold rating because, although the company suffers from low-quality earnings, is overvalued, and has poor management at the helm, the company also has a lack of long-term debt, total assets worth $6.24 billion, another $4.58 billion worth

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.