GameStop stock thrives despite Monday’s market carnage
In a sea of red, one familiar meme stock was looking quite green indeed at Monday’s closing bell.
Shares of GameStop GME, +2.63% closed up 2.6% on the day, despite heavy sell-offs across the market as investors pointed to climbing cases of the delta COVID variant as a threat to the global economy recovery.
What news gave every retail investors’ favorite videogame retailer a boost on the same day that saw that Dow Jones Industrial Average DJIA, -2.09% posted its worst result of 2021 so far?
None at all.
In fact, the big news on GameStop was no news, a situation that did not appear to bother the company’s army of fans on Reddit and Twitter, who made it abundantly clear that they very much still “like the stock.”
On Reddit, GameStop’s legion of so-called “Apes” touted their “diamond hands” and even shared they were buying option orders on Fidelity’s trading platform going into the close, even after experiencing issues buying GME earlier in the day.
“Nice! I truly do think this stock is undervalued even with all the [hedge fund] crap surrounding it,” posted user Highlander2748. “It will bear fruit. It may take a while, but it will be worth the wait.”
Volume on GameStop was well below it’s daily average, but data from HypeEquity showed that social media volume on the stock was up more than 100% on the day with mentions of “buying” and “holding” outpacing mentions of “selling” by more than 2 to 1.
“Banks, Disney, crypto, basically the whole market took fat losses today and it’s business as usual while we outperform most of the market and the only news story I see is how meme stocks are losing steam,” user WigglesPhoenix posted on subreddit Superstonk.
That sentiment bore out in other memes too.
GameStop Stock: Why NFT Could Be Big For The Company
In recent days, news that GameStop would enter the NTF arena gained traction among apes and Reddit traders. Wall Street Memes discusses why this could be good news for the stock.
GameStop (GME) - Get Report shares have been heading lower week after week since June 9. But the meme mania pioneer remains one of the most debated stocks among Redditors. Last week, on July 14, news of GameStop’s NFT release bumped the stock’s popularity on WallStreetBets. See below.
Figure 1: WSB sentiment on GME. Swaggy Stocks
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Latest news
Recently, news has surfaced that a GameStop NFT (non-fungible token) project was underway. Some investors and traders saw the development as a potential catalyst for the stock.
NFT is a single asset usually embedded in an object (like a video game skin, for example) and registered in a blockchain network. It is an encrypted digital record of a piece of art that can be bought, sold, and collected.
The news gained relevance after GameStop launched a website about NFT in the past few weeks. However, not much more information has been shared by the company so far.
(Read more from Wall Street Memes: AMC Stock To The Moon: Could This Be The Week?)
Why NFT is relevant
NFT is a form of CryptoArt. The art pieces can take the form of a logo, a phrase, a song, and are published directly into the blockchain.
Although the CryptoArt market has been around for a while, it has gained more attention in 2021. The chart below shows that the CryptoArt market is already valued at $594 million, as more than 800,000 artwork pieces have been sold so far.
Figure 2: Monthly cryptoart volume. cryptoart.io
Below are some fun facts about CryptoArt:
the co-creator of the famous cartoon Ricky and Morty auctioned off a hand-drawn black and white piece of CryptoArt for $150,000; the most expensive CryptoArt on record was sold for $69 million: Everydays, by artist Beeple; viral video “Charlie bit my finger” was turned into an NFT and sold for over $760,000 in June; the CEO of Twitter sold his first tweet artwork for $2.9 million.
Can GME benefit from NFTs?
GameStop has not yet offered details about the launch of its NFT or its strategy around it. It is safe to say that the company would benefit from diversifying its business model, expanding further beyond gaming and the brick-and-mortar channel – and that it is probably looking to do so with digital art.
The company is currently pushing to turn its fortunes around. CEO George Sherman left the company after failing to meet his goals – not before cashing in some of his GME shares at meme prices.
On the e-commerce front, GameStop has recently hired several former Amazon employees to improve the digital strategy. Billionaire Chewy co-founder and GameStop chairman Ryan Cohen seems to have the credentials to help overhaul GameStop’s operations, which has helped to keep meme mania alive.
Will GameStop succeed at turning its business around? Only time will tell. In the meantime, the Reddit crowd seems to be paying close attention, in hopes that the stock can surge once again.
Twitter speaks
GameStop shares have been well off their June 9 levels, and about 50% below the late January top. How confident are you that GME will revisit its previous highs?
(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Wall Street Memes)
Gamestop (GME) Stock Price and Forecast: Why is GameStop down again?
GameStop shares continue to slide in market downswing.
Meme stocks get hit hard as markets turn red.
GME is down again in Monday’s premarket.
GameStop, the king meme name, has been suffering sharp falls of late as meme stocks start the week in negative territory. It probably has to happen eventually. Nothing can keep going up forever. GameStop filled the gap on the chart at $217 and just kept on going lower. Markets love to fill gaps, but the meme stock names all suffered. Once $200 broke, it was all hands on deck as the bears took over.
The meme stock rally has been fading with a similar picture among the new top meme stock, AMC. The chart below compares the performance of GME and AMC since early June. Both are now down over 30% in the period.
Social media postings and Google search terms are a definite guide to this with WallStreetBets going mainstream. Apple and the S&P 500 ETF (SPY) have been trending highly on the site for the last number of weeks, while AMC and GME have fallen. A similar story emerges on Google search with search volumes for AMC and GME down over 65% from the 2021 peak.
GameStop key statistics
Market Cap $12.1 billion Enterprise Value $11.4 billion Price/Earnings (P/E) -123 Price/Book 24 Price/Sales 2 Gross Margin 24% Net Margin -2% EBITDA -$112 billion Average Wall Street rating and price target Sell $88.33
GameStop (GME) stock forecast
GameStop has now entered the strong support zone or consolidation zone we identified back in April and May. This is where the last sharp fall stopped before a price consolidation occurred and GME stock spiked higher, so can the same thing happen?
The volume profile shows why this is a support zone. This is the area of price with the highest concentration of volume going back to March. We would expect the price to at least slow its fall if not stop falling. The point of control is at $160.88. This is the price with the highest amount of volume and so an equilibrium of sorts.
While the overall markets looks negative on Monday and the meme stock space unloved, it is time to consider a long entry position in my view. As ever, careful risk management is advised with a stop or else use a long option position to minimize risk. The strongest support is at $136.50, this is the low from May 11 that saw GME spike again to over $300. This is the preferred entry point. At present, the trend remains negative with the 9 and 21-day moving averages being broken and trending lower. The Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) are also trending lower in line with the price. Traders prefer to be late into a trade to chase a breakout when indicators confirm a move, and at present this is not yet the case. If the RSI or MACD turn higher or the price breaks the 9-day moving average, it might be time to take a position before our preferred $136.50 support. For now, price action in the premarket looks negative, so sit tight. The best trades come from waiting for the right entry.